The Intelligent Insurer
Towards the end of 2019, Tokyo FinTech held a panel on the future of insurance with some distinguished industry experts, hosted by Deloitte Tohmatsu, our sponsor. The following are some of the highlights of the discussion, from a Japanese, Asian and global perspective.
Neal Baumann, Global Insurance Leader at Deloitte: This is possibly the most fascinating time to be part of the insurance industry. For many years, industry executives have been debating change and disruption. I think what we are going to see happening over the next 12 to 18 months is that the debates are pretty much finished and it is time for action.
What we are talking about here is really a different way to meet the customers’ expectations, and an opportunity to break into a new phase of growth. To be fair, it is a hard to leave the legacy context behind, and I do not just mean legacy technology, I use this to refer to the whole legacy environment, including culture, mindset, and the methodologies applied.
InsurTech is a really important catalyst for change, challenging the way this business has been conducted over the last 30 or 40 years. I am privileged in that I am able to spend a lot of time in different countries and see how the industry as a whole is developing, and I see this excitement everywhere.
On the other hand, it is hard for established institutions to adopt a new way of doing business and to be more — dare I say — user friendly. Some of our colleagues in the startup community invest a lot of time and passion around new ideas. In the industry, we are not really the receptive hosts that we could be. That is probably the hardest challenge that the industry has right now, bridging that gap and pushing the last mile between a bright idea and a proven concept to create the new reality.
Steve Monaghan, General Partner at FinMirai: The reality is that technology is a tool set, and the real challenge in innovation and transformation is always people. Technology is developing so fast in lowering the barriers to entry, it is creating almost generic customer experiences now where you are going from app to app and industry to industry with almost zero friction. That use of technology to reduce friction between what the customer wants and and their ability to acquire that product or service is what China is really thriving on.
But the dynamics are very different in the rest of Asia, so what you see work in China might not necessarily work elsewhere. In my last startup, which brought AI to insurance, I employed at one point the Chief Innovation Officer at Ping An, so I got some insights into that. A lot of their cool technology is not quite what you would envision. But the really smart thing they are doing is using data in a in a very sophisticated way, so what they are doing on the AI front is quite interesting.
However, they are still using quite traditional policy administration and underwriting systems, so the level of automation and the potential of technology has not really been fulfilled there either. The way we design companies is largely oriented around our limitations as human beings. Whereas in technology, we need to fundamentally challenge how we structure organizations. We tend to aggregate around expertise and where we have logic in an organization, we create policies around that logic.
Technology is horizontal, and it does not matter which industry your are in, it is the same type algorithms that you use in the technology industry and in health tech, for example. So I think what you see around the region are different levels of engagement. Japan should be in an AI superpower, and it is an AI laggard. That is a real shame, because in a market with an aging population, AI is a multiplier.
To round out the market view, China is definitely way advanced. Hong Kong is definitely a laggard and unfortunately the situation is getting worse. Singapore now has a very unified ecosystem. From an industry perspective, insurance is lagging about eight years behind banking, which is a loss for the insurance industry. It will hopefully start to accelerate soon. And it would not surprise me if insurance companies follow the path of banks and create truly digital entities off to the side and the regulators issue digital insurance licenses.
Bruce Appleby, Chief Digital Officer at Aflac: My involvement in the insurance industry started about ten years ago, and it has been an interesting shift over the last three or four years, where the thinking has evolved from simply selling insurance online and worrying about the dis-intermediation of agents to truly applying technology to the business in the broadest sense.
The state of the industry in Japan, however, is still very analog. Maybe auto insurance is starting to break out now, but health and life insurance are still very much sold through agents. So the challenge really is to get better at designing solutions.
We also have been looking strongly at how to leverage data better. There have been changes made to the privacy laws, and the government is focused on promoting that “data economy”. Their path is somewhere between Europe and China as far as I can see, so over the coming years the carriers hopefully can get easier access to customer data, but in a way the customers are comfortable with, and the customers can actually get a reward from.
Zach Taub, Regional Head of Customer Experience at AIG: There is so much opportunity for disruption, so many areas are changing. It really does come back to what was said earlier, it is not about the technology stack, it is about the mindset. And one of the things that I think my mission is, having joined AIG from Moneytree, one of Japan’s leading FinTech startups, is to bring that slightly obnoxious startup mentality to the hundred year old insurance company.
If you like a challenge, this is a fantastic world, because you will never ever be short of opportunities to test people’s assumptions to look at doing things in different ways. With Moneytree, I have done this advocacy externally, and now I am doing it internally in the organization. The exciting part is building relationships with stakeholders that last a long time. You have real successes together, you contribute to the business as a unit, and that is really exciting.
So what does CX (Customer Experience) actually mean? It is a broadly and poorly defined role in most organizations. For us, it is really about designing experiences and thinking about who are your customers. It is not just about having people access your product online. It is also about agent experience, distributor experience, it is about how you you transform the way the team approaches what you do. And so there is that transformation mindset. It is not a secret that insurance is a laggard in digital transformation — for me personally, that is all upside, there are just so many ways to improve.
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