When we think of innovation success stories in financial services, we commonly look to banking with the likes of Monzo and Starling leading a wave of innovation and change in recent times. However a traditionally ‘low engagement’ category for consumers, insurance is also being shaken up by a digital revolution.
Despite the customer need, business imperative and the technological building blocks being out there, innovation in insurance is still behind the curve. What is holding insurers back and how can you accelerate digital transformation, and quickly turn new ideas into tangible business and customer value?
We recently set out to explore these questions and many more as we hosted a lively panel debate at TAB HQ featuring:
Tom Whitbrook - Lead Strategist at TAB
Niall Barton - Executive Chairman at Wrisk
Vinay Jayaram - Co-founder and CEO of Envizage
Lindsay Ratcliffe - Director of Design and Innovation at TAB
Here are five key takeaways from the evening:
What’s driving innovation in insurance?
Strategist Tom kicked off the panel debate with an early comparison to banking, suggesting “Insurance is where banking was 10 years ago” - struggling to keep pace with technology, evolving customer needs and the increase of disruptors better placed to serve them.
Changing expectations and behaviours are overturning long-held assumptions about how to deliver customer value. New technologies such as sensors, machine learning, conversational interfaces, and IoT are enabling innovative propositions and customer experiences that were unthinkable even five years ago. While innovation elsewhere in our lives is resulting in whole new uses cases requiring insurance protection such as airbnb rental insurance, Uber driver insurance and Cybersecurity protection.
You can’t silo Innovation.
The panel discussed the challenges businesses face when attempted to adopt innovation in a very ‘controlled environment’. Vinay emphasised that within the Insurance sector years of “cultural wax has built up” consisting of legacy processes and strict legislation which has quickly become a significant blocker to innovation.
Tom echoed this sentiment suggesting “you can’t expect insurance companies to change overnight as legacy organisational silos are much more harmful than legacy software”. These organisational silos mean businesses don’t have the structure, ways of working or incentives to make innovation possible, let alone the priority.
The solution to this problem is rarely achieved through mergers, acquisitions or innovation theatres. These strategies create further silos, by either adding another company to the mix or a team of innovators who eventually reach the same blockers of getting ideas from post-it notes to reality. Eventually, innovation needs to be embedded throughout all aspects of the organisation and be made a priority at the top.
Insurers aren’t making the most out of technology
Vinay discussed how technology can support better customer relationships in the “definitive moments”, highlighting the importance of the initial first contact from an insurer when a claim is made. Through big data and machine learning, technology can help predict when these moments will happen enabling insurers to become proactive in their response.
All insurers want a less risky customer. IoT devices offer not just a way to monitor customer risk but also a way to nudge customers towards behaving in less risky ways. For example, a fully smart home could enable customers and an insurer to actively monitor - and take action on - a leak in a kitchen tap by turning the water off preventing flood damage.
Customer engagement was a clear win theme for the evening, with Lindsay suggesting there is a huge opportunity now more than ever for “insurers to engage better with their customers and deliver assurity and confidence in their home, not just a contents policy.”
Utilising technology throughout the value chain will enable insurers to go beyond a policy document and deliver true customer satisfaction, innovation and competitive advantage.
Digitisation vs Digitalisation
While digitisation and digitalisation sound very similar, they are incredibly different. Digitisation focuses on the process of converting a physical format into a digital one while digitalisation is how this new digital world then impacts the business, allowing the insights and automation from technology to impact internal processes.
Niall, Co-founder of Wrisk, echoed this point highlighting the importance of embedding digitalisation into internal processes, “For this process to be effective, there needs to be insurers in the technology industry and technology in the insurance industry”.
To fully adopt technology and its benefits, it needs to be adaptable and receptive to insurances traditional practices and legislation. Without this, true digitalisation can not occur.
Partner. Don’t outsource
Finally, a recurring theme for the evening was the need for insurers to leverage partnerships to accelerate internal innovation and quickly turn new ideas into tangible business and customer value. Tom highlighted the beauty of partnerships is “they don’t do what you do, they have aligned incentives and different skills and capabilities.”
Tom detailed five key things to make a partnership work; outcome focus, responsiveness, empowered teams, open sources and transformational leadership. Niall echoed the importance of responsiveness stating “I look for responsiveness very early on and that tells me a lot about the individual and the company.”
Key partnerships can enable insurers to provide consistency and execution throughout the value chain. Although ensuring these five things are present in a partnership is not as easy as it sounds, looking into how you can improve those specific elements before partnering with a company will undoubtedly provide better results.
As Niall eloquently put it, when it comes to digital:
“Don’t compare yourself to your sector, but the best thing on your phone."
If you want to find out more about how to innovate insurance or improve your digital offering, get in touch with us today!