Craig Olivier, Chief Technical Officer, Genasys Technologies, takes a look at how the insurance eco-system is a toolkit for company survival. Without it, your brand isn’t going to evolve.
Like many industries that have been around for a long time, the world of insurance is crying out for innovation. Many products have the same look and feel as they did 50 years ago – and some even longer. They have neither kept up with the new generations that are buying them nor with the new risks that have emerged over the last decade or so.
To be fair to the industry, the greater connectivity that technological advances have facilitated over the last 25 years has made an awful lot of it products and services look out of date. Smartphone ownership empowered our customers to demand the same level of personalisation and slick experience from their insurer as they get from retail and tech giants.
It’s also important to acknowledge that the changes in day-to-day life wrought by the impact of the global pandemic this year have brought this all into sharp relief. Insurers now have to get their head around covering businesses that are now spread over thousands of locations thanks to home working, not just a handful of premises … and what are the implications of that on household cover or cyber insurance?
Insurers today not only need to understand where their customers are in their individual lifecycles and offer tailored packages, but also leverage data capabilities to better understand each risk and suggest appropriate covers to truly add value to the customer relationship. And the value add doesn’t stop at simply offering cover; risk prevention and mitigation needs to be part and parcel of their offering. Think about the myriad of possibilities that have emerged with the Internet of Things – devices to detect events such as escape of water, fire and intrusion.
It goes without saying that creating new products and securing the capacity to support them is fundamental to innovation; however the technology that underpins innovative new products such as usage based covers and new distribution channels is equally important. However in today’s fast moving digital world, it’s hard and perhaps even impossible for any one individual company to be able to do everything. This is where the insurance ecosystem comes into its own.
The insurance ecosystem is an interconnected network of companies, people, data and/or processes that are linked together by the shared use of digital platforms to achieve shared goals. Offering powerful benefits for both companies and consumers alike, this new business model is fast becoming an attractive option for insurance providers seeking to expand their capabilities.
Its value is that it makes the barrier to entry much lower in terms of engaging with others – for example, affinity groups – to distribute innovative product offerings in a structured manner through different channels.
It makes it far easier to engage with customers at what I like to call the micro moment – effectively being in the right place at the right time to offer the insurance they need at that moment. To illustrate what I mean, how great would it be at the moment when a traveller has used the bag drop facility at the airport and as their luggage heads off on the conveyor belt, they get a message offering them travel or luggage or gadget insurance.
And it is an enabler to innovation. There are a lot of insurtechs and tech providers who are focused on certain key areas of the insurance value chain and have the ability to integrate into the wider ecosystem. There are so many different areas throughout the insurance value chain and it’s our belief that there is greater value in not being all things to all people, rather being able to integrate with all the different and focused tech throughout the chain and incorporating the right tech at the right time depending on what an individual business is trying to achieve. Why build from scratch, when you can integrate?
The most important aspect is finding the right partners with the technology that makes sense to enable the innovation. There is absolutely no point in using technology for the sake of it. There are a lot of buzz words out there and the temptation to follow the AI herd for example is great – but if it doesn’t solve the problem that a business is trying to overcome, it’s a waste of resource. It’s vital to use the correct partners and, most importantly, those with the ability to integrate back into your technology stack. Open architecture supported by APIs, in my view, is key to this.
There is first mover advantage in adopting an insurance ecosystem mindset – understanding the direction in which the insurance industry needs to be heading and being part of the movement – and a real danger in not doing so of being left behind.
Not partnering, creating and using the benefits of an ecosystem can actually distract an insurance business from its primary focus. Trying to solve all the potential problems and come up with all the answers alone can in fact create internal inefficiencies. There are partners ready, willing and able to support digital initiatives such as claims and payment automation and the delivery of new products to new customers through new distribution channels. Insurance providers should be leveraging the expertise of these ecosystem partners to facilitate innovation and assist their businesses move along their digital journeys. If they don’t, they may well find themselves extinct.