What will help facilitate a secure future for the insurance industry?
“We’re living within the new revolution, which is a technological revolution, so without the right technology there is no potential future”. Tim Ward, CEO of eINS.tech, goes into more detail on the steps needed to ensure the insurance industry can keep up as technology moves on, for InsurTech Rising (FinTech Futures’ sister company).
There is an information and technological revolution going on around us, which is powering a giant, evolutionary shift in our economic and cultural thinking and modelling. This is the age of the “I want it now” economy and the insurance industry seems paralysed in working out appropriate new vision and connected strategic decisions to secure its survival against the hoards of “disruptors” and new kids on the block that are at the forefront of this new age.
So what can existing insurance businesses do to secure their survival? In my view there are two fundamental changes that the existing players need to make, if they are to have a good chance of surviving.
Firstly, they must understand what it is that they are selling – insurance is a service, a response to an event or situation that is defined by a service level agreement, as contained within the insurance contract/policy. It is absolutely not, and never will be, a “product”. So stop referring to “products”. Recognise and embrace being in a service industry and refer to “solutions” or “services”. This will psychologically focus the vision, the thinking and the innovation in the correct direction:
- Putting the customer where they absolutely should be – at the centre of the business.
- Facilitating new, solutions and service based value propositions (which in turn could lead to the insurance industry becoming itself a disruptor, by blending new things into its existing services that compete with and disrupt other sectors in the services industry).
- Constantly driving improved experience for customers.
This first change will, of course, expose the biggest practical problem the existing insurance players have – reliance on outdated, and quite simply unfit for purpose (in the new world), technology. This a good thing because the industry must be honest with itself, admit its problems, stop resisting change and make the necessary decisions to improve. But such change, in core technologies, has to be major and has to be immediate (the Internet revolution started decades ago and the insurance industry has consistently been one of the slowest to respond, which is why it is so exposed to new competition. Time has all but run out). There should be no mystery here – go online, entirely online, with all your core processes and services (choose Web native and Cloud oriented tech platforms that can deliver great service and a multi-channel experience to customers and make integration with current and future innovations in technology easy).
The second fundamental change is to stop gazing at your own navels and the navels of your peers, and go and look at how other service based businesses put the customer first, give the customer what they want now, and then anticipate what they might want in the future.
Being too close to the coal face is one of the big contributors to the paralysis that existing insurance players have – focusing on the technical detail of insurance and hoping that anyone outside the industry will be too baffled to enter it; relying on history and size and hoping this will be enough to ensure existing brands prevail. However, when an industry is starving for new vision and strategic direction that embraces, and is a leading player in, the new world order, it is an absolute necessity to take many, many steps back from the coal face and carry out a full and proper examination of the mountain in which the coal face sits, the entire mountain range, other mountains and mountain ranges, and indeed, the overall global terrain.
British Airways did this very successfully and here are two examples:
- They introduced the zigzag queue at airports (abused today but originally it was a positive innovation in the airline industry) so their customers felt that they were moving forward and getting closer to their destination, after the BA innovation team travelled to Disney Land to learn how they dealt with queues and improving the customer experience.
- They asked a super yacht seat manufacturer to design the world’s first flat bed aviation seat, after all the aviation seat manufacturers and industry experts told them this was impossible.
BA did not innovate by sitting in a large room several times a year, talking to other airlines and their industry peers and experts about the state of their industry. They looked further afield, at other industries and how they dealt with similar problems and issues. They looked, and thought, truly outside the box.
This is something the insurance industry desperately needs to emulate. It must look, for example, at the taxi industry, the retail industry, the music, film and entertainment industries, the airline and hotel industries and many others, and learn from them.
The future of insurance is bright, but only because new entrants are driving it. The old guard must change – change big and change now.