Cap Gemini released mid-September, in partnership with Efma , its annual report on insurance:”world insurance report 2017“. This one is based on an international survey (Capgemini’s voice of customer) and this year is interested in 3 aspects:
- Generation Y and its appetite for digital solutions,
- The notion of” Moment of Truth ” (Moment of Truth, the moments that tip a customer’s opinion on his insurance company)
- A growing cooperation between insurance companies and traditional insurers that makes it possible to exploit the strengths of the two types of structures.
Thus, and I’m aligned with this idea, it is not only necessary to invest in innovation, but we must invest properly.
Key elements to remember from Word insurance report 2017
- 1st part
- Digital technology is now at the heart of insurers’ strategy
- Digital is also changing the competitive landscape and, by raising the insurance profile, is driving sector transformation
- Insurers stay ahead thanks to the confidence they inspire
- With their respective strengths, it is the collaboration that takes place between insurers and insurance companies
- 2nd part
- The deployment of new technologies in insurance is transforming processes and bringing value to insurers and policyholders
- Insurers prioritize their investments towards solutions that are easily integrated into their systems and have a potential impact on the entire value chain
- Innovation and digitalization are likely to respond to the triptych Convenience, Agility and Personalization
- For a successful implementation, insurers must invest in a solution portfolio in synergy with each other.
World insurance report 2017 details each of these aspects.
Digital collaboration redefines the insurance industry
The rise of digital insurance
Insurers have gained unparalleled expertise in risk analysis. The current wave of new technologies, focused on customer needs, is forcing insurers to change. Today, younger generations want to have solutions adapted to their way of life. More specifically, CapGemini finds specificities in the expectations of these groups of populations. They formalized them in their study on “Moments of Truth”.
Specifically, CapGemini finds that Generation Y and the group of techies have more marked behaviors, including the loyalty and the likelihood of buying a complementary product.
This confirms the need to find solutions to meet these more demanding expectations.
CapGemini cites the examples of Aviva (driving support app), AllState (claiming with Quick Foto Claim) or Meiji Yasuda Life (strengthening the sales force with smart tablets).
Is digital changing the competitive environment?
Insurance companies can draw new business models, but in a deeper way, they pull the market on a path of breakthrough innovation. Some examples:
- The Everquote comparator offers a preselection of companies based on the profile analysis of the individual;
- Aggregators FinanceFox or Brolly allow to have a 360 ° vision of the policyholders’ contracts;
- BrightHealth to simplify the patient experience by keeping you healthy on the smartphone;
- Trov offers on-demand insurance;
- Finally, Fabric targets young parents to offer life insurance policies.
Everyone (insurers / insurtech) has its specificities and its assets. The diagram below graphically represents the respective advantages of each.
Collaboration as a method of evolution
Competition has long been the norm between insurers and insurance companies, but the notion of collaboration is becoming more and more popular to make the most of the strengths. The following diagram shows these forces. Knowing them well helps to ensure that we make the most of them.
Different methods of collaboration are envisaged:
- Investment / Equity stake;
- Strategic partnerships: in terms of distribution and the construction of offers, for example;
- Incubators: Kamet’s example for Axa invites external companies to help them in their development;
- Internal Incubators: When internal teams have good ideas, you need to be able to grow them out of the usual constraints;
Among these models, it turns out that pure collaboration is still the one put forward by most actors.
The priority for traditional insurers should be to stimulate a culture of innovation and to have a” digital first” approach. Collaboration with insurance companies is one of the keys to this success.
3 themes appear as levers of” Moments of Truth”:
Browse the enigma of innovation
The capabilities of insurance companies open up new opportunities for insurers
From a customer point of view, the solutions offered by insurtechs revolutionize the historical face-to-face relationship through:
- B2C aggregators: These are the comparators, like Insurify
- B2B aggregators: Proposals for tailored solutions for business customers
- P2P Intermediaries: Collaborative Solutions
- Mobile apps and chatbots
Emerging technologies act as catalysts for insurance companies
The technologies cited as examples on the back-office side are:
Then, others, more visible to the client, and therefore front-office side:
- Robo Advisor
- Wearables : portable connected objects (mostly health-oriented)
- Ecosystems connected
Note: CapGemini does not take too much risk here because they quote almost all the technologies that make the headlines of the moment!
Set priorities for the future
In order to select priorities for future development, World Insurance Report 2017 suggests meeting the 3 essential needs of the insured: Convenience, Agility, Personalization.
To do this, CapGemini proposes 3 pillars, visible on the diagram below:
- Digitization, to look for improvements in the cost structure;
- Data & analytics, to look for a better customer engagement;
- Insurance as-a-utility to find new sources of income.
What digitalization solutions?
The recommended solutions are:
- Connected objects : for example, Oscar for health that tracks your physical activity levels, or Hippo for the home that tracks leaks before they cause damage;
- Key process automation : Lemonade robots by example are dreadfully effective, or the use of drones to resolve claims more quickly in natural disasters;
- Smart contracts with the blockchain : Examples of Dynamis and SafeShare Global are included as examples.
- Mobile solutions : Focusing on mobile-only solutions may be relevant, as proposed Wrisk .
- APIs open to develop new applications : This allows you to benefit from the creativity of the mass of developers on the market. The report only cites MuHu .
What solutions around data and analytics?
The recommended solutions are:
- Build individualized profiles : Amodo or Mydrive solutions
- Individual Risk Assessment / Risk Management : Cigna or GOQii allow to target the technophiles for example.
- Pricing Analytics : Sentiance and its partnership with Insurtech RISK is quoted.
- Identifying Emerging Risks : Praedicat analyzes millions of pages of scientific studies to identify new risks.
- Targeted products and services : For example Y-Risk
- Customer service augmented by artificial intelligence : Chatbots of course, but also offers solutions such as Next Insurance or Xtra Axa chatbot .
What solutions for insurance as-a-Utility?
The recommended solutions are:
- Collaborative Insurance : for example, the now well-known Friendsurance
- Multi-risk policies : The solution proposed by Aioi Nissay Dowa Insurance Europe meets this criterion;
- On Demand Insurance : Slice Labs of course and also Sure provide interesting solutions;
- Usage-Based Insurance (UBI) Metromile or Progressive among others offer Pay-As-You-Drive or other derived from the genus.
- Micro Insurance : BIMA or Star Microinsurance ;
- Flexible Coverage : This is the principle of the wholesale broker, for example Bought by many or GEICO ;
How to move forward?
All actors have priorities that vary from year to year and according to their level of advancement. On the other hand, all are confronted with an identical context and the search for new business models is important. For this, it is about being able to choose which solutions to put forward.
The following diagram presents, for each model that an insurer could consider, the functionalities or solutions on which it is relevant to invest.
So we see that one solution can not meet all needs. Therefore, we must invest in a reasoned and coherent way in a set of solutions that create synergies between them. ( Note: Nothing new, the popular saying says well:” Do not put all your eggs in one basket”! ).
Conclusions on world insurance report 2017
The report World insurance report 2017 sometimes appears as a catalog at the forefront of all that the insurance innovation market has solutions, without any opinion, and we can regret it. However, you have to keep 2 things:
- It has the merit, in this catalog, of being quite exhaustive, and little is missing on the call
- There are many examples to illustrate ideas and to form one’s own opinion.
In short, they succeed their exercise at will educational, but do not go further!