Insurance Innovators (an offshoot of Market Force, which I had already talked about here for their report under the same title ) has just published the future of insurance 2017 (Future of General Insurance Report 2017).
7 themes are discussed (for a better readability I separated into several pages):
- Innovation and Disruption
- A changing regulatory environment
- The future of underwriting and pricing
- Value-added services
- Touch Millenial Generation
- Insurance in the Age of Machine Intelligence
- Fraud in a connected world.
Written in partnership with the Chartered Insurance Institute , and sponsored by IBM, Sas and Smart Communications , this report is generic, but of quality. Market Force believes that insurers are poised to innovate and transform to keep pace with insurance companies, but the pace of transformation is still too slow. A tip: Act now!
Innovation and Disruption
The insurance industry is not in its first wave of transformation since its inception. The last major wave dates back to the 1990s with the massive influx of direct sales.
In recent years, and according to the polls or studies, the market oscillates between feeling of a real uberisation brutal to come, and mutation in depth and in a slower way. What is certain is that the transformation is on!
A new competition
The competition that worries the market is of two types:
- startups (insurtechs) which, with new models or greater agility, could nibble away significant market shares;
- GAFAM, or any other player external to the historical market, who are powerful enough to position themselves on the sector ( Note: If Google has backed away, we must closely follow the current movement of Amazon recruiting in the UK to offer products in Europe )
According to the report, 89% consider that there is a risk that intermediaries win the customer relationship through insurtechs . ( Note: This confirms my view that there is a decomposition of the value chain between risk bearers on one side and distributors on the other ).
The insurtech revolution
Insurtechs can have a strength being simple, smart and fair. Lemonade responds well to these criteria:
- 90sec are needed to subscribe
- Costs are fixed (20%) regardless of the premium
- Claims are settled very quickly (3 minutes on average, with peaks in 3seconds), thanks to artificial intelligence algorithms
- The remaining technical result is donated to charitable operations, which tends to limit fraud.
Innovation: It’s time to become concrete
If insurers want to keep up with the pace of innovation, it’s about moving and fast! You do not have to go very far right now, but significant steps are important to stay agile and continue the transformation.
This is the case, especially in organizations, where the” Head of Innovation” or the agreements with insurtechs are developing and the trend is set to continue.
In any case, time is running out: 42% of customers consider that their insurer can provide good service, and 37% of customers still do not trust in him … It is therefore essential to invest now in the data to reinvent the product offering.