The zero tech focused paradigm shift
For some time now we have been talking about some common key drivers in insurance transformation & innovation, some of the key macro trends I've been focused on have been:
Predict more assume less
Prevent rather than payout
Real-time or forecasted over lagged and retrospective
True humanity and planet orientation
The agile insurer (with the Direct Line Group and others now seeing the org future differently)
Venturing and partnering to new value over always going it alone and sometimes struggling to succeed or scale
Until now in the insurance industry I feel we have all been largely distracted or driven by the internet build out era. More data, made available everywhere and huge increases in computing power have brought about a new potential paradigm for insurers. Whilst in previous thought leadership I and my colleagues at that time (e.g. Daren Rudd with our view at the time on the future of insurance) had more or less suggested we were at the next tipping point. This wasn’t correct, but we could be forgiven, the data points we were working from were largely based on the human insight and the tech trends, not on the business strategies and market dynamics. As these were not so aligned it appears Insurers have all collectively moved a lot slower than we hoped, and the distractions of relative cost reductions through tech and the use of digital based relationships (lower costs to serve) was a much easier to business case to write and they appeared far more predictable at the time.
Until now in the insurance industry I feel we have all been largely distracted or driven by the internet build out era.
Instead I now believe we have actually remained in the era of early experimentation in insurance. If digital maturity characteristics largely followed something like these horizons:
1. Traditional approach:
Low usage of online / ecommerce / social
Largely personal relationship based
Lack of trust in 'new' technology and approaches
Heavily intermediated
Waterfall methods are most common
2. Digitally transformed:
Rapid uptake of "digital relationship" management capability (including outside of owned assests)
Mobile and IoT tech pervassive
Move to empowered / self-service capabilities
Focused on risk management rather than payout after risk occurs
Agile methods and innovation models are being utlised
3. The word "digital" disappears:
Personalised products / service / experiences
Digital technology is embeded, wearable, ubiquitouts
Data and connected systems routinely drive product & services and the associated expereinces
The new way of working has been achieved, innovation is a working model and the business is organised to respond to insight seamlessly
And if you were to plot (as I have with clients) the competitive set of most insurance markets over something like this, I think there would be few examples beyond early stage two. So, here’s my next (possibly inaccurate prediction). Once the pioneers (such as Hélène Stanway or Ian Hood before) have finished demystifying “digital” and getting to proper innovation through relentless experimentation, the pioneers focus seems to now be lasering in on positive business cases with real scale potential. In doing this they are starting to democratise the approach insurers take to realising new value (a balance of business imperatives, human insight and tech change in a new lower risk working model). This is in turn breeding a new set of people who can drive this change forward alongside them, which in turn is leading to signs of a business or market model first shift (true transformation). We are starting to see a move to things that can unlock this potential future faster. And despite COVID-19 and the challenges that follow, with zero discretionary spend and in quarter ROI in some cases, things like the following will still stand up to these challenges well:
The AI underwriter: Give it scenarios and it will return real time risk and value profiles. Making decisions far quicker.
The automation of assessment and loss adjustment: Video assessment has immediate value potential, but there are far more ways of unlocking human capital here and making assessment more accurate and a much better customer and employee experience.
Connected everything: This has created great power in data, but also the ability to use this insight real-time to prevent things. This is most easily applied to closed environments such as buildings (factories and warehouses being environments I’ve experimented on with insurers already). However, the human is getting a lot more sensors fast (e.g. Apple Watch) and soon this will provide a huge shift in human telemetry as well. Entirely new insurance propositions are already emerging from this.
The connected vehicle: I know, I know, I just said connected everything, but this is still worth an independent mention. I say connected car because it's a bit of a catch all, and there's shifts much more near term prior to autonomous vehicles becoming an ever more a ubiquitous reality. There are many yet fully exploited uses of the data that can be extracted from vehicles that could fundamentally change the way insurers underwrite / provision insurance, handle claims and provide services generally.
Fraud and financial crime detection: Nearer term I see a huge potential for AI based systems interrogating claims data and preventing fraud has huge value potential coming from this. Detecting and preventing fraud in claims has huge value potential that can be realised fast.
Turning things into data: There's still a lot of data in different media formats and information sources that aren't easily processed, stored or dealt with in insurance. And there's huge value potential to using the machine to change this, along with also improving experiences and freeing human capital across certain functions.
This sort of value creation unlocks further potential and drives the insurers overall transformation agendas. And when you combine this with the underpinning of cloud infrastructure, IT modernisation (e.g. our team Virtual Clarity) and administration systems fit for agility, our industry is uniquely placed to help drive this forward alongside insurers. These are challenging times, and we need to help face these challenges and realise opportunities at the same time. Our relentless focus has to match theirs. I've worked the insurance sector for longer than I care to mention, I see real change coming through now, it's time to accelerate this and realise this value fast. It would be really interesting to hear from others about their focus areas in insurance. What are the key challenges you are facing or that you see coming?
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