Today I was speaking to a research journalist, she asked about the challenges facing the insurance industry right now. If you Google this, you get the normal things:
Consolidation; Aging workforce; Slowing growth; Disruptive tech; Prospects from over-regulation, Speed of technological change, Changing customer behaviour; Competition from new market entrants. The list can go on and on.
Initially I was stumped, thinking where to start, on the fly to pick just 3 key points. If you look at that list above its EVERYTHING - the whole landscape is changing and needs to change. This is the challenge - everything!
Whilst on the phone I came up with the following 3 core foundational issues, this is also what lays behind what we are doing at STP and MicroInsurance and why.
- Integration - one of the big challenges is that the insurance industry is spread across many different companies Brokers, Agents, Aggregators, MGA's, Insurance Companies, Reinsurance, Third Party Admins (TPA), Specialist Law Firms, Tech companies and the list goes on, all these companies with their own systems and entering and re-entering data. When a customer talks to a fresh new start-up web site or bot they are still presneted with the same old policy written by quill pen from the underlying insurance company and, when a claim comes along, forget it, the TPA manages that. We need more streight through processing, more integration, front to back, an omnichannel approach. More API's!
- Investment - where does all the money go and where does any investment come from? With all the parties wanting their % of fee what is left or tech investment? What is the % of revenues that brokers and agents put into R&D or new tech? 0%? Do they just spend to keep the lights for tech? Maybe they have a few $000 to spend? What ever the % today, this is not enough. Tech budget should be 10%+ of revenues and 25% of this should targetted at new tech investment if they are to be part of the future. In terms of tech investment the industry is not standing still - its going backwards. Tech is moving at such a pace today, to keep up more spending is required.
- People - the people in the industry are an asset and a problem. There are too many people in all processes. The pace of change is dead slow. It is about a pulse - other industries the heart beat is fast - marketing, custmer experience, sales, new product launch, innovation, social, video, voice-first - all these things move at a fast pace. The pulse of insurance is near dead compared to say Apple or Amazon. Incumbent people are the cause of this. The people in insurance need to know what insurance is for and energise it to make it relevant for today and 2020 onwards. Insurance is amazing; it enables growth and sustains people at a time of need. It is for people to live and grow. Without insurance not much would happen in the world. Think about it; Would you go via Uber if it was not insured? Would you trust Amazon with your service if they were not insured? Would you buy a house if it was uninsurable? Would you work for an uninsured company? Maybe you would….but think about it, why isn’t insurance more relevant to people?
These are my top three issues from the huge list of challenges facing the industry. What are your three issues?
I don’t think competition is an issue because most of the worlds assets and events are not insured – there is masses of opportunity.
I don’t think consolidation is an issue – this is an opportunity and happens in every industry. Its required.
I don’t think slowing growth is an issue because there is so many new opportunities and ways of integrating insurance with business and life, the challenge should be opposite, too fast growth.
Changing customer behaviour is not an issue, that is just lack of empathy and care on the part of the industry. Customer expectations always change, every day people learn new things andbang! their expectation goes up. Thank goodness for this!
Over regulation, this can be an issue. The industry needs to be more transparent and easier to deal with. If insurance did what it said, then there would be no reason to fear any regulation. It would better to have standards than regulation.
Do you agree? What are you doing about it?
Microinsurance is insurance with an API. We are in the forefront of change; developing policies by the season, job, by the hour, by the day and by the Km, thus fitting our model to that of the sharing economy platforms and the way small and micro businesses see risk. We are unbundling policies so that the cover offered fits with peoples needs or the actual job or process being undertaken.
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