Jump onboard the insurance disruption train or get left behind

Insurance-Industry-Disruption

"The winds of change are blowing wild and free"

Bob Dylan (To make you feel my love)

Endless amounts of noise and copy have been devoted to the subject of ‘disruption’ and it’s been something of a buzz-word in the insurance industry for a while now. Disruption is really nothing new, however, and certainly nothing to be frightened of. 

Disruption has been happening since the dawn of time... 

The only difference with the current rate of change going on now when compared to past change is the rate and velocity at which it is happening.

I daresay that the inventors of the oil lamp put the noses of candle makers out of joint and that they in turn experienced their own collective nadirs when gas lighting and the electric light bulb came along. 

What is making the subject of disruption now so buzzy is the unprecedented rate of change that is taking place as part of the phenomenon that is very grandly being labelled the 4th Industrial Revolution (we’re in the midst of it - it’s happening now).  The use of the noun ‘revolution’ in this case is completely justified. 

The rate of technological change in the areas of automation, blockchain, AI, 3D printing, robotics, analytics and sensors is quite frankly astonishing. The main barriers to change seem to be the limits of the human imagination. 

I suppose it was destined to shock business, retail and industrial sectors that for years have cranked the handle in the optimistic hope that customers will continue to show up in the same way they always have.

‘The winds of change are blowing wild and free,’ indeed.

I fully expect that if we could time travel 10 years into the future we would all, to a lesser or greater extent, end up by quoting Dorothy’s line out of the Wizard of Oz “This doesn’t look like Kansas”.  

So, I work in insurance, what has this got to do with me?

More enlightened insurance companies have ‘read the runes’ and are with differing degrees of zeal are starting to challenge the status quo, explore new business models, routes to market and technologies.

Start-ups like Lemonade offer a vision of a new insurance business model. The traditional insurers have noticed and indeed Allianz has taken a ‘strategic’ stake in Lemonade while it was announced only last month that Aviva has backed FinTech start Neos and will acquire a new one soon.

If you work in insurance and/or own a business and want to enjoy a long and prosperous future, I really don’t think it will be enough to just ‘keep on ‘turning up’ and doing a great job in the vain hope that you will be immune from the change that is going on around you.

The plain fact is that technological advances fuelled by myriad business drivers are causing disruption to the insurance sector, which in turn will lead to incredible opportunity and/or job losses. It’s also very likely that we will see people doing new or different jobs that don’t currently exist. We can’t even begin to imagine what those new jobs will look like now.

What to do next

The great news is there is an ever-growing community of insurance folk recognising that business transformation is in the air. On the basis that forewarned is forearmed, NOW is the time to do something about it.  Here are some thoughts:

1. Disruption/Innovation committees – To stave off the threat posed by the ever-growing number of new InsurTech entrants, which are seeking to eat the insurance industry’s lunch it would be wise for companies to consider setting up working groups dedicated to reviewing threats and opportunities. At the recent Insurance Insider InsiderTech London event, Aquiline chairman and CEO Jeff Greenberg shared this sentiment.  A good old-fashioned SWOT analysis would be a good place to start.  It could be a great way of future proofing a business.

3. Build an Innovation Lab and recruit digital scientists to help steer the business forward while encouraging employees to share their technology experience.  You might be surprised what you learn from existing employees whose enthusiasms range from being an expert on FIFA Football Manager to using apps that connect their smart home. What can you learn from their technology down time experience?

4. If you work for an insurance organisation, now is the time to make yourself absolutely mission critical to revenue and become a lynchpin in the customer value chain.  My thoughts here come almost straight from a broker I know that firmly believes that its employees/management should always be hard wired front and centre to its customers.  My hunch is that it will be a while before people responsible for delivering tangible customer revenue/value will be replaced.

5. Become technologically savvy – The fast-moving digital world is not going to crawl back into the head of a Silicon Valley dressed down boffin anytime soon. We live in a technology driven world.  There are countless courses and companies out there trying to help people improve their digital literacy.  Take a look at the great things that Barclays is doing with it Digital Eagles programme.

6. Get qualified – Up until now becoming qualified in insurance has been seen as something of a ‘nice to have’ but it is now essential. The CII provide a huge range of valuable courses covering not just insurance specific courses but also highly sophisticated marketing, finance, and economics modules, which all have the benefit of being focused on insurance and risk management. 

7. Think digital, act digital, learn new skills and get on the technology train to transformation City-central.  Amazon boss Jeff Bezos reportedly tell his employees to adopt a mind-set that the business only has 12 months to survive so he says either innovate and pioneer in that timeframe or die.  Amazon could be the first trillion-dollar business.

So my message is that whether you are young or old it is never too late to adopt a new mind-set. Remember, you have 12 months to save your business, let the countdown begin. 

Founder and Managing Director of www.youTalk-insurance.com the completely FREE and independent insurance news, video and thought leadership multimedia website for insurance and risk professionals. Contact Paul: paul@youtalk-insurance.com
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Comments

Great article Paul, absolutely spot on. The digital age is now (it has been for sometime) and the winds of change are certainly blowing quite hard. Insurance is one of the last great bastions of industry to go through disruption and it will happen, faster than we think. The only other certainty is that just like all the other industries (banking, music, telecoms etc), the disruption won't come from an incumbent / insurer but from outside our industry and that means the onus is with us to keep relevant and up to date on modern, customer first product design and distribution as well as communication methods. After all email is 50 years old this year and we still think its going to continue being the main form of business communication. We all have a responsibility to embrace the now so that our industry is in the best position to be relevant in the future. Our knowledge and expertise will be even more important if the companies that start this disruption are not native to the market we operate in. Here's to the future.
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