Many see the Insurance market as slow and far behind. However, recent developments and initiatives in the industry have made it one of the most innovative within the financial services sector.
Someone very wise said to me last month that they thought the Insurance market was the least innovative market. That it reflects trends slowly rather than creates them, and possesses dubious working practices and opaque pricing. I nodded and gave a wry smile but it really got me thinking.
I spend most of my time with senior people across the UK and European Insurance sector; I tweet daily on the market, and blog regularly. In terms of market forces, it is one of the most dynamic, and is as challenging as the airline business. Warren Buffett asked people to check his mental faculty if he ever invested in planes again, but he’s been putting his billions into Insurance. He likes it.
It is easy to spend time on where the market is suffering, where it has come up short with the regulators, and where it has failed to invest. So I thought about areas where the Insurance sector is thinking a little deeper and challenging perceptions, but most of all, thinking further than the here and now.
I have come up with my top 5 insurance innovations:
I can see clearly now (the rain has gone) was a song that was sung by Reggae God Jimmy Cliff, the move by AXA recently to put your previous year’s premium on your new quote is the kind of innovation which is required. It creates a genuine open and transparent way of working with your customer but also your competition – very small, but very welcome.
Children are our future – So the song goes by George Benson, but I think the Insurance market has come alive to the fact that it is a bit male, pale and stale. It is now investing in programmes to bring a broader selection of candidates into the market.
I met with a firm recently who has started their own Graduate programme. Whilst it brought challenges and issues for their claims management team, they will be doing another one next year. The sector needs to be a destination for our best and brightest school and University leavers. I like the new initiatives launched by the CII, but it is critical that these are supported by the industry.
I am the law was a track from seminal Human League album Dare. The increased focus by regulators and other bodies is having, I believe, a positive effect on the sector. Whilst the cost of increased Compliance Monitoring, Conduct Risk and Business Reviews is far from small, it is professionalising and maturing a business that has traditionally had low barriers to entry.
I tweeted recently about the calls for a review around the VAT status of Gibraltar, and the recent communications from the FCA on Delegated Authority. I think all of this will have a positive impact in the mid to long-term and will create innovation.
Einstein-a-go-go was the song by 80s one-hit wonders Landscape. I see a huge amount of investment going into technology, this will of course enhance the consumer experience, but get this – will also enhance the employee experience.
I spoke to one firm earlier in the year who implemented Guidewire into Claims and a new CRM into Complaints, and in week 1 were seeing a 20% increase in productivity. Another firm are giving their staff a better life by not having to hop from one screen to another to get customer data; small but significant gains. I met with Roger Oldham who runs LMTE, a technology club for the London markets, these and others are a way of firms working collaboratively for the common good.
I’ve seen the future is a song by Prince and also by Leonard Cohen, I suspect not the same song. I see lots of evidence where insurers are creating specific packages for customers and putting them front and centre in making decisions, from quote to claim. Whether it’s black boxes in cars for learner and new drivers, or challenging the Aggregator sites.
The talk of Amazon or Google moving into the market will have a positive impact on the current firms that are willing to innovate. In the same way as the pay-day lenders are changing their models or getting out of the market, the same is happening with Insurance. Whether it was Direct Line 20 odd years ago or Insure the Box more recently, innovation has happened and continues to happen, it is just the pace that it is occurring now.