Creative Disruption: Technology and The Future of Insurance

On 15th of March Celent held our creative disruption event at the Tower of London – no small irony to be discussing the future of insurance surrounded by such rich history. Celent’s Catherine Stagg-Macey opened proceedings with a discussion about how quickly technology is moving and by providing a concrete example of that in the form of 3D printed objects handed out to each of the guests. As she discussed time taken to source the items Catherine observed that agreeing what to print took perhaps longer than getting the items delivered. We moved swiftly to the wake up call session presented by myself, Craig Beattie. This opened with a few provocative thoughts around what might be possible within the next ten years and moved on to how technology is redefining what our customers and staff in the insurance industry perceive as convenient – redefining what just in time means, just enough and how much effort things take. I went on to look at how digital and being connected to computing resources has redefined insurance distribution and observed two key things about digital: First adoption is now measured in months and not years and; Secondly, that digital seems to redefine itself regularly and a redefinition due imminently. We explored how social is changing buying behaviour and generating ever more data, data that is proving to be useful in all manner of models from predicting the stock market to predicting illnesses in large populations. Before long I yielded the floor to the our three insurer case studies. First up was Sebastian Herfurth, CEO and Founder of Friendsurance in Germany. Sebastian took us back to our social roots in insurance in discussing the micromutual operation. As he explained how Friendsurance worked it became clear that classic insurance products enable the operation and that the true innovation was in the area of small claims, where friends covered the losses of those in their group. On innovation, Sebastian advised that the customer guides Friendsurance and they constantly review their customer experience – “we build paths where people choose to walk”. Next to present was Matthew Gledhill, Managing Director of Beagle Street in the UK. Matthew first reflect on some of the most difficult things he had done in his life and noted that none of these were nearly as painful as trying to purchase life insurance. Matthew spoke about how they had reviewed the full value chain and looked at the needs of the customer to deliver a customer experience that made sense. Next steps included looking at new types of customer, a great observation that not all customers are the same. Our final case study presenter was Tsukasa Makino, CIO of Tokio Marine in Japan rounded out our case studies with an amusing and insightful look at their innovative products. Makino-san discussed the cultural changes in Japan and the issues this presented for them as an insurer. He introduced the audience to the term Moteru meaning “to be attractive or popular”. Young people are now much less likely to own a car, this being seen as less attractive, but they still have occasional use for a car and therefore, occasional use for car insurance. Tokio Marine’s one day insurance offering sold via mobile, internet and agents provides just such a product. David Smith, CEO of Global Futures and Foresight followed our break and took us on a whirlwind tour of the future and the major trends affecting the world now. He noted that all enterprises innovated when they started, but arguably have forgotten how to do this as they grow in size. There was so much content here it’s hard to summarise but I’ll leave with a few provocative thoughts from David:

1. World GDP is set to triple in four decades, how much of this are you targeting?
2. The disparity in health and aging globally will be a significant and growing issue, what will it mean for the insurance industry?
3. If you automate all the mundane and routine jobs, how does anyone become an expert?

Jamie Macgregor, Senior Analyst with Celent followed David discussing Celent’s approach to deliberate innovation management, an approach intended to draw out the missed opportunities for innovation and shine a light on what an insurers change portfolio will achieve. Jamie shared some anecdotes from session already executed with insurers globally and discussed the benefit of considering innovation and disruption as facets of your portfolio. The key question or challenge from Jamie, “are you managing out innovation?” The day ended with a panel session with a mix of audience polls as well. Nicolas Michellod led the session, with our case study presenters on the panel. There were some discrepancies in view between the audience and the panel as we discussed how the panellists innovated. We had already heard that the customer had to be at the centre of what you do. Matthew offered the advice that a villain can help with innovation, focussing effort on removing the influence of the villain in the story. When asked if it was important to think outside the box Sebastian noted that he was already outside the box, coming from a very different background into the insurance industry. Further, freedom and reward were also highlighted by the panel as contributors to an innovation culture – along with a performance driven culture. Another area of difference was in drivers and inhibitors of innovation, with the audience voting for skills as a major influence but the panellists highlighting clear responsibility and reward, courage and above all – speed. The event offered me so many points of insight I found it hard to summarise. To that end, I choose to use someone else’s words from a tweet during the conference, “Insurance is changing fast…” For those on Twitter who want to review comments during the day you can find those here and that content we are permitted to share will be available to clients in our library shortly.