Time to innovate, and embrace the rise of the robots

Adrienne O’Sullivan, CEO at DAS Ireland, considers insurance innovation and the insurtech movement.

4th September 2018

Change is constant and the pace is accelerating. As I see it businesses have one option; adapt now, before your competition does – and innovation must be central to that.

Innovation has become such a hot topic within insurance these days and we’ve seen the industry change from being extremely traditional to moving towards ‘insurtech’ in a really short space of time.

So what’s driving this, and where’s the new battleground?

Positive and negative influences

In our industry a number of factors have historically dictated the pace of change – or lack thereof; the constraints of legacy systems, the quality of data, a bias towards in-sourced developments and a traditional focus on underwriting.

These factors inadvertently led the insurance sector through generations of consolidation, with standardised products distributed at the cheapest prices in an escalating race to the bottom.

That status quo was ripe for disruption, and while insurance was late to the party, momentum has been building, and now seemingly irresistible forces are enabling and driving change – a combination of advances in technology, changes in customer need and expectation, a continual drive for efficiency, and the increasing threat of external disruption.

In our neighbouring market, London has developed into a leading hub of global insurtech innovation, contributing to businesses adopting a more entrepreneurial mind-set, which, for me, is one of the things which makes working in the insurance sector so exciting today.

However, innovation for the sake of innovating is no good, and businesses really need to focus on where innovation brings the most impact for the customer. I believe there are some key common areas to bear in mind:

1) Changing customer needs and expectations

Customer needs should be at the heart of your thinking, but it’s important to recognise that this is not a static position. Technology and other lifestyle factors are disrupting established models, generating new expectations from underserved sectors, and changing how customers want to engage with products and services. Products and propositions need to adapt to this.

Don’t assume that today’s successful model will continue to thrive tomorrow.

2) Changes in business model / transactional efficiency

From a fundamental re-think of strategy through to changes in transactional processes or resources, changes in your model can unlock growth, create new markets, and deliver efficiencies. Businesses should consider whether changes in how they work can deliver benefits – and don’t assume that today’s successful model will continue to thrive tomorrow.

3) Be aware of the risk of external disruption

The threat of non-traditional players entering the market is very real and our industry seems to have realised just in time that we need to take steps, but it has to be now. The legal insurance space is a great example – if there’s one market that’s more traditional than insurance, its law. The opportunity (or threat!) of disruption is massive.

4) AI and robotics

AI and robotics are fast becoming the scare stories of our times and it’s true that the possibilities of this technology are astounding. Today’s generation of AI is more accurate, efficient, and predictive than its human equivalent. It’s only 22 years since world chess champion Garry Kasparov took on AI machine ‘Deep Blue’ for a game – he never stood a chance!

Providers can improve their efficiency and capability by embracing insurtech, but ultimately it has to add value to a customer.

So give up all hope now? No, I don’t think so. AI and RPA (Robotic Process Automation) doesn’t necessarily mean fewer people – it can actually mean that significant numbers of people can be freed from manually intensive processes, allowing them to focus on areas where they can add more value, but where they do not currently have the time.

Final thoughts

At the centre of all this has to be the customer. Providers can improve their efficiency and capability by embracing insurtech, but ultimately it has to add value to a customer who will receive benefits through cost and service.

From a legal expenses perspective, as patterns of home ownership, employment and lifestyle all change, we need to ensure we can use innovation to provide a range of new insurance products that suit the way consumers choose to consume and live.

At DAS we’re working really hard on how our propositions can be redesigned to better meet customer need. And we’re certainly not afraid of those machines.

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