Ankur Vora, Emerging Risks Policy Adviser, ABIThe digital world is changing at an unprecedented pace – just look at the amount of data we generate these days. In 2012, every minute, 48 hours of video were uploaded to Youtube, Google received 2,000,000 search queries, and just under 700,000 pieces of content were shared on Facebook.
Today, just three years later, 300 hours of video are uploaded to Youtube, Google receives over 4,000,000 search queries, and Facebook users share 2,460,000 pieces of content – every single minute. Moreover, there’s still so much room to grow – the global number of internet users is just 3.17 billion, or less than half the world’s population!
Growth of this scale is a disruptive force, creating opportunities for all industries to innovate and transform, and significant challenges to adapt to and overcome. Yet the general perception is that even within the financial services sector, the insurance industry has been slow to innovate.
This is reflected in the emergence of start-up threats to the incumbent market, signalling a far more disruptive business environment in the coming years. The Netherlands’ fully digital insurer InShared, the USA’s innovative health insurer Oscar and the UK’s peer-to-peer motor insurer Guevara are three examples of new insurance providers beginning to use fundamentally different, digitally enabled, business models in mainstream markets.
Next week, at the ABI Data Conference, we'll be talking about how the industry can recognise and benefit from the growing range of opportunities presented by this digital revolution, while overcoming the main barriers to innovation. Amongst the most significant of these barriers is the reluctance to fail. Technological innovation is almost invariably built on foundations of failure - testing multiple ideas in an agile way, continually iterating and adapting in small steps rather than in radical leaps, with an eye to long term goals rather than short term gains. Too often fears about regulation and policy become roadblocks to even starting a project, rather than challenges to be overcome by presenting tested and innovative models which genuinely work to the benefit of consumers.
If insurers today are to succeed in tomorrow’s world, they need to do three things to make the most of the transformations going on around them:
1. Take risks
Insurers are used to managing risk, but senior executives need to be willing to take risks on unproven ideas and technologies. They should be willing to 'move fast and break things' as per a Facebook motto - the most innovative ideas come by taking measured risks with a relatively high rate of failure, but with an eye to long-term gains through learning and iteration.
2. Redesign organisational culture
Insurers need to leverage their expertise in pricing and analytics, and their existing customer base and claim data while simultaneously using small, agile teams who can build and test ideas quickly in ‘greenfield’ environments – i.e. projects that lack constraints imposed by previous work or legacy systems.
3. Continue to build a trusting relationship with consumers
Data has been at the heart of the digital revolution, and using data innovatively requires a strong, trusting relationship between customer and insurer. Good technology is built on the back of providing a positive user experience, seamlessly convincing the user that the service or product is working to their benefit. This is key to gaining the user’s trust, as for all the intellectual and policy-based arguments for using data safely and appropriately, it is ultimately the customer’s experience that will play the biggest part in determining their level of comfort.
At the ABI Data Conference, we will be launching a publication containing numerous hypothetical examples of how the industry might use technology to innovate in the coming years. Technology has a remarkable ability to capture the imagination of customers, exciting and engaging them. If insurers want to make the most of this ability, then they have to continue to show leadership and courage in the pursuit of innovation.
Ankur Vora is Emerging Risks Policy Adviser at the ABI