About Jamie Macgregor

Lost in Innovation?

Lost in Innovation?

So, how do you avoid getting lost in innovation? The simple (and maybe glib) answer might be to buy a map, a compass and start to plan your route. However, what do you do when there is no map, no obvious path to take and no-one to follow?

The last 24 months have seen an incredible amount of activity across the sector in experimenting with novel proposition concepts fuelled by emerging technologies in the internet of things, distributed ledgers and bot-driven artificial intelligence. Although each new concept shows promise, we are yet to experience a clear and obvious pattern for winning new clients or delivering a superior shareholder return using them. Many of the most exciting novel ideas (and many are genuinely exciting) are yet to see any real business volume behind them (see my earlier blog for additional context of what insurtech has to offer in defining the ‘dominant design’ for new tech-enabled propositions).

So, as an insurer faced with having to balance how much it should invest in these new concepts versus furthering the existing business in what is probably a highly successful and scalable model, two of the big questions we often hear from clients are: “Which of these nascent concepts are most likely to deliver real business value the fastest?” and “How much effort should I be devoting to exploring them today?” These are the questions that we looked to address at our latest event in London that we called ‘Lost in Innovation’, attended by just over 70 inquiring insurance decision makers.

Faced with uncertainty, we followed an agenda that focused on the things that an insurer can control, such as the innovation-led partnerships they enter, the skills they develop internally, the criteria used for measuring value, and the potential challenges ahead that they need to plan for.

Celent analyst Craig Beattie presenting on emerged software development approaches

Alongside presenting some of our latest research on the topic, we were joined on-stage by:

  • Matt Poll from NEOS (the UK’s first connected home proposition in partnership with Hiscox) shared his experience on the criteria for a successful partnership.
     
  • Jennyfer Yeung-Williams from Munich Re and Polly James from Berwin, Leighton, Paisner Law shared their experience and views on some of the challenges in the way of further adoption, including the attitude of the regulator and potential legal challenges presented by using personal data in propositions.
     
  • Dan Feihn, Group CTO from Markerstudy, presented his view of the future and how they are creating just enough space internally to experiment with some radical concepts – demonstrating that you don’t always need big budget project to try out some novel applications of new technologies.

So, what was the conclusion from the day? How do you avoid getting lost in innovation? Simply speaking, when concepts are so new that the direction of travel is unclear, a more explorative approach is required – testing each new path, collecting data and then regrouping to create the tools needed to unveil new paths further ahead until the goal is reached. Scaling concepts too early in their development (and before they are ready) may be akin to buying a 4×4 to plough through the scrub ‘on a hunch’ only to find quicksand on the other side.

Some tips shared to help feel out the way:

  • Partnerships will remain a strong feature of most insurer’s innovation activity over the next 12-24 months. Most struggle to create the space to try out new concepts. Also, realistically, many neither have the skills or the time to experiment (given that their existing capabilities are optimised for the existing business). Consequently, partnerships create a way to experiment without “upsetting the applecart”.
     
  • Hiring staff from outside of the industry can be a great way to change the culture internally and bring-in fresh new ideas…however, unless there is an environment in place to keep them enthused, there remains a risk of them turning ‘blue’ and adopting the existing culture instead of helping to change it.
     
  • There are several ways to measure value created by an initiative. The traditional approach is a classic ‘Return on Investment’ (RoI). However, RoI can be hard to calculate when uncertainty is high. To encourage experimentation, other approaches may be better suited, such as rapid low-cost releases to test concepts and gather data to feel the way. Framing these in terms of an ‘affordable loss’ may be another way to approach it – i.e. “What’s the maximum amount that I’m willing to spend to test this out?” – accepting that there may not be an RoI for the initial step. Although no responsible insurer should be ‘betting the house’ on wacky new concepts, reframing the question and containing exposure can sometimes be all that’s required to create the licence to explore.
     
  • There’s still an imbalance between the promise of technology and the reality of just how far end-customers and insurers are willing to go in pursuit of value. The geeks (or ‘path finders’) have rushed in first – but will the majority follows? Regardless, to avoid getting lost in the ‘shiny new stuff’, a focus on customer value, fairness and transparency around how data is being used need to be at the heart of each proposition – plus, recognising that the regulator will not be far behind.
     

In summary, the journey ahead needs to be less about the ‘what’ (with all of its bells, whistles and shiny parts) and more about the ‘how’ (deep in the culture of the firm and its willingness to experiment – even in small ways) – at least while the map to future value is being still being drawn.

Celent continues to research all of these topics, including assessing the different technologies and techniques that insurers can use. Feel free to get in touch to discuss how Celent could assist your organisation further.

Celent clients will be able to access the presentations from the event via their Celent Account Manager.

In search of a new ‘dominant design’ for the industry. What does insurtech have to offer?

In search of a new ‘dominant design’ for the industry. What does insurtech have to offer?

There is little in the world of insurtech happening today that insurers couldn’t arguably choose to do for themselves if they were motivated to do it. They have the capital to invest. They have resources and could hire to fill gaps in any new capabilities required. They importantly understand the market and know how to move with the trends. And yet, despite having all of these things, they readily engage with the start-up community to do the things that arguably they could do for themselves.  So, why is that?   

In Making the Most of the Innovation Ecosystem, Mike Fitzgerald’s observes the main cultural differences between insurers and the start-ups they court. These cultural differences give us a strong clue as to why insurers engage with start-ups, even though on paper they do not and should not need them.

Alongside these deep cultural differences, I believe that there is another angle worth exploring to help answer the question, and that’s the market’s maturity stage and, with it, the strategies required to succeed.

One model that helps explain this relates to the work of Abernathy and Utterback on dynamic innovation and the concept of the ‘dominant design’. To be relevant to this discussion, you first need to believe that we’re on the cusp of a shift from an old world view of the industry based upon a well-understood and stable design towards one where substantial parts of the insurance proposition and value network are up for grabs. You also need to believe that, for a period at least, these two (or more) worlds will co-exist.

So, here’s a quick overview of the model (in case you’re not familiar with it)…

Settling on a “Dominant Design”

First introduced way back in the mid-1970s and based upon empirical research (famously using conformance towards the QWERTY keyboard as an example), Abernathy and Utterback observed that when a market (or specifically a technology within a market) is new, there first exists a period of fluidity where creativity and product innovation flourishes. During this period, huge variation in approaches and product designs can co-exist as different players in the market experiment with what works and what does not.

In this early fluid stage, a market is typically small, and dominated by enthusiasts and early adopters. Over time, a dominant design begins to emerge as concepts become better understood and demand for a certain style of product proves to be more successful than others. Here, within an insurance context, you'd expect to see high levels of change and a preference for self-build IT systems in order to control and lower the cost of experimentation.

Once the dominant design has been established, competition increases and market activity switches from product innovation to process innovation – as each firm scrambles to find higher quality and more efficient ways to scale in order to capture a greater market share. This is the transitionary stage. 

Finally, at the specific stage, competitive rivalry intensifies spurred on by new entrants emulating the dominant design, incremental innovation takes hold and a successful growth (or survival) strategy switches to one that either follows a niche or low-cost commodity path. Within an insurance context, outsourcing and standardisation on enterprise systems are likely to dominate discussions.

Applying the ‘dominant design’ concept to the world of insurance and insurtech

Building upon the co-existence assumption made earlier, within the world of insurtech today, there are broadly (and crudely) two types of firm: (1) those focused on a complete proposition rethink (such as Trov, Slice and Lemonade); and (2) those focused on B2B enablement (such as Everledger, Quantemplate and RightIndem). The former reside in ‘Fluid’ stage (where the new ‘dominant design’ for the industry has not yet been set and still may fail) and the latter in the ‘Transitionary’ stage (where the dominant design is known, but there are just better ways to do it).

Figure: Innovation, Insurance and the 'Dominant Design'

picture4

(Source: Celent – Adapted from Abernathy and Utterback (1975)

Outside of insurtech, within the 'Specific' stage, there is the traditional world of insurance (where nearly all of the world’s insurance premiums still sit by the way) that is dominated by incumbent insurers, incumbent distribution firms, incumbent technology vendors, and incumbent service providers.

So what? 

What I like about this model is that it starts to make better sense of what I believe we’re seeing in the world around us. It also helps us to better classify different initiatives and partnership opportunities, and encourages us to identify specific tactics for each stage – the key lesson being "not to apply a ‘one-size fits’ all strategy to the firm".

Finally, and more importantly, it moves the debate on from being one about engaging insurtech start-ups purely to catalyze cultural change (i.e. to effect the things that the incumbent firms cannot easily do for themselves) towards one begging more strategic and structural questions to be asked, such as will a new ‘dominant design’ for the industry really emerge?, what will be its time-frame to scale?, and what specific actions are required to respond (i.e. to lead or to observe and then fast-follow).

Going back to my original question “What does insurtech have to offer?”. Insurers can do nearly all of what is taking place within insurtech as it exists today by themselves…but, as stated at the start of this blog, if, and only if, they are motivated to do so.

And there’s the rub. Many incumbents have been operating very successfully for so long in the ‘specific’ stage optimizing their solutions that making the shift required to emulate a ‘fluid’ stage is a major undertaking – why take the risk?. However, this is not the only issue that is holding them back. For me, the bigger question remains one of whether there is enough evidence to show the existence of an emerging new ‘dominant design’ for the industry in the ‘fluid’ stage that will scale to a size that threatens the status quo. Consequently, in the meantime, partnering and placing strategic investments with insurtech firms capable of working in a more ‘fluid’ way may offer a smarter more efficient bet in the meantime.

In a way, what we’re seeing today happening between insurers and insurtech firms  is the equivalent of checking out the race horses in the paddock prior to a race.  Let the race begin!

 

 

 

 

 

 

“All that glitters is not gold”: Four concepts, four potential insurtech responses

“All that glitters is not gold”:  Four concepts, four potential insurtech responses

As a few of us head to InsureTech Connect in Vegas this week to explore what the world has to offer in insurtech, I feel the need to keep my feet firmly on the ground and not to get too caught up in all of the glitz and glamour of both the location and the trendy start-up scene with its sea of beards.

“Bah, humbug!”, I hear you taunt in response.

Although I love the insurtech scene and welcome the fresh ideas, enthusiasm and willingness to be bold it brings (….and it’s way overdue and our industry needs a really good shake-up), I am mindful that history warns us that we should maintain an air of caution at this stage in any tech market’s development.  As the saying goes, “all that glitters is not gold” and there will undoubtedly be winners and losers (perhaps making Vegas all the more appropriate for the location).

Also, until wider market commentary around insurtech switches from the investment going in towards the value coming out of the start-ups (with real numbers on stealing market share, run-away customer demand, and incredible returns), we simply won’t know which way the market will move…if at all.

So, where will I be looking for the signs of a fresh gold seam and what might be an appropriate response for an insurer’s ‘insurtech strategy’?  From my perspective, there are four areas to focus upon:

  • Distribution. Undoubtedly, this is the area under the greatest threat of change through mobile, embedded micro-transactions and a change in demographics.  If you’re a traditional agent or direct writer, watch-out. If you’re an insurer on the other hand, your biggest challenge is likely to be the “speed of pivot” between current traditional and new channels that emerge. As a primary insurer, market scanning, operational agility and partnerships are likely to be critical elements of your insurtech strategy.
     
  • Automation, Analytics and AI. For decades, the industry has been running on robust (at least ‘robust’ for some of the time) transactional systems. For the bold, we’re now at a point where a substantial chunk of the operating model could arguably be replaced by not much more than an algorithm surrounded by a much smaller team of people to handle the customer touch-points. “Cloud native”, analytically driven micro-service architectures are the direction of travel. In markets exposed to aggregators, we have already seen some evidence of these characteristics being adopted by new entrants to the market.  As an incumbent, the challenge remains an age-old one of internal operational transformation and overcoming cultural inertia. Here, an insurtech strategy may be one of partnership in order to catalyse a change.
     
  • New propositions.  New risks, new data sources and, with them, new services.  Whether cyber-risk, the sharing economy or IoT enabled services, there is a lot of ground to cover here.  Out of these, new risks and use of new data sources appear to show the greatest promise in the near-term, and within the normal remit of an everyday insurer’s strategy. The IoT requires a different response. Although very very hot, it is a slower burn than other proposition related areas, primarily due to differing rates of sensor adoption, sensor installation economics, the absence of standards, the “what’s in it for me?” end-user proposition and the number of parties to engage, each with different agenda and requiring co-ordination. That said, it’s inevitable that it will become ever more pervasive across the industry. The bigger question, however, is what will the insurance industry’s role be in shaping it? Any insurer interested in the IoT needs to have effective partnership strategy with adjacent industries at its core.
     
  • New risk-bearing models. The word ‘disruption’ is overused in our industry, often without a solid understanding of what it truly means (for example, I’ve lost count of the number of times I’ve seen it used to describe a neat technology ‘widget’ that performs just one step in an end-to-end process).


Simply speaking, in order for an industry to be disrupted, one of two things needs to happen. Either new technology needs to open-up a significant jump in productivity (rendering the old ways of doing things as obsolete) or there emerges an effective substitution for the need being satisfied (with the consumer switching as a consequence).  Anything else could be argued as just normal competition and shpuld be expected.

As highlighted in my first point above, it’s evident that distribution is facing an increasingly turbulent time.  It is also clear that some technologies may enable a leap in productivity once implemented in the extreme (and not just for a single process step). However, for me, the court is still out for the substitution of the main risk-carrying entity itself.

However, one area that threatens this position is P2P (both at the front-end with insureds and the back-end with methods of alternative risk transfer). Even though it appeals to the more geeky and technical side of me, the barriers to adoption at scale just feel a little too high currently – whether market education related or regulatory (as, if executed poorly, a misselling scandal may result).

Furthermore, market efficiency is probably still better served through the current market structure than P2P owing to the ‘law of large numbers’, albeit implemented on better technology and with greater transparency. After all, there is a reason why mutual insurers have been merging or converting to public companies around the world.

That said, I’m willing to be proven wrong and will be looking eagerly for firms / evidence to demonstrate otherwise. In this area, although the brave will venture out regardless, an appropriate insurtech strategy for the more cautious feels like a classic ‘watch, learn, and be ready to pounce’ with a ‘Fast Second’ strategy.

For insurers reflecting on their engagement strategy for insurtech, the common thread across all but one of the areas above is the need for effective partnerships between insurers and start-ups. As Mike Fitzgerald observes in Insurer Start-up Partnerships: How Maximize the Value of Insurtech Investments:

“Both sides face challenges. Industry incumbents face the burden of their legacy systems, their aversion to failure, and a habit of extended decision cycles. Newcomers lack the capital to underwrite risk, do not understand the regulatory environment, and cannot scale easily." 

There is value (and hopefully gold) to be gained from both sides in engagement.

Finally, while interest in insurtech is high, any insurer ought to be maintaining a watch on activity, providing that a strong bias towards value being delivered is taken (as opposed to money going in).

So, in summary, that’s what I’ll be focused on over the next few days – the hunt for value around these four themes.

The UK’s First Personal Insurance Policy for ‘driverless cars’: Too early or just in time?

The UK’s First Personal Insurance Policy for ‘driverless cars’:  Too early or just in time?

Yesterday, we received a press release announcing the launch of a new insurance proposition targeted at personal use for ‘driverless cars’ from Adrian Flux in the UK. This news arrives hot-on-the-heels of the Queen’s Speech last month that announced the UK Government’s intention to go beyond its current ‘driverless’ trials in selected cities and legislate for compulsory inclusion of liability coverage for cars operating in either fully or semi-autonomous mode.

As the press release suggests, this may be the world’s first policy making personal use of driverless cars explicit in its coverage (we haven’t been able to validate this yet). Certainly, up until now, I suspect that most trials have been insured either as part of a commercial scheme or, as Volvo indicated last year, by the auto manufacturer itself or trial owner. 

What I find particularly interesting about this announcement is that they have laid the foundation for coverage in their policy wording and, in doing so, been the first to set expectations paving the way for competition.

Key aspects of the coverage (straight from their site) include:

  • Loss or damage to your car caused by hacking or attempted hacking of its operating system or other software
  • Updates and patches to your car’s operating system, firewall, and mapping and navigation systems that have not been successfully installed within 24 hours of you being notified by the manufacturer
  • Satellite failure or outages that affect your car’s navigation systems
  • Failure of the manufacturer’s software or failure of any other authorised in-car software
  • Loss or damage caused by failing when able to use manual override to avoid an accident in the event of a software or mechanical failure

Reflecting on this list, it would appear that coverage is geared more towards the coming of the connected car rather than purely being a product for autonomous driving. Given recent breaches in security of connected car features (the most recent being the Mitsubishi Outlander where the vehicle alarm could be turned off remotely), loss or damage resulting from cyber-crime is increasingly of concern to the public and the industry at large – clearly an important area of coverage.

Given the time taken to legislate, uncertainty over exactly what the new legislation will demand, and then for the general public to become comfortable with autonomous vehicles, I suspect that it may be quite a few years before a sizeable book of business grows.  Often, the insurance product innovation is the easy part – driving adoption up to a position where it becomes interesting and the economics work is much harder.

Maybe this launch is a little too early?  Or maybe it's just-in-time?  Regardless of which one it is, in my opinion, this is still a  significant step forward towards acceptance. I also suspect that some of these features will start to creep their way into our regular personal auto policies in the very near future. I wonder who will be next to move?

If you’re interested in learning more about the potential impact of autonomous vehicles on the insurance industry, why not register here for Donald Light’s webinar on the topic tomorrow.

 

Personal musings from one of the world’s first InsurTech incubators

Personal musings from one of the world’s first InsurTech incubators
Last Friday (and flowing into the weekend), I was privileged to take part as a mentor in the final selection process for the first “InsurTech” cohort of the StartupBootcamp’s accelerator programme targeted at the insurance industry. This programme claims to be one of the first specialist “InsurTech” accelerators to be run globally by an independent firm. The programme has attracted pretty impressive backing from the industry with firms like Admiral, Allianz, Ergo, Intesa SanPaulo, LV=, Momentum, LBG/Scottish Widows, Tryg and UnipolSai taking partnership roles. To give you an idea around the scale of achievement of those who got through, the process started with circa 1.3k interviews, 250+ applications, 42 short-listed ideas and then whittled down to just 18 finalists…from which just 10 could be accepted onto the program. These ten firms will now go on to be mentored during their start-up phase, have their ideas challenged and further developed from people within the industry and independent entrepreneurs and, in doing so, build the network they will need to both attract funding and find new clients. Over the two days that I spent with the finalists, there were a number of themes that came through the submissions. Here are my personal musings: Data featured strongly across nearly all of the initiatives. Having access to either unique sources of data (whether from a home move, from a travel plan or from connected world) and a model for assessing underwriting risk appeared to be a winning combination. Digital engagement, aggregation and ‘robo-advice’ are hot topics. What I found most interesting was the focus on underserved markets, whether targeting prospects with poor health records, in difficult to reach populations around the world, or educating Gen-Y/Z of the value of insurance. Addressing underserved markets profitably is a big issue that the industry often struggles with. A fertile area if tackled well. What impressed me the most, however, was the passion and sense of purpose displayed by the teams in fixing something that just feels ‘plain wrong’ to them. The Internet of Things (IoT) is going to change the industry’s client engagement experience and liability profile. Five initiatives related to the IoT were submitted. Three were focused on wellbeing, one on the connected home and one on drones. Although it didn’t quite make it into the final ten, I found the drone initiative fascinating. With Amazon and others itching to launch commercial drone services at scale, this is a market that is set to grow. Drone insurance could be the next ‘fleet’ or ‘auto insurance’ (as was pointed out by my fellow mentor Charles Radclyffe). Certainly, the current risk models in use today are immature and unlikely to be adequate for a world where autonomous vehicles are delivering packages across our heads 24×7 (assuming the regulator allows it). Sadly, the drone initiative didn’t quite make it into the final ten. Personally, I wonder if it’s just maybe a little too early, but perhaps still one to watch for the future? As with anything IoT related in insurance currently, each initiative will face a shared challenge. Although the proposition concepts may be compelling, the instrumentation rate of adoption will ultimately set the pace for growth. The IoT is still in its infancy across the industry and convincing prospective clients to share their instrumented personal data is no small undertaking. Data permissions are a growing concern for both individuals and regulators. It was refreshing to see some of the propositions pitch personal digital vaults as part of their propositions, whether for managing data from connected devices, personal wellbeing or personal belongings. Although it’s not yet clear how the market will develop for these services or how they will be monetised beyond a simple subscription model, services like these may suddenly find themselves in the limelight once regulators step in to protect personal privacy. Regulatory compliance. It wouldn’t be the insurance industry unless there was at least one idea focused on regulatory compliance. What if you took all of your regulatory compliance reports produced, aggregated them, and then analysed them? A really simple idea without a huge amount of cost involved. It was a refreshing couple of days. I look forward to seeing how their ideas and propositions develop over the next year. If you’d like to know more about each of the final ten, details can be found here.

UBI, personal data and the global implications of the European Union data directive

UBI, personal data and the global implications of the European Union data directive
On Monday, I was asked to present at a UBS conference for investors on technology disruption facing the industry. It was far from Celent’s usual audience of business leaders and technologists, and as a result the questions being asked were quite different, sometimes challenging, however refreshing at the same time. One of the most interesting sections of the day for me was looking at the adoption of usage based insurance (UBI) across the industry and the implications for data protection. Ever since personal data was first discussed as having the potential for emerging as a new asset class at the World Economic Forum in 2011, capturing and incorporating personal data into the proposition design has been seen as a potential gold mine, fueling the creation of many start-ups and, in our industry, propositions based upon understanding individual risk and investment behaviors. It’s hard to think of any digital proposition today that doesn’t require you to first mark a check-box to say that you’re willing to give up the rights to some of your personal data as part of standard terms and conditions. When used well, it can enhance the experience enormously. As an avid Netflix ‘box-set’ watcher, I’m sure that I’d quickly get lost (or bored) without it for example. However, I’ve also learnt to be increasingly picky about who I let have access to my data and what links I click. I’m often amazed by how many apps want access to my location without seemingly having a purpose for it. What’s harder for me to know, however, is what happens to my data once I’ve given permission for where I can see it benefits me to do so. At Celent, we’ve talked for quite a while about how personal data willingly shared could be a major asset in fuelling new proposition design and aiding risk avoidance. It’s not just UBI propositions that can benefit. The potential applies to all nearly all propositions – including commercial and specialty. Data sources such as LinkedIn, Twitter feeds, Glassdoor, and potentially even driving patterns could prove to be an interesting indicator of the quality and morale character of senior management teams for example. However, at the heart of these propositions or services needs to be an acute understanding of the legal implications and ethics around personal data use. One related piece of upcoming legislation discussed that every insurer with operations in Europe needs to be aware of is the new European Union Data Protection Directive. This directive seeks to unify data protection laws across Europe and is due to be finalized later this year, with a likely implementation date set in 2016. One of its aims is to protect the consumer and, in doing so, strengthen the laws on security, privacy, residency, permitted use and portability. The maximum fine for a firm getting it wrong could be as large as 5% of global turnover. So, for example, if you’re a US or Chinese insurer with operations in an EU country that suffers from a data breach or allows sensitive personal data to leave permitted EU jurisdiction, then your global profits could take a nasty hit. So, how does this relate to UBI and the use of personal data within the design of propositions and servicing? Well, apart from the obvious security, anonymity and archival implications, insurers will need to watch carefully what data they use and the permissions consumers have signed up for around its use, probably placing them squarely in control of it. These changes will inevitably tip the balance more firmly in favor of the individual. Open, transparent, incentivized and positive engagement around the use of personal data will need to become the norm. The days of fortuitous use or situations where policyholders are unaware of how much of their data is being used to underwrite risk may be numbered.

Could this be the kick the industry needs to take mobile seriously?

Could this be the kick the industry needs to take mobile seriously?
Today marks one of the most significant changes to Google’s algorithms seen in recent years. As of this morning, Google’s search engine will favour mobile friendly content over traditional website content. Many firms who have not invested in mobile will get caught out as they start to slide down the search result list when viewed from a mobile, possibly moving from page 1 to page 2 or 3. For firms that are reliant on online sales and service, such as small businesses and retail, this change could have a significant impact on their revenues, probably resulting in either frantic tweaking of Search Engine Optimisation (SEO) routines, a rapid investment in redesigning their site for mobile, or some other more radical action such as simply scaling back operations to match lower revenue streams. Within the insurance industry, the greatest initial impact is likely to be felt by insurance distributors, aggregators and direct operators who increasingly rely on online sales for retail products. Many of these operators have been investing in mobile-ready sites for some time now. So, to test the progress made, I thought it would be fun to conduct a quick highly unscientific test just to see how far down the results list you had to go before you reached a site that was not listed as ‘mobile friendly’. For simplicity (and being based out of the UK), I chose the UK personal auto market and the UK individual life market as my test case. I thought that trying to action this for other markets such as the US, France or Japan from within the UK would produce some strange results owing to my IP address location. So, excited to get going, I simply typed “Motor Insurance Quote” and “Life Insurance Quote” into my mobile. What were the results of this unscientific test? Well, I guess that it will come as no great surprise to readers of Karen Monks’ series on the state of the web/mobile capabilities in the life market; there are more ‘mobile friendly’ sites in personal auto than in life insurance. Ignoring sponsored advertisements, I got to result #13 in personal auto before I hit my first ‘traditional web-site’, which to be fair was not a bad lay-out for a traditional site. With Life, the story was quite different. I only managed to get to #3 before encountering my first traditional site, and this time it was tough to even see where you needed to press to get started on the site from within a mobile device. What do the results of this highly unscientific test tell us? Well, I guess you could argue, that it tells us little new about the UK personal auto insurance market. It’s a highly competitive market that has been subjected to multiple disruptions over the decades, starting with direct operators in the 1980s, then by the aggregators in the 2000s, and now by the telematics insurers. Investing in mobile capabilities, although first seen as an innovation by insurers, has rapidly become a basic requirement for survival in recent years. Consequently, this latest change by Google is unlikely to have a significant effect as the market has already moved. Insurers within this market need to just continue with ‘keeping ahead’. However, for Life insurers, it feels like the situation is still very different and potentially ripe for disruption. There is, of course, an argument that says that Life insurers do not need to invest at the same rate in mobile capabilities compared with personal auto as customers still rely more heavily on intermediated channels. However, the counterargument to this is that even though customers may not choose to buy on-line, they may still choose to research a product online first (estimated as c.29% by Celent in 2011 – now likely to be higher). So, could this change by Google be the catalyst the life industry needs to start taking mobile more seriously and invest for the future? Sadly, only time will tell. I think I’ll diary the same unscientific test for a future date to see if there has been any movement…..watch this space!

You can take a horse to water but a pencil must be led: The challenge of “What does Digital really mean for the industry”?

You can take a horse to water but a pencil must be led:  The challenge of “What does Digital really mean for the industry”?
Recently, I facilitated a roundtable discussion on “What digital really means for the industry”. Over the last couple of years, we’ve run many similar roundtables on the topic. Each time we run one, it never ceases to amaze me around the lack of a common definition for what digital really means, not just across the industry between firms but also between individuals within the same firms. In fact, I’m sure that there is a PhD paper waiting to be written on the topic. One of my favorite set of questions at these events is to first ask the delegates how they define “digital” and then to follow-up by asking if this definition is shared across their organization. Generally, when you ask the first question, you get very articulate and clearly well-thought through strategic response that makes 100% rational sense. Then, when you ask the second question, you often get a look of despair or, at best, frustration with their colleagues who “just don’t get it” or are “pulling in different directions”. Well, I might be exaggerating a little here but hopefully you get the idea. From the experience of asking this question repeatedly over the last couple of years, it seems to me that there are two challenges around “what digital really means for the industry”. The first challenge relates to opportunities presented by technology, which range from the mundane (such as good old fashioned ‘Straight Though Processing’ and even the application of newer more exciting mobile technologies in customer engagement) through to the extreme (such as new device enabled propositions and business models fueled by the Internet of Things). This is the “what?” challenge, the one that we hear most about and the one that we can articulate the best. It’s tangible. You can see it. You can experience it. You can recognize what others are doing that you are not. There is no mystery around this challenge and you can build a program of change to address it. The second challenge is a more subtle one. It is “as old as them thar hills” and can be aptly summed up by the saying “You can take a horse to water but you can’t make it drink”. It’s also one that this industry, as well as others to be fair, have been struggling with every time there is a step-change in pace and direction. If you know where you need to head to, bringing the rest of the organization along with you is the next big challenge, especially when you’re a large and complex one. This is the challenge of “How?”. When discussing the topic with one insurer, he shared with me his view that “digital” is merely a term used to get his team to think differently about the way things are done. To stop his team thinking about the way they do things today and start thinking about what could be instead. For me, this was a refreshingly honest perspective. It was not about the devices, the technology or the Apps, it was about re-envisioning his business. To achieve this takes great leadership and mustering support around a shared vision. This brings me back to the title of this blog. Stan Laurel couldn’t have said it better (or maybe worse?) in “Way out West” … “You can lead a horse to water, but a pencil must be led”. Maybe now is the time to move the debate on to talk more about the “pencils” and the vital role that leadership has to play in addressing successful Digital Transformation? I’d be interested to hear your views about where the challenges around digital really lie for you.

Model Insurer Asia Summit: A quick overview

Model Insurer Asia Summit: A quick overview
Earlier this month, Model Insurer Asia Summit was held by Celent at the Fullerton Hotel in Singapore. With approximately 50 delegates from across the APAC region, it was a fantastic event to learn from others, debate the key issues facing the industry, and network across the region. A total of 18 firms were recognised this year from over 8 countries, with entries ranging from large regional technology transformations through to novel uses of technology to enable propositions. Tokio Marine presented just one such novel use of technology to enable a proposition where an app-based avatar is employed to provide health advice for women based upon how their body is feeling in support of a health insurance product. This solution goes as far to include tracking the insured’s body temperature using a smartphone and a connected thermometer in order to identify when they may be coming down with an illness. I just love this idea! After talking about the potential for personal telemetry within the health insurance sector for several years now within Celent, it’s great to see a live proposition racing towards it. Since its launch in June 2013, Tokio Marine has added 250,000 users already. The Model Insurer Asia of the Year winner was awarded to Max Bupa Health Insurance (MBHI) from India. Being a relatively new player in India at around four years old, MBHI had aggressive plans to launch new distribution channels whilst not losing sight of delivering an excellent customer service experience. It chose to implement a BPM solution to wrap around its existing applications, enabling it to deliver a consistent end-to-end process that achieved a 75% increase in processing capacity and 90% improvement in service level agreements. This is a great example of how, when applied effectively, technology can truly deliver a differential business performance. To find out more about these (and the 16 other finalists), a copy of the Model Insurer Asia report can be downloaded by Celent clients at http://www.celent.com/reports/celent-model-insurer-asia-2014-case-studies-effective-technology-use-insurance. Finally, this year, we sandwiched the summit between two roundtable discussions: one on the use of digital and ‘big data’ to enable innovation in insurance; and the other one on regional distribution opportunities and challenges. Round-table discussions of this nature are always a great way to get detailed insights around the main challenges facing firms quickly. Unfortunately, I can’t share too much as they’re closed sessions and “what’s said in the room, stays in the room”. However, what I can share with you is that many of the opportunities and challenges facing individual firms across the Asian region are shared with insurers from around the world. There is a growing desire to provide a more engaging proposition with the end client, a need to secure new forms of distribution, and an acceptance that effective technology is at the heart of future business performance. Sound familiar? That said, unlike perhaps some other geographic regions, regional diversity in distribution, regulation, population prosperity, language, character set, and political goals, make it more difficult for insurers, vendors and SIs / consultancies to navigate with a ‘one size fits all’ policy. It’s this diversity coupled together with the regional growth rates for emerging financial services that make the region one of the most fascinating to follow and one that we expect to see a lot more innovation come out over the coming decade.

Model Insurer Asia Summit: A quick overview

Model Insurer Asia Summit: A quick overview
Earlier this month, I attended the Model Insurer Asia Summit at the Fullerton Hotel in Singapore.  With approximately 50 delegates from across the APAC region, it was a fantastic event to learn from others, debate the key issues facing the industry, and network across the region. A total of 18 firms were recognised this year from over 8 countries, with entries ranging from large regional technology transformations through to novel uses of technology to enable propositions. Tokio Marine presented just one such novel use of technology to enable a proposition where an app-based avatar is employed to provide health advice for women based upon how their body is feeling in support of a health insurance product.  This solution goes as far to include tracking the insured’s body temperature using a smartphone and a connected thermometer in order to identify when they may be coming down with an illness.  I just love this idea!  After talking about the potential for personal telemetry within the health insurance sector for several years now within Celent, it’s great to see a live proposition racing towards it.  Since its launch in June 2013, Tokio Marine has added 250,000 users already. The overall Model Insurer Asia winner was awarded to Max Bupa Health Insurance (MBHI) from India.  Being a relatively new player in India at around four years old, MBHI had aggressive plans to launch new distribution channels whilst not losing sight of delivering an excellent customer service experience. It chose to implement a BPM solution to wrap around its existing applications, enabling it to deliver a consistent end-to-end process that achieved a 75% increase in processing capacity and 90% improvement in service level agreements.  This is a great example of how, when applied effectively, technology can truly deliver a differential business performance. To find out more about these (and the 16 other finalists), a copy of the Model Insurer Asia report can be downloaded by Celent clients at http://www.celent.com/reports/celent-model-insurer-asia-2014-case-studies-effective-technology-use-insurance. Finally, this year, we sandwiched the summit between two roundtable discussions: one on the use of digital and ‘big data’ to enable innovation in insurance; and the other one on regional distribution opportunities and challenges.  Round-table discussions of this nature are always a great way to get detailed insights around the main challenges facing firms quickly.  Unfortunately, I can’t share too much as they’re closed sessions and “what’s said in the room, stays in the room”.  However, what I can share with you is that many of the opportunities and challenges facing individual firms across the Asian region are shared with insurers from around the world.  There is a growing desire to provide a more engaging proposition with the end client, a need to secure new forms of distribution, and an acceptance that effective technology is at the heart of future business performance.  Sound familiar?  That said, unlike perhaps some other geographic regions, regional diversity in distribution, regulation, population prosperity, language, character set, and political goals, make it more difficult for insurers, vendors and SIs / consultancies to navigate with a ‘one size fits all’ policy.  It’s this diversity coupled together with the regional growth rates for emerging financial services that make the region one of the most fascinating to follow and one that we expect to see a lot more innovation come out over the coming decade.