There's disruption in FinTech
We all know how succesful the first wave of FinTech disruptions has been sofar. It is hard to find a bank that is not actively engaging with start-ups to bring the necessary innovation to their organization; especially in the area of product innovation. I alreay know of start-ups involved with defining & developing next phases of FinTech disruptions - which are in the area of internal banking processes of banking like customer regulatory compliance.
How about InsureTech ?
To date, disruption in insurance is very limited; which is quite remarkable - not in the least because it's relatively easy to develop a vision for personalized insurance. Imagine a car; and a car needs to be insured and 'us' developing a vision for this. Similar with travel and travellers requiring insurance. Why not package 'insurance' with the product, the car, the travel. In terms of the car, the full package could be supplied by the car manufacturer (or leasing company or rental company) . They, being the supplier/owner of the car would be able to deliver customer benefits: charge on actual 'usage', and a host of safe driving options. This would lead the insurance to be part of the [cost] price of the commerical product.
A provoking thought .... is it likely that the insurance companies, as we know them today, might 'disappear' ? Will their role change? It could be that their primary, may be even their only 'role', will be that of a re-insurance company - active in B2B. The impact this will bring might take years to take place. Or not ? Take a look at self driving; early 2015 everyone thought that this would take years and years and by mid 2015 Tesla suddenly appeared with a viable option.
One of the reasons for this innovation & sense-of-urgency is that car manufacturers are organizing the pre-requisites for safe driving. See the acquisition of HERE maps. One thing is sure: car manufacturers act! And insurance companies - they seem to lack sense-of-urgenct - which is strange considering that challenges are huge and that changes will have a dramatic effect on them!
The future in car, travel insurance
Personalisation will be the main, and possibly decisive, factor. The example of packaging insurance with the car makes sense; it's basically one product - and it's about single use - the insurance is tied to the car. Instead of having multiple organizations to deal with - each with their own processes - customers will be dealing with one [supplier], the car manufacturer. Because it has direct access to the drivers (direct access to consumers/customers (you)) as well as the usage of the car (your behaviour) - it'll be well placed to make best offers. The IoT, with all it's sensors, faciltates this in ways we've never have seen before. A fine example of technology translated into business benefits.
Apart from having direct access to their consumer base - car manufacturers have the modern tech, financial power and, let's not forget, smarkt marketeers, to enter this market. It's fair to say that this is a low entry - similar to mobile telco providers that don't own their networks. It's most likely that car manufacturers will drive innovation, from their industry - aiming straight at the heart of the insurance companies. It'll be very hard for insurers to maintain a profitable car insurance product.
Insurers need & can act. But they need to speed-up ... develop & communicate their vision, act on it ... and deliver on this ... in short, MVP style, cycles. A break away from the past is required.
Digital health innovation
In health ... innovation is likely to be driven by start-ups, and it could be that, when these scale up, they'll be picked up by software companies like IBM, Google or hardware companies like Philips. Note that Philips is more and more becoming a company dependent on software. The question is why would start-ups throw themselves in the arms of insurance companies, organizations in search of re-inventing themselves? IBM, Google, Philips and many more could be the next digital health carer and curer which will deliver admin and insurance as part of their offerings.
A new term for 'insurance company' ?
With software and hardware companies active in care and cure markets, with products and services that include "insurance". Fast forwarding to the year 2025: .... why retain the name 'insurance' company?It would be intruiging to think that an insurance' company was a classification we'd used for admin factories, using software, to protect people from the financial risks; which is just that ... administrative processing of claims and managing ,money flows. Of course this is a simplified classification.
Over the next few months I'll be adding ideas, solutions, may be even samples of implementations of what is described in this article - thus helping to re-shape this industry.
Nanno van der Laan,
14 December 2015