Moving Your Giant Toward Utopia
The insurance sector has finally reached a stage of profound reforms where the need for change applies at all levels. I believe we are living during the best time to work in the sector, and these challenges make it even more fun. Today, no one should expect their department or their own work not to evolve disruptively in the coming years, from the actuary using machine learning, to a CMO using neuroscience and behaviour research, or claims examiners interacting via virtual reality, and more.
One of the key elements driving this business transformation is the presence of the "urgency" factor. That is, it is more urgent for the Yellow Pages to become digital than it is for a small bakery shop near Estepona (Spain). How urgent is the situation for the insurance sector? A recent study by Accenture found that if any of the GAFA (Google, Apple, Facebook or Amazon) tech companies offered financial services, 29 % of those surveyed would change their insurance to these entities. In comparison, the highest ranking insurance company to appear in BCG’s innovation rankings comes in at 30th – well behind the tech giants. This suggests the need is urgent indeed. Why, then, is it so difficult for the sector that represents 6% of the Spanish GDP to innovate?
The fear of losing out
According to a study by Watch & Act, nearly 80% of CEOs believe that companies that don’t launch innovation initiatives do so because they are afraid these initiatives will fail; for fear of doing the wrong thing, they do nothing. Although this figure does not belong exclusively to the insurance sector, it serves as a reference and reminds me of what we are seeing in the private transport industry.
We have all seen images of taxi drivers in Paris protesting against VTC drivers such as Cabify and Uber, or we have suffered a strike organised by the taxi trade in Spain. This behaviour underlines the fear of many taxi drivers who are facing the reality: 25,000 VTC in France are gaining clients from the 40,000 Parisian taxis. The same displacement could happen very soon in insurance if a more attractive service is not offered.
Artificial Intelligence (AI) is already a reality, in addition to many other technologies, and while it is possible that insurance intermediaries or taxi drivers will not disappear, it is evident that they (and many other people) will drastically change the way they now work due to the technological boom.
Customers knocked on the door asking for change; start-ups answered
Startups are by definition tech focused. Many seemingly untouchable industries have been destroyed by tech companies and there is no reason for insurance to be spared. The examples are numerous in the most disparate sectors such as retail (Amazon), hospitality (Airbnb), media (Facebook) or art (Artsy).
To create an innovative insurance solution it is not necessary for a member of the Board of Directors to rent a garage in Silicon Valley, as the legend goes, but it is essential to examine our process in order to find a way to combat the fear of change and understand that technology is not a threat.
How? With a team prepared to fully integrate a digital presence into the company's strategy.
Digital transformation is a challenge for any industry that emerged before the internet. Today, customers are looking for a value proposition that includes a reasonable price, product on demand, and a good experience. That's how Amazon becomes a benchmark destined to shake up all the markets in which it is allowed to operate.
The traditional company needs to rethink its strategy: from the product to distribution, including human interaction. It is true that moving a giant is difficult, but not impossible, and the elements brought by new technologies (Big Data, the blockchain, AI, and customer relationship management are the keys to success in the future.
Finally, I think it is a good sign that we see some "insurance giants" launching insurance innovation labs and dedicated teams, and collaborating with startups, to create an innovation model based on the trust of its employees and customers.
I'm not saying it's easy, but here I like to quote the Argentine film director Fernando Birri. When asked, "What's the use of utopia?” he replied, "I ask myself that question every day because utopia is on the horizon. If I walk ten steps, utopia will move ten steps away; if I walk twenty, it will move twenty steps away. I know that I will never reach it. What is it for? To walk."
Therefore, let us be utopian. Let us advance on the back of this giant towards transformation, and from good to great.