Interviews
Daniel Aubert
Daniel Aubert
Digital Transformation Director
ASISA

The Insurance Industry Moves Forward on the Digital Journey

~ 6 minutes

Technological evolution has affected Insurance companies which are increasingly using data and becoming more competitive. In this interview, Daniel Aubert shares his thoughts and insights regarding the current and the future situation of the Insurtech sector.


Does your company consider itself an active player when it comes to investment and partnerships with startups?

Our Group is focused on providing the best health services, as it is owned by a cooperative of doctors. Thus, we reinvest heavily in technology for diagnosis and prevention, as well as customer experience and satisfaction.

In recent years we have heavily invested in new platforms, in terms of cybersecurity, sales capabilities, and above all making life easier for our customers. This is a considerable effort, given the size of the company and the overall investment we make in technology.

As the industry is moving fast, we must maintain the quality of the security we offer our policyholders, bearing in mind the reputational as well as potential financial damage that this type of malicious activity can have on the insurance industry.

“The new entrants have much lighter structures than companies that have been in the market for 60 years and therefore can enter the market without that historical barrier, with much more evolved technologies, making intensive use of data and extracting value from the information they can have.”

Insurers are investing more and more in distribution channels and Commercial Lines of Business rather than in Health companies. What is your insight on this? How do you foresee this trend for the following years?

Insurance companies invest in the distribution channel which is crucial because the sales part is an activity that we must focus on since one of the things those new entrants compete for is price. The new entrants have much lighter structures than companies that have been in the market for 60 years and therefore can enter the market without that historical barrier, with much more evolved technologies, making intensive use of data and extracting value from the information they may have. This allows them to be more competitive, so what you must do is invest to see how you can minimize the impact of those who are entering this type of sector.

In terms of commercial issues, everyone is looking at ways to make the customer journey seamless, providing an end-to-end digital experience. It is also true that the technology evolution itself and the new generations demand a fully digital and non-face-to-face model. Moreover, the pandemic has forced us to work much more with telematics and digital media. Even older generations of customers are a little more reluctant to have to continue doing business in a way that is not digital, so there is a greater investment, at least in our case, in these new technology trends and business models.

Tech Giants and Big Corporations are very into Distribution and Commercial this year too. Why do you think insurance companies and new entrants such as these companies move in this direction? Are they competing for leading these markets or is it more like a collaboration scenario?

Only in the future years, we will get to see whether they are here to stay or whether they are here to collaborate. The truth is that we are already seeing this with the metaverse and with the technological evolutions that are on the table every day. The important thing is to take advantage of the data and to be able to control, from the point of view of having the information about what customers do and in what world they move to see how they generate value, not only in the insurance world but in this global world. Understanding individual lifestyles and insurance preferences can be valuable information that other markets could use to cross-sell different products and services.

“They are playing a key role in the most evolved markets, especially in the area of car insurance, with tools that allow premium adjustments, depending on the customer’s driving habits.”

How do you see this trend evolving in the following years? Do you think Insurance companies will follow a trend driven by Tech Giants or vice versa?

They are playing a key role in the most evolved markets, especially in car insurance, with tools that allow premium adjustments, depending on the customer’s driving habits. There are even companies, especially in the United States, where insurance is paid per use.

This model would be more difficult to operate in the Health Insurance sector because it would require access to an American health model in which you have a scale per service, which is not the model we have in place in Europe, especially in Spain.

From a regulatory point of view, in all the startups that are growing, especially when they come from the big technology groups such as Amazon, Apple, or Facebook, we notice a disparity in regulation, to which they are subject, and we are too.

The same thing has happened in banking, and it takes the regulator more time to understand these less traditional business models and establish rules that can apply to purely insurance companies and startups at the same time. Therefore, you can see that there is an imbalance in that sense.

“The Tech Giants are thinking about how the regulated model for both insurance companies and banks, whereby many of these services will be forced to be open, can evolve.”

What is your perception of the interest of the Tech Giants in the Insurtech market?

Tech Giants have a different kind of interests. Firstly, they do not allow themselves to be stepped on, guaranteeing that the information flows through their platforms so that they can then exploit this information and make use of it within the regulatory limitations. Secondly, they do not only develop - or help Insurtechs to develop- ad hoc modules for the insurance world, but the whole infrastructure is based on their technology ecosystem.

On top of that, the Tech Giants are thinking about how the regulated model for both insurance companies and banks, whereby many of these services will be forced to be open, can evolve. Additionally, the insurance company's information can be consumed by third parties to remove these barriers to entry and face less competition as a result of that. This has not yet happened in the insurance market, but it is only a matter of time.

“There is a niche market that opens up with the deregulation or the paradigm shift from what we have now which is a highly regulated and restrictive market.”

What do you think are the great challenges that affect an insurer when we combine the terms regulation and technology?

The main challenge for insurance companies is to look for alternative business models and see how they can monetize the information available. There is a niche market that is opening with the regulation or the paradigm shift from what we have now, which is a highly regulated and restrictive market, and this is a great internal opportunity to see how you can change your business model and do what the big technology companies have done. There is a lot of ground to investigate internally, to articulate based on having the data very well controlled, with microservices and with the ability to be consumed or sold, within the limits set by the regulation itself.

Regulation is going to create and use more and more sandboxes and new techniques to see how to generate a market that is more open and competitive. The insurance regulatory market, compared to banking, used to be very stagnant. However, in the last two years, there has been strong regulatory pressure to try to catch up and gain that lost ground concerning banking regulation.

We are going to see new entrants with much lower barriers to entry than we have seen so far, the market is going to open up and data is going to flow much more openly than it is flowing at the moment.

Looking into the crystal ball, what are your predictions for the Insurtech industry for the next years?

We are going to see new entrants with much lower barriers to entry than we have seen so far, the market is going to open up and data is going to flow much more openly than it is flowing today. This will mean that the more traditional companies will have to reinvent their business model. The technology giants are going to play a very important role because of the technology itself and their investment capacity. They are investing in their main lines of business and technology. This contrasts with insurance companies, where technology is deemed as an expense, not an investment.

We believe the EU will evolve its health services to be more open, sharing information amongst different countries between public and private health sectors, even though the service will remain primarily at a local level.

What models do you think are not going to grow/have relevance?

It will depend on how regulation evolves. Deregulating the market is fine, but it must have minimum standards that everyone should meet, otherwise, companies with a long history in the market could end up negatively impacted.

Photo by Pepe Olivares on alicanteplaza.com