New insurance business models and the new demands and opportunities of liquid insurance ecosystems are changing the way insurers think about business. At this third Round Table, the experts shared their vision on how business model transformation is shaping the insurance industry.
Round Table Speakers: Martin Poelzl - Head of Insurance Consulting DACH at NTT DATA, Michael Maicher - Global Partner & Director at Allianz Group & Allianz Partners, Sibylle Fischer - Director Strategic Venturing at Bâloise, Anastasios Chatzimichailidis - Head of Insurance at Revolut, Esther Prax - Program Director InsurTech Hub at Munich.
Circular Managing and Tech Giant's Impacts on the Industry
"New products based on the monitoring of the behaviours of customers are created, new distribution strategies replacing intermediaries by algorithms or predicting the actions from its customers."
According to Martin Poelzl, it is not only the ecosystems that are impacting the industry, there are two more important pillars to consider, for example, the power of data we have seen that the value chain of insurers or ecosystem players in that context is much more driven by platforms and specifically by data and this is not a linear process anymore but it's much more flexible and constantly adapted to changes. That is why the concept of “circular managing” is introduced. New products based on the monitoring of the behaviours of customers are created, new distribution strategies replacing intermediaries by algorithms or predicting the actions of its customers, new underwriting and administration decisions activating or deactivating policies automatically, micro-insurance for hyper segmented customers, etc. And another aspect is the entrance of new players such as Tech Giants. An example is Google, this Tech Giant is seeing insurance as a very profitable industry that is starting to transform its businesses with lots of new players and opportunities. Google Alphabet is another example. They are investing in lots of Insurtech from all the lines of businesses and so they are finding an entry into the insurance industry.
Embedded Insurance, The Future of the Insurance Industry
"Embedded insurance is a key concept to stay close to our customers and provide three examples. The first one is micromobility; secondly the peer-to-peer sharing platform; the last example is the digital and online car sales platforms."
From the point of view of Michael Maicher, it is first crucial to understand the fundamental market changes and also the fast-emerging trends which we are all facing so why are we in need to change. These changes are consequences of the exponential growth of the digital platform. Digitalization has transformed our day-to-day lives and we are constantly online our regular everyday activities have to a large extent shifted onto digital platforms. Secondly, it's the major change also of life forms and customer behaviours with less owning and more using. And thirdly it's the increase of the new technology such as e-mobility. Maicher considers those changes, especially in the mobility ecosystem, as one of the most fundamental ones and this is why they have strongly focused themselves on new partnerships. Maicher explains that embedded insurance will become a major driver for the insurance industry and is a key concept to stay close to customers, some examples of this type of insurance are: micromobility, peer-to-peer sharing platforms and the digital and online car sales platforms.
Physical Health And Financial Home, New Models For The Insurance Industry
Esther Prax explains two fields particularly interesting right now, one of them is health, so physical health, and the second one would be financial health or financial home. As she explains, in health we see the most consensus among our insurances and there's a large interest in moving into prevention across the board mainly through partnering with other players also such as pharma but also with startups to become this kind of life partner in this patient journey. Now if we look at financial well-being and the position the insurance has tried to take there or is taking there it varies greatly so financial well-being means the trend of really having one financial home a platform where the user manages all the personal finances, all the personal investments but also long-term contracts such as insurances.
Limitations For A Service-Oriented Ecosystem
"It is necessary to build around the customer and their needs, not only the customer journey but also listen to what he or she wants and where and how to connect."
According to Michael Maicher, the first limitation we are facing is the new risks in a new and very fast-emerging area such as new mobility. These new risks are very challenging many times for us because we have no history and then we always ask for very competitive pricing from the beginning. Secondly, he thinks we are too slow and we need to innovate faster as the world out there is moving also extremely fast. Another element's about the data. We have enough, probably a lot of data already, but many times we are missing the understanding so we need to turn the data into real insights and we see also that intro text could help us to create new correlations with new tools. Insurers also tend to think about products instead of value propositions and ecosystems. Last but not least, in accordance to Maicher, the tight interlink between underwriting claims, operational, risk management and this interconnectivity is key so intro text can help us also to better interconnect the value chain and sometimes bridge the gaps which we see and cannot solve immediately ourselves to create that seamless customer experience.
Sibylle Ficher thinks customer needs and customer-centricity, as well as a building around the customer, is a limitation and we have to improve on that in insurance. It is necessary to build around the customer and their needs and the line there, not only the customer journey but also listen to what he or she wants and where and how to connect. And the second limitation is regulation which hinders innovation.
For Anastasios Chatzimichailidis there are three basics that we don't get right and if we don't get these three right we're not going to make this transition and win it'll be Google or it'll be somebody else that gets this right. The first one is being customer-centric to understand the customer. The next step is engagement, so we need to engage these customers. For Chatzimichailidis, the biggest risk first is the engagement because that's the top of the funnel and if you don't get the top of the funnel big enough, not enough trickles down at the end. The next thing is trust, that is, data sharing. We need to be able to share the right amount of data to fulfil our promise to the customer. The last one is a simplification.
Trending Topics In The Insurance Industry
In regards to hashtags from the insurance industry, the first hashtag of Esther is “trust leap” because that's what it takes really for the different players in the ecosystems to come together and to share the data that's needed to build those ecosystems, but also the trust leap of the customers towards the insurers. The second hashtag is “human-centred” so really to be human-centred in all kinds of product development within insurance, human-centred also in our partnerships between startups and insurances everything that we approach here but also to build more transparent more flexible products that pick up the customer at the point of need.
For Sibylle, her first hashtag would be “peace of mind” because that's what is particularly sold in insurance and it is what customers are buying. The second one is a “personalized one-stop-shop” meaning this customer-centric journey where customer can choose and don't even realize that he is in an ecosystem
Michael Maicher’s hashtag is “stronger together” which means like listen and working in a real co-creation mode with clients and also partners. The second is, “simplification”, as said in Allianz “simplicity wins” providing solutions easy to understand which are also easy to operate.
Chatzimichailidis explains his first hashtag, “know and protect me”, the customer-centric piece. People just want to know and they just want to be protected at the end of the day. The last one is “insure me on demand”.