Partnerships, data, interconnected companies and smart and digital distribution are the key elements of today's insurance landscape. At this Round Table, it was discussed how integrated and reinvented value chains are shaping the future of the insurance industry.
Round Table Speakers: Mercedes Concepcion-Gray - Chief of Strategy & Growth Leader at NTT DATA Services, Juan Mazzini - Senior Analyst at Celent, Rose Hall - VP & Head of Construction Innovation at AXA XL, Dev Ganguly - Chief Operating Officer at Jackson
Covid-19, The Reason For The Acceleration Of Partnerships And M&A
According to Juan Mazzini, some partnerships are more visible, some are a little bit less visible and others are invisible partnerships since it's more related to having access to a capability like fraud detection or AI applied to automate estimations. Mazzini explains that the pandemic has a role in accelerating these invisible partnerships. But moving to those that are more visible the driver was growth and the acceleration that we saw or we see comes from the opportunities that arise for insurers from the digitalization of adjacent industries that allow things such as immediate insurance. Regarding M&A, Mazzini explains that we are seeing investment or acquisitions of startups coming from insurers, brokers and reinsurers so let's take cover wallet as an example where sewerage first took a minority stake aligned to what I believe was its interest in using the platform to go to market with a specific digital value proposition for small-medium businesses and later cover wallet being acquired by AON. Mazzini sees some M&A between Insurtech startups themselves and he would also say that we see investment from incumbents in their neo insurers or digital MGAs. Think about Nationwide launching Spire or MassMutual with Haven Life for example.
A Shift In The Traditional Insurance Business Model
"Insurance has always been about ecosystems and maybe today the big difference is that those ecosystems are highly digitized."
Juan Mazzini is seeing interesting or unconventional partnerships or unconventional ways to put those partnerships to work. There are different reactions to what's going on. Some companies are becoming or considering becoming a utility company where they manufacture the product and someone else distributes and you have another situation where someone manufacture and distributes and then you have other companies that focus on owning the customer. You're always thinking about trying to take advantage of an ecosystem. Insurance has always been about ecosystems and maybe today the big difference is that those ecosystems are highly digitized and when you think about the customer experience and you can think how this is unified throughout these digital ecosystems with wide level, third-party platforms and solutions and how they are connected, how the environments get connected to bring that customer experience to the customer where they can't distinguish between where the insurance company starts, where the partner is working. Now the company that only manufactures a product is not selling other firms’ products that are only a manufacturing capacity but those distributing that insurance from this manufacturer become part of the manufacturer ecosystem so you are always part of an ecosystem.
According to Dev Ganguly, at Jackson, distribute through partners who carry different products and different services. The ecosystem effect is taking place between Jackson and its distribution partners, Jackson and the platform providers and different technologies are coming into play. One of them is APIS, the digital language and how systems talk to each other. Now different ecosystems partners interact with each other on a more real-time basis as an example if you have an advisor at the distribution partner who wants to do a withdrawal on a Jackson product they are now able to leverage digital technology to make that call real-time or if you have and consumer who wants to update a beneficiary a lot of those changes are happening real-time and the ecosystem partners are connecting real-time so that has significantly improved the experience in the ecosystem overall. Ganguly also emphasizes a lot of collaboration in the industry, far more industry standards come into play, far more investments into common ways of doing things which are also helping the industry grow from an ecosystem standpoint, so that's a big thing that is happening in the L&A space when it comes for manufacturers like us to interact with ecosystem partners whether it's FinTech, Insurtech, platform providers, distribution partners so on.
The Owner Of The Customer Experience
Juan Mazzini talks about super apps where you can do everything, you can pay, you can ask for a taxi, you can order food, you can buy your insurance, everything is in there and everybody is doing things around trying to be in those super apps. For Mazzini, the one owning the customer is a super app.
According to Rose Hall, the customer is permanent the customer spans from here to here and it may be a different owner at the beginning than it is at the end. AXA XL is going to be expanding the concept of the construction ecosystem, the knowledge networks, the education, the partnerships, and the stakeholder engagement networks. They are going to be expanding that outside of construction to other business units so property and in the marine and environmental and our risk consulting business. They are attempting to capture the customer experience across that whole value chain because, as a global insurer, they ensure every piece of it in some part of the business so if they consider the construction ecosystem as maybe a case study or the MVP, the minimum viable product, for their concept and what they are successful with here and then they start scaling it out to the rest of the value chain for a building asset now they are owning the customer experience across the entire life cycle of buildings. That's the big hairy audacious goal to own that customer experience across every piece of their span.
Innovation Insurers Vs. Startups
According to Juan Mazzini, when you look at insurers only 1% of the respondents say that they are allocating time for more than 50% of disruptive innovation, instead of the startups 41% say that they are looking for more than 50% disruptive innovation. It's not surprising that you will see that startups pursue this disruptive innovation and the insurers will be looking more on the incremental side. 84% of insurers answered that they would be pursuing incremental from 75% of the time allocated to incremental to 100%.
Technological Impact On The Insurance Industry
Mazzini thinks technologies are already in place and now it's a question of executing them. Technologies are strong enablers for digitalization and if you see technology from a business perspective, considering that the business is becoming highly digitalized, you can think about it in terms of how do you get into digital innovation which is going beyond digitizing your existing business. Mazzini explains the framework they have to assess in the digital journey you are into an area where we call advanced digital where your product starts to take advantage of the machine to machine interaction, you start to use the internet of things, implement usage-based insurance propositions, make more complex ecosystem integrations and work with comparison sites, aggregators robot advisors or even digital agents. According to Mazzini when you think about getting into an extreme digital innovation in this type of model you are leveraging the use of data of the context and the AI to make for example sales in one click or paperless and frictionless claim payments. And last but not least, for applications what we're seeing is the increasing adoption of low and no code-based applications mainly in the front end, where you have the battle for the customer experience but also in the back end, where you have many of the enablers of those experiences, but with this concept of having that digital middle layer what we're seeing is that most of the adoption first is being done in the front end and progressively going to the back end.
Trust, A Challenge For Enabling Technologies
"Customers are not sure whether they want to give insurers their data or not and establishing that trusting relationship is going to be key to be able to do anything with data."
From Rose Hall's perspective, a challenge for enabling technologies is trust. The challenge right now is that customers are not sure whether they want to give insurers their data or not and establishing that trusting relationship is going to be key to being able to do anything with data. Then you work backward, you look at the techno, you look at the data that you want to be able to adjust the way we underwrite the risk or adjust the way we think about their risk or provide customized or tailored programs or whatever it is that we're trying to do and you work backward from there and then we get to tech adoption which is where we started here in the ecosystem. According to Hall, thinking about a construction company and about all the different technologies that they are using, the first thing that needs to happen is all those things need to be integrated within their own company to make meaningful data to send and interpret that meaningful data in a meaningful way.