Founding Members: Spiros Margaris (@SpirosMargaris), Sabine VanderLinden (@SabineVdL), Reggy De Feniks (@ReggyDeFeniks), Rob Galbraith (@robgalb), Robin Kiera (@stratorob), Denise Garth (@denisegarth), George Kesselman (@mr_insurtech), Roger Peverelli (@rogerpeverelli), Minh Q. Tran (@Minh_Q_Tran).
1. Which top priorities should the insurance sector focus on in 2021?
Spiros: The insurance industry should focus its priorities on buying or partnering with insurtech companies to accelerate its digital transformation.
Sabine: Respond more strategically to the UNS GDs via targeted sustainability and climate change initiatives. Reconsider health & wellness strategies as they become a heightened topic as the new normal brings new challenge related to the future of work. Deploy Digitization 2.0: which should include microservices, Open Data, APIs as well as platforms and ecosystem partnerships.
Denise: That must both work with existing technologies and address a new virtual world accelerated by COVID-19. This is driving the technology demand --- the need for technologies that can enable digital business transformation with agility and speed. Facing these strong market and internal pressures to respond, insurers are struggling with how their strategies need to adapt and shift, how to prioritize, where to invest and how to deal with “legacy technology debt.” Because of that “debt” and past experience, many leaders are faced with perceptions of transformations that are difficult, long and expensive. But does it have to be this way? However, like all change, digital business transformation is successful only when company leaders from the top and throughout the organization believe in the need to change and approach it from a business focus, with an outside-in view of needs of the customers at the center. This is where next-generation technology – digital platforms and next gen core system platforms – make the difference. Realizing the promise of transformation requires a fundamental shift in mindset, from thinking of technology as a function of the business, to becoming the foundational driver of the business. The demands of agility, speed and innovation are dramatically different as we enter 2021 than they were entering 2008 or even 2020. To succeed in the future of insurance, which is accelerating and separating Leaders from Followers and Laggards. Insurers must lay the groundwork of a new digital insurance business model that embraces digital platforms and next gen core system platforms with vision, energy and speed. Goodbye 2020 and Hello 2021! Across all industries, including insurance, companies are facing an unprecedented wave of change. Fast-rising customer expectations and new generation of buyers with Millennials and Gen Z are requiring innovative business capabilities.
Rob: Top priorities for insurance in 2021 are being SCALED to be Agile: must involve Sensors, Cloud, AI, Local knowledge, Efficiencies in the back office, and Distribution and digital communication.
Robin: Insurers should prioritize Customers utilising internet-enabled tools and techs like apps and social media that would be relevant to them. I think we need to bend little and be flexible to cover the current needs and not with the traditional offers.
Roger: The growing awareness for the importance of health and life, which will accelerate innovation and insurtech, in particular also beyond covers. People crave for institutions which care, now more than ever. New technologies help insurers to dramatically increase their social impact. In 2021 this will finally take off.
Minh: Insurers should rework their investment arms into more responsible and structures and explore impactinvesting.
2. You highlighted topics including customer experience, embedded finance, the value chain, BigTech and sustainability among others, why are those priorities important today?
Spiros: Consumers want and expect a seamless customer experience of embedded businesses.
Denise: What they achieve will depend on their ability to enter the market while it is still an uncrowded “white space.” The complexity of insurance products and processes has plagued the insurance industry since its beginnings. It has consequences for decisions throughout the customer’s journey with an insurance company. Urgency of adapting to Millennials and Gen Z is reaching a critical tipping point. By 2025, the combined Gen Z and Millennial generations will dominate the 30-60-year-old sweet spot for insurance. How Gen Z and Millennials view work and career is very different than how Gen X and Boomers view them. Millennials’ and Gen Z’s behaviors align to employment fluidity to Gig or on-demand employment, reinforcing a strategy to capture them early in their lifecycle via voluntary benefits that can be ported when they leave, allowing insurers to capture, retain and grow the relationship regardless of their employment. Given the nature of ecosystems, insurers can assume multiple roles, from owner of the unifying platform, to orchestrator of the products and services, or provider of products and services. Of course, this requires leadership with an appetite for taking informed risk, ability to move quickly, capacity to build partnerships within and outside of insurance, and strong technology capabilities. But most important is a clear vision of the customer’s lifestyle – health, wealth, life, and wellness journey and the ability to assemble the ecosystem of partners, products, services, data, tech that empowers customer to accomplish their needs in a holistic, satisfying way. So, consider how this would change the customer experience.
Robin: There should be a marriage of customer needs and digitalization. Customers are not only at risk with this pandemic also businesses - so being fast and relevant are vital.
Sabine: Insurers' business model has been disrupted by recent events & needs to recalibrate to meet future customer needs... and this with purpose-led initiatives. More underserved market segments are emerging every day. Such customer segments must see their needs addressed, fulfilled, and serviced through the Digital Marketing channels that matter for them the most. Current products & services do not always fulfill the emerging needs of an increasingly digitized population – estimated to represent 90% of the total population by 2030.
Roger: Basically, these key trends should already have been on the agenda of carriers. Because of the current crisis they just shifted into a higher gear. Health and life are more relevant than ever. Many people realised the benefits of working from home. And although they also miss the office, they are not likely to commute to the office every day of the week anymore. Also with the economic crisis that many countries areexperiencing, people are facing times of uncertainty. They crave for institutions that care about them.
Rob: Increasingly the world is facing the same challenges – health, inequality, climate change and cyber risks – and these focus areas are critical for all of us. We need even more cross-pollination of ideas across borders & truly disruptive offerings!
Minh: Insurers play a crucial role in helping to achieve SDGs by 2030, not only by financing means but also by managing climate risks.
3. With a surge in demand for unique and personalized customer experiences, what will the customer’s wants and needs be in the future?
Spiros: Insurances need to think of partnering with Insurtech & fintech companies to be able to extend services to their customers beyond their core competency.
Rob: Customers want experiences similar to what they get from leading global brands such as Amazon, Netflix and more. Many insurtech leaders such as Hippo, Lemonade and many more are working hard on these offerings!
Sabine: Depending on the segments... there will be some massive shifts in customer demands during the course of the next 10 years. Our recent research shows that by 2030, GenX (x Millennials), GenZ & GenY will represent 90% of those likely to be digitally engaged. To motivate GenYs & GenZs for instance, insurers won’t have a choice they will need to engage via new media (particularly social media) as the target customer spends on average 3 to 4 hours on social & own 9 social accounts. Personalisation will therefore mean... social media first, friction-free, low touch engagements. Personalisation will require the usage of on demand gamification and Behavioral Economics techniques. Personalisation will also require a clear alignment with the clients’ values and believes long-term meaning things we do not think about often in insurance.
Denise: The viability of the insurance industry is vitally connected to demographic trends, market trends, customer opinion and adoption of new technologies. If insurers lose touch with our customers, both current and future, insurers will lose business. The result is a porous market, where engagement is everything and the relationships between businesses, customers, channels and partners is crucial. Insurers unprepared for new dominant insurance buyer may find they are no longer relevant after this major shift. Evolution of digital technologies continues to reshape our lives, changing people’s behavior and expectations and demanding a connected, multi-channel customer experience that provides convenience, accessibility and value. Today’s customers are increasingly digitally adept, with higher expectations, different needs & demand for better experiences not met with the traditional insurance approach, creating a fault line between customers’ expectations and insurers’ ability to deliver. As Millennials and Gen Z rapidly emerge as dominant buyers, capturing them as customers will be challenging at best if insurers continue traditional approaches. Why? This new generation views and values things much differently. They are not satisfied with traditional insurance processes, products and business models. In our most recent consumer research, we found younger generations open to buying insurance from a wide array of options including: For life insurance, they are 33% more open to new channels than the older generations; The preference gap between new and traditional channels is large for older generations – nearly 50% – as compared to only 21% for Gen Z and Millennials, meaning they are much more open to different, new channels – creating an opportunity for growth. Younger generation is twice as likely to buy auto insurance from a car shopping website, a vehicle manufacturer website or have it included in the purchase or lease of a vehicle.
Robin: As mentioned in experience, mobility, health and wellness, all of these with personalized digital products and services that can easily get on the palm of their hands (mobile devices).
Roger: McKinsey told us that in the last eight month we made a five-year leap in digital. Customers and companies alike. That’s more of a qualifier. People want solutions for the real need they have. Not a car insurance; but a car – or even more accurate: mobility. Be part of that context. Ecosystem thinking! Not just covers, not just fast convenient experience. It’s about services beyond covers. New added value. And new revenue streams!
Minh: Not only will customers choose more sustainable companies but also opt for personalised, digital-first services due to COVID-19.
4. What are the winning products and/or services you are already seeing, challengers & emerging market players delivering to win customers?
Roger: In health think about Virgin Pulse, dacadoo, wellmo, Vitality. In automotive think of telematics-based concepts that are beyond sophisticated driving. Just love all the services Unipol offers in Italy! n home think of finally using all the data streams from IoT to help people manage their house better. Check Grohe, Leakbot. And cyber!
Sabine: Challengers have learned that to serve the customer one must focus on one clear and well-defined niche market, design a unique customer engagement from the core, apply emerging technologies to build microservices aligned to each segment expectations. Market players that have shown great success following such path include Lemonade, By Miles, Bought By Many, Laka, Canopy, Getsafe, to name but a few.
Rob: Winning customer offerings generally serve a specific niche or need that is being underserved by traditional markets. Disruptive startups such as Up Cover Bought By Many and others know their customers really well!
Robin: 1st is - Insurers who are in social media like TikTok - you might be missing the opportunity of our generations. You also want to be there when they get old. 2nd is - Insurers who are selling in the ecommerce marketplaces - go where the money is.
Denise: The industry had already begun a digital transformation that was accelerating due to a combination of factors – customer expectations, technology and shifting market boundaries. The Covid pandemic and its impact to the economy where insurance growth is directly tied to GDP is affecting businesses, employees and daily life and has exposed the resiliency or lack thereof of every industry and businesses within them to rethink their strategies and plans. These implications are directly and indirectly influence insurance. Those industries doing well are proving more resilient versus those not because of their digital business models that contrast the traditional business model like streaming media versus traditional satellite, at home cooking vs eating out, and home delivery vs. in-store buying. Within insurance, we have seen the growth in online buying of insurance, particularly for many of the new “digital first” startups such as Lemonade, Root, Ladder Life, and others. We are seeing an interest in on-demand insurance. One estimation suggests embedded insurance could account for over $700 Billion in Gross Written Premiums by 2030, or 25% of the total market worldwide. We are also seeing the demand for new voluntary benefits like DI, LTC, CI --- due to a greater understanding of these products. And we are seeing the need for new products to adapt to our customer’s changed business models – with increased interest in cyber, umbrella, and more. These and other companies have resilient, future-ready digital business models positioned to ride the trends and crisis – widening the gap for competitive advantage and positioning them as leaders. So how do companies position themselves as leaders? It is all about first knowing where you are in terms of Knowing-Doing Gaps as compared to those who are leading the digital transformation with resilient digital business models, then second prepare and prioritize plans that are crucial to moving you forward and third is executing on these priorities with a sense of focus and urgency. This is why strategic planning for 2021 is more important than ever … and the traditional business planning approach may not suffice in this time of dramatic change and pressure.
Minh: Impak, an independent impact rating agency that is moving beyond ESG, has created the first impact reference index.
5. What could we learn from other sectors, industries or BigTechs?
Spiros: That platform ecosystems are attractive business propositions for customers as well for the provider.
Rob: Insurance is complex – it is a financial instrument and legal contract all rolled into one – and is highly regulated. The industry is very conservative – we need to be dream bigger like Google, Tesla, and other leaders!
Sabine: The way BigTech has gradually been focusing time and effort on combining mobile first, cloud-based, big data-led, and AI enabled platform capabilities are very interesting and did not occur overnight. Customers: Often called users on those platforms. This means that multi-sided business models are deployed in these tech platforms. Behaviour economics: leverage data and targeted analysis to focus on outcomes that matter. Maximise strengths rather than trying to focus on weaknesses. Such companies are considered ambidextrous enough to learn where to create stickiness & ecosystem value for their users. Applies a Future lens... Think about Apple, Google, Microsoft, Tesla, etc. their entry within insurance has been about augmenting their end-to-end proposition within the context of their offers.
Roger: Just love how Unilever uses Google data to create new channels to reach out to their customers. Also, other countries. I’m fascinated how ecosystem thinking is part of the DNA of chaebol, the large Korean conglomerates such as Samsung, SK and Hyundai. The data skills of Big Techs Not just how they gather data; but how they turn these into new insights and how they turn these new insights into new propositions.
Denise: During that time, we saw new trends that began to reshape the world, from new technologies to new channels, customer demographics, customer behaviors, big tech businesses and much more that have dramatically altered nearly every industry and business. Those who continued to do the same things and expecting different results have slowly declined or are no longer relevant. Just consider stalwarts of the 1900’s like major retailers, bookstores, music stores, travel agencies, newspapers, automotive and more. Those who adapted and changed are growing and thriving, those who have not are gone or slowly dying – often not even realizing it. In many ways the famous quote, “Insanity is doing the same thing over and over again and expecting different results,” is a reflection of the last 50 years.
Robin: If you can't beat them - join them. More on partnership rather than building from the bottom of the barrel.
Minh: Learning from impact investing to incorporate impact into the core of activities, generating revenues and positive externalities.
6. How will emerging trends impact the insurer's business model during the next three years?
Rob: The number of IPOs, M&As and other exits this year has validated insurtech startups and innovation in the insurance sector unlocks tremendous value. I expect to see more disruptive offerings from leaders flush with new capital!
Sabine: Insurers will need to think through their current business model to adapt capabilities to meet future customer needs. Some will focus on Predicting: Use technology to mitigate and prevent future risk types. An additional group will focus on orchestrating: Cooperate and manage complex ecosystems of partners. Others will focus on embedding or deploying offers within the business models of others through distribution partnership agreements.
Denise: Global furniture giant IKEA partnered with iptiQ to offer home insurance to its customers. Travel insurers partnering with online travel agencies. Apple Care acting as electronics and warranty insurance. Walmart offers pet insurance – In November they announced they added pet insurance as animal adoptions soar during pandemic. Walmart is offering insurance through Petplan and connecting people to pet sitters or dog walkers through Rover. The continued emergence of outside industry players -- GM, Tesla, Amazon, Ikea – providing insurance & value-added services and/or embedding insurance to meet new customer demands and expectations that will disrupt insurance even more. The traditional B2B2C model offered insurance products through non-insurance or non-financial organizations such as associations, non-profits, employer groups and more. today’s new buyers do not necessarily associate with some of these traditional groups and will look to buy insurance thru groups such as Gig Economy groups, health and fitness organizations, large retailers, auto manufacturers and more – purchase part of their transaction Interestingly, these groups are highly digital and provide the ability to integrate the purchase of insurance. Just consider, Ford is partnering with Nationwide, which offers insurance that lets customers earn discounts for safe driving, offering a maximum discount of 40% off the policy premium using the FordPass™ app in 2020 model-year Ford vehicles. GM announced today it will take its relentless focus on safety and delivering a world-class customer experience one step further with OnStar Insurance. GM’s new insurance agency, OnStar Insurance Services, will be the exclusive agent for OnStar Insurance. Petco launches insurance - In October they announced the launch of Vital Care, a paid annual plan providing pet parents with a convenient, affordable way to meet their pets' routine wellness needs. Intuit launches quickbook insurance and 401K services - QuickBooks customers can now protect their businesses with comprehensive insurance coverage and offer their employees a 401(k) benefit, traditionally offered only by large companies. The growth and opportunity in program and affinity business to meet unmet risk needs and untapped market to create a new level of customer experience – and will move from traditional models to ecosystem-based models. This shift from our traditional models to new, innovative models is connected to today’s digital era of insurance shift. This shift is accelerating, in many ways, redefining affinity and program business models by leveraging next generation digital platforms and ecosystems. Success with these models is linked directly to insurers’ digital platform technology and expanding ecosystems of new partners. In this new era of insurance, nearly every insurance process is rapidly becoming frictionless, including buying. The benefit of adapting to these channel dynamics is that we move from needing to “sell” people on purchasing insurance, to introducing insurance that is ready to be “bought” seamlessly at the point of need, creating a scale-able, sustainable business model.
Spiros: The insurance industry model will change forever. They need to offer many more solutions that go way beyond the classical insurance business model.
Roger: They really give incumbents the opportunity to develop new business models and new revenue streams. I’m not sure they will lose a lot of their market share.
Robin: Personalization combined with digitalization - would flex the business budget muscles but having the attention and trust of the customers are future proof investments.
Minh: Insurers who fail to address ESG at business model core will face notable balance sheet risks, both assets and liabilities.
7. What are the top three recommendations you would want to see incumbent players action in 2021?
Rob: My top 3 recommendations for incumbents in 2021: 1) accept the challenge from new competitors such as Lemonade, 2) go beyond incremental offerings to truly new products, 3) experiment around the globe to speed innovation efforts.
Spiros: One recommendation is enough: Partner or buy insurtech and fintech startups to prepare for the ChangeTsunami that will change and redefine the insurance sector.
Denise: Insurance companies increasingly are competing in a new paradigm beyond their brand, product, price and distribution – the latter being primarily agents. Business Platforms are Mandatory. Embrace a Strategic Multi-channel Approach to Reach Customers on their Terms. The viability of the insurance industry is vitally connected to demographic trends, market trends, customer opinion and adoption of new technologies. If insurers lose touch with our customers, both current and future, insurers will lose business. The result is a porous market, where engagement is everything and the relationships between businesses, customers, channels and partners is crucial. Insurers unprepared for a new dominant insurance buyer find they are no longer relevant after this major shift. Innovative partnerships, ecosystem development and connections are crucial. Insurers must align their strategies around core system platforms, digital experience platforms, next-gen technologies and ecosystems that are technically and architecturally different than the on-premises “modern core” solutions of the past. The heart of the insurance platform is an orchestration of next gen technologies including cloud-native computing, microservices, APIs, new data sources, artificial intelligence (AI) and machine learning (ML), coupled with an ecosystem of partners. Digital experience platforms create the ability for constant touchpoints with customers in simple ways by plugging into capabilities that enable cost-effective growth while bringing insurance coverage closer and more personalized to the customer. This creates tremendous potential for both penetrating existing markets and reaching or creating brand new markets.
Roger: Stop hitting the snooze button. Stop pausing digital transformation plans. Accelerate them. Work with insurtechs to gain speed. Adopt new technologies at scale. Eliminate the corporate immune system and not invented here syndrome. Move from proof of concept and pilots to implementation at scale. For top-line and bottom-line impact.
Robin: 1. Policies combined with modern innovation/distribution can a good combination. 2. Bend a little not only for the customers but also for young partnerships. 3. You already had the headstart - might as well push the innovation turbo button.
Sabine: The focus must be on designing execution-led strategies or refining strategies not just on a limited understanding of market factors but by combining a clear understanding of customer needs, market drivers, and the evaluation of a multitude of scenarios. The customer is changing, and the customer engagement must be aligned to those, new unique low-touch engagements. Future Business models will need to be redesigned for growth by understanding how to better partner, invest, and acquire.
Minh: 1. Use of AI and big data solutions to make smarter, purposeful and impactful investment decisions; 2. Take ESG and Impact as an integral part of the process without green washing; 3. Deploy important human resources to rethink its value proposition
8. What are your final words of wisdom for world leaders observing or participating in this TwitterChat?
Spiros: If you an insurance incumbent I can only say to you: Change radically or die (period).
Rob: Repeat after me: insurtech is NOT a fad! Despite a crazy year in 2020, the sector proved to be resilient and funding remains strong. Don’t cut your innovation budgets in half; double them instead from unused travel expenses.
Denise: The demands of agility, speed and innovation are dramatically different as we enter 2021 than they were entering 2008 or even 2020. To succeed in the future of insurance, which is accelerating & separating Leaders from Followers & Laggards, insurers must lay the groundwork of a new digital insurance business model embracing digital platforms, next gen core system platforms with vision, energy and speed. The era of succeeding as a “fast-follower” is long gone. The gap between Leaders and Followers and Laggards over the last year and the next three years is staggering: In the past year, Laggards had a 41% gap to Leaders; and Followers, had a 15% gap to Leaders. Over the next three years, the gap widens with Laggards and Followers falling further behind Leaders, with 62% and 21% gaps, respectively. Tremendous changes are still on the horizon. Future market leadership and success will be defined by focusing on the customer experience, business innovation, and technological leadership. Today’s Leaders are reallocating their investments into digital transformation that gives them a compelling, engaging, customer-centric approach that differentiates them in a new era of insurance. How do your strategies align to what Leaders are doing? What specific plans can you take to improve your odds of success? How can you accelerate your digital transformation? Welcome to the Future of Insurance!
Robin: Leaders, Investors, Insurers or even Customers - remember, Insurance is still Sexy, especially we are, and we will serve the societies even on your personal or global hardest times. We made it this year - thank you heroes.
Sabine: The winning business models of tomorrow are not the business models of today. Even though many people state that all business models have already been invented! Are they real or are we limited with what we already know? We talk about Big Tech, but competitive entry is coming from other sectors too. Not just Big Tech. Don’t just build platforms and ecosystems in siloes. Apply platform and ecosystem thinking to combine Open Data and API thinking to scale, accelerate your opportunity for growth.
Minh: I believe insurers should take on a leadership role during the transition to a more resilient, low carbon future.