Innovate in the insurance sector to survive
Feedback with the client or Business Intelligence as essential elements of the insurance sector
Every year thousands of companies come into being worldwide. They can be divided into two categories: those that are created for the sole purpose of growth and those that are in it for the long haul. Insurers, or the insurance industry as it tends to be known in the English-speaking world, belong to the second group, mainly because they require time to build up trust and to guarantee their commitment to covering losses in circumstances where nobody knows if they might happen and when.
Therefore, in the insurance world, where survival over time and trust are fundamental factors of the business, it is perfectly normal that companies are rather cautious about technological transformations, and introduce innovations very gradually and only if they serve to reinforce their jealously guarded reputation. But how, therefore, do we explain that, according to Innovator’s Edge, there were more than 70,000 company profiles related to Insurtech at the end of 2017 with 428 different types and a presence in no fewer than 178 countries? The explanation is the dizzying speed of technological changes currently taking place, along with the fact that millennials are coming of age and forming a new generation of customers with very different consumer habits than their predecessors. Millennials are obsessed with staying connected and are staunch defenders of immediacy; millennials don’t request but rather demand digital channels that are able to provide answers to their queries, permanently available at any time of day and from anywhere in the world. They want economical and versatile products that meet their expectations. What’s more, the dynamism of the millennials infects other generations who want to appear like them and to stay young by imitating everything they do. Millennials are the trendsetters and drivers of social innovation.
In response to this demand, and especially for standard insurance products, many platforms have sprung up that make it easy to interact and take out a policy almost instantly. Is this innovation in insurance? Of course it is innovation, but maybe not so much at an insurance level, but rather in the way it is marketed and as a communications channel. The basic principles remain the same, which is essentially the law of large numbers applied to the benefit of the collective as a whole. It’s just that no paper is involved now. The literal weight of the written word has been replaced by digital signatures and the traceability of information. In general, everything points towards innovation being focused on an infinite number of gadgets which, logically, are also being incorporated into the world of insurance, which will happen even more so in the future. This is because, in addition to offering endless opportunities for collecting customer data and feedback , they contribute to the prevention of risk and enable new kinds of services to be provided with improved in-built levels of security.
In very general terms, innovation in the insurance market can be defined as any transformation that makes experiencing life safer and more stable. It is also anything that makes communication with the entity more straightforward and direct. However, when all is said and done, true innovation in insurance covers more than just these elements. Innovation in insurance goes a little further, as it enables us to go beyond the limits imposed by the market until very recently, advancing into the future and giving better and more extensive protection to the things we value today and which, until recently, we were unable to cover with a policy. Innovation in insurance is defined as a company created to fulfil a neeed and that has come to stay.
About the author:
Montserrat Guillen Estany is a professor at the University of Barcelona and a member of the Fundación MAPFRE Board of Trustees. She runs Riskcenter (IREA), UB’s research center, and is a member of the Royal Academy of Economic and Financial Sciences. Her speciality is statistics applied to insurance and the quantifying of risk. In the field of actuarial sciences, Google Scholar records her as the world’s leading woman in terms of citations for scientific articles.