I was delighted to be asked to join this one, but probably not for the reason most people expect. Sadly, it felt like on the night - I was in a minority - thanks to my serenading partner in crime, Arslan Hannani from Zurich - we both seemed to share a similar perspective. I guess, it had to be almost expected given much of the room was from the InsurTech Community, but we did have some support - thanks to those brave souls to put their hands up and stood up! All is not lost!
The two questions for the evening were
- Have insurance companies failed their customer?
- Who will own the future of Insurance?
There has been much fun both during the night, through the Q&A and after with the ensuring twitter debate so I thought I would share my thoughts and notes on my perspective here.
Question 1 - Have insurance companies failed their customer?
Answer - I say NO, and NO, and NO twice on Sundays!
If you see the billboards around town (certainly at my local train station) - Zurich have paid 99% of claims. Aviva will tell you 96% and everyone else in the top 10 a similar story. What bit of the 'promise to pay' has failed you?
Perhaps I focused on the word "failed" here too much, but in an insurance world, wording has always mattered. It may be semantics, when challenged by Gareth Eggle - but I think this is important here.
This is not marriage guidance, nor have I been - but I suspect if it was (from all the bad movies I have seen), they would tell you for a perfect partnership, you both have to work at it. You both have to care.
But I don’t think customers do really care - you go for convenience over value and you think we are all the same.
We throw some data into a comparison engine and find the ones that best match. We have been conditioned for decades to do this. You could argue there is a third person in this relationship and well - that’s a whole different debate and counselling session.
For most people, you only talk to me when your upset, when there is a crisis and when you are angry! What do you expect?
But you know - even then - when you do call, I welcome you with open arms. I will NOT fail you
We may have an identity crisis - as per Oliver Ralph’s piece a while back in the FT. Insurance tomorrow is likely to be very different to insurance today - in fact in my view Insurance has a strong chance of being the by-product of the service you buy.
We will still have the underpinning risk transfer mechanisms we need - just disguised by the service you actually want - machine maintenance, home monitoring, health, office monitoring. In this room we all know this - we all talk about it.
I will not fail you.
Insurance hasn’t changed because we haven’t had to - there are plenty of other things that needed to go before us - your food orders, your ability to order a take away and have someone on a bike whizz it to your front door, your weekly food shop, even the digitised statement from the bank you can now see online.
Hell, we can even submit our gas meter readings online, only to be surpassed with m2m sims and smart meters over the coming years.
We’re not that different. I won’t fail you.
And yes, it's our turn now. We are digitising, we are making it easier. But just because this wasn’t here, does NOT mean we failed you.
Could we become more efficient, effective, digital etc? Absolutely YES. Find me an industry that can’t. Arise InsurTech collaboration which has been growing over the last 5 years or so as this room all knows. Perhaps we have been slow in some areas to do this. You won't find me disagree here either.
Have we failed, absolutely and categorically NO.
Paul also mentioned during his piece - dual pricing. Harry also challenged me afterwards and you won't have any disagreement from me. Just last week, I had the same insurer almost 60% more expensive than my renewal they sent me. As the FCA announced after our debate, time is pretty much up on this practice. But don't for one min think this is a practice limited to Insurers. You mean the same dual pricing if you book your holiday on a Mac vs a PC. Or savings interest rate for online only vs a branch account or ever try to get a new mobile phone deal as an existing customer.
MyPOV - Time is definitely up on this for our industry. Let's see how the super complaint (only the second one ever after the PPI one and we know what happened there) plays out over the coming weeks. As a good friend used to say, everyone gets time in the spotlight - now is our time and the industry needs to address it, then the spotlight will move.
Question 2 - Who will Own the Future of Insurance
Answer. Other. Customers of course will own the future of insurance
Quite simply the customer, and if you think it's any different, I fear we are stuck in a silo of wining in a game of products, where giants are competing in a race to zero. It’s a race to become in some cases the most efficient manufacturer - something insurers aren't always well known for.
How many of us have switched based on a bad (claims?) experience, or price??
In the words of the great Dirty Harry. Go ahead. Make my day. Punk. Customer wins! (or as I managed to say on the night, go ahead Day, make my punk!)
We own the options. We get the vote. Customers are in charge of their own destiny. We have the choice to move and people exercise that choice all the time.
- Understanding the needs and importantly, the unmet needs of your customers.
- Going a stage further and understanding what matters to them. Is it their asset. Is it time. Is it (in)convenience.
- What are you prepared to pay a premium for and what’s table stakes?
Find your niche. USAA as Paul said is an awesome example. Another favourite of mine I came across recently is Hagerty classic car insurance. 87 interactions per year. It's exactly where Bought by Many are with their 340 plus groups - the customer wins, because we have taken time to understand what matters to that specific customer segment, whether it's traveling with ailments, specific pets or cycling.
'Your margin is my opportunity' is a phrase often attributed to Jeff Bezos. This is exactly where InsurTechs have won the hearts and minds in my view. We started in distribution years ago and we are eating away more and more. Perhaps it's your pace is my opportunity is more appropriate.
Yes, we run in very many cases in complicated legacy estates. Our new InsurTechs are unencumbered by technology. This is your greatest gift. Yet your unbundling may be the biggest challenge in the race to re-bundle in the next few years.
A few thoughts here:
- We have to get better at communications. We say 99%/96% of claims because the millions of good claims that just get paid - don’t sell headlines or magazines articles.
- We have to speak English - look at what lemonade are doing in terms of open source policy. Look at the simplicity of Trov and the ability to switch things on and off.
We go to school and learn for a short period of time trigonometry. We quickly forget this (I'm assuming!)
Why not teach kids how a bank works? What’s the value of insurance. I recall an insurance survey I did a while back. It talked about a large number of customers don’t know what an excess is. And 26% would give a regular blood sample or urine sample. What does that tell you.
It feels like sometimes we have lost the understanding of our value and what it means to the customer. We have have NOT lost our VALUES.
So, there you have it - We have NOT failed and the CUSTOMER owns the future. Thats my perspective. Would love your views here. Feel free to chime in below!
A big thanks to our hosts, sponsor and my fellow debaters
- Jannat Shah, Investor at AXA Venture Partners
- Luisa Barile, CFO at Bought by Many
- Carl-Georg Bauer-Schlichtegroll, Founding Partner - EOS Venture Partners
- Paul Merrey, Partner - KPMG
- Ben Potts, Managing Director, UK - Novidea (Sponsor)
- Paul Ridge, Sales Manager - UK Insurance at SAS(Sponsor)
- Ed Axon, SVP Business Development at Trov
- Harry Franks, Co Founder and CCO - Zego
- Arslan Hannani, Head of Market Management, Zurich
Good fun, thanks Robin, Matthew, Paolo, Lauren and team!
Nigel Walsh | @nigelwalsh