Pulling together some loose threads from October’s Insuretech Connect Conference, here are 10 takeaways:
- Innovation Rap. “I actually feel the industry gets a bad rap in terms of innovation,” Dan Glaser, Marsh McLennan Cos. CEO, told the roomful of innovators, citing newer insurance products in the areas of trade credit, transactional risk, supply chain, cyber and others. He acknowledged that the industry’s innovation may have until now emphasized products and protection over customer experience but that is changing. The veteran sees the industry as very open to new ideas, experimentation and partnerships. What’s more, insurance is an enabler of innovation and insurtechs. “Nothing happens without insurance. There’s very little innovation, there’s very little investment that can take place without it,” he reminded them. At the end of the day, he said, there may actually be too many great ideas to achieve. So, he tells his team: “We have enough money to do anything, we don’t have enough money to do everything.” The challenge is prioritization. “Focus is important. We have to deliver the future, but we also have to deliver third quarter.” He said he comes to the conference more to get than give advice, but he endorsed the drive to better understand the customer. “If I had any guidance or advice, I would say internally and externally, the first thing that every business has to know is, who is your client? In our industry that’s a little bit more complicated than you might think. It could be the end consumer, it could be an insurance company, it could be a broker, it could be a risk manager. Who is the client? You don’t get to have too many clients, right? So, who is the client? And what are you specifically doing to improve their experience? I think increasingly in a digital world the winners and losers will be defined by the client experience.”
- Behind the Curtain. Daniel Ariely, Duke University behavioral science professor whose work inspires the people at Lemonade and who always provides food for thought, talked building trust with customers. One building block is that businesses should demonstrate that they actually put a lot of effort into serving their customers even though shiny technology may hide all the hard work they do. People are happier to pay if they know the provider has put a lot of effort into the product or service. Restaurants do a good job of showing their effort by explaining all the ingredients in a dish, letting patrons know the fish was caught fresh that day, and then taking time in the kitchen to prepare the individual meal. Ariely said consultants do a good job also, delivering presentations that are hundreds of pages when all the client wants is the last page with the recommendations. Other industries do a poor job of showing their effort. “Almost anything online, and almost everything financial,” Ariely said, claiming that as financial firms move more and more online, they get less and less appreciated. “Now, online, how dare they charge me $5 a month for a checking account? It seems immoral. We don’t see the effort.” The travel site, Kayak, is an exception; it does a good job, according to Ariely. “You type a search query and you press enter and they show you what they’re doing for you. ‘We’re searching United. We’re searching American.’ Things are moving on the screen, and when they finish it you say, ‘My goodness! I had no idea this could happen.'” He stressed that it’s not about slowing down the customer experience a lot. People don’t like to wait. But if the wait is just 10 seconds and that extra time is filled with activity showing what effort is underway on their behalf, they end up happy. “We have this perception that as long as you give people magical as an outcome, people will appreciate it. That’s just not the case. If we wanted people to appreciate what we are doing, we have to help them appreciate, like the restaurant, like the consultant.”
- Get Outa’ Here. One of the best observations came from Beth Maerz of The Travelers. “Innovation isn’t happening within these four walls,” she said on a panel titled, “Distribution from Within: Is It Actually Possible?” Maerz, who is vice president for customer experience and innovation in Personal Insurance, is impressed by the number of meetings being held outside of the Travelers corporate buildings, and with how many people are spending more and more time going off-site to work, learn, partner, share and educate. They are meeting and working with partners, companies, schools, organizations and others “they never would have considered partners before.”
- Consumer Champion. Like Ariely, Kenneth Lin, founder of 85-million-member Credit Karma, gives technology credit but only up to a point. “We can do things faster, and we can pay with more payment methods, we can take applications online. We’ve made streamlining and underwriting easier. We’ve done a lot of amazing things in capturing data.” All of that is great but it leaves the real financial issues facing consumers unsolved. “We are failing a lot of consumers,” Lin says. For example, 28% of consumers have no money left at the end of the month; they need to borrow. Less than 46% of consumers have less than $500 in savings, and even includes people with incomes of a $100,000 or more. Credit Karma teaches that shopping around for financial products really matters and, Lin hopes, building products to help them do that really matters, too. He challenged everyone to think about building products that solve little consumer problems. Credit Karma started out giving free credit reports on its way to becoming a trusted source for shopping for credit cards, loans, a tax service and now, advice on car insurance. “All of these things are not about building revenue but about building trust and building engagement with our overall user base.” It’s also about education. Lin says as members learn how their credit scores work they tend to become better consumers and financial risks. Recently Credit Karma started helping its members track the value of their cars — which for many is their most important asset — and also learn about safety recalls on their makes and models. So over time Credit Karma has collected its members’ demographics, address, credit score, tax information and car information and even traffic violation along with other any public records. Eight million members have synced their cars to Credit Karma’s platform since launch of its auto feature a year ago. The next logical step is to help them find the best rates on car insurance without them having to input any additional information. And teach them how their credit score and other factors affect what they pay for insurance. The insurance shopping service has been launched first in California and Texas. Consumers can get anywhere from 10 to 30 quotes with little or no data entry. Lin’s firm is not partnering with any insurers or being paid for this service, at least not yet. “Through all the journey, we think about being a champion for our members,” said Lin.
- Cyber Agents. “We borrow the trust the agents have built,” said Paladin Cyber’s Han Wang, referring to why his company that offers cyber protection services for businesses teams up with agents and brokers rather than going direct to small businesses. “Small business doesn’t move online.” Chubb has learned that while large businesses may not be interested in buying cyber security services from insurers and agents, small and medium sized businesses are. Chubb’s William Stewart said that between insurance speak and cyber speak, it’s easy to get lost in lingo. Brokers do understand cyber but there is a need to clean up the language and give them terminology that clients understand. AIG’s Tracy Grella added that clients definitely need a broker for cyber. “Brokers are offering a service, not just placing a policy,” she said. In the area of cyber defense against the dark arts, AIG is working with DarkTrace. “Everything is connected,” said DarkTrace CEO Nicole Eagan. The villains are smart and have artificial intelligence and all the tools the good guys have. It isn’t all about them taking data outside the building; it’s also that they go in and change data. They keep changing how they attack. “Historical attack data is not all that meaningful,” she said, describing how her firm works to get mega-information from inside clients’ operations. That information is then used to ward off intruders and act before claims happen. “So, we all learn in real time what everyone connected to a network is doing.”
- Sharing Uber. Despite some indications to the contrary), it looks like Uber is not interested in getting into the insurance business. Rather, the global transportation firm seems content to focus being a smart insurance buyer and risk manager, according to Curtis Scott, the firm’s global insurance chief. But that doesn’t mean Uber isn’t interested in insurance. At Uber, Scott says that a lot of what his team does is create access to insurance. “We work with insurance companies to understand what our business is, what the needs of the drivers are, and actually how to create things that are meaningful for them…and share and better understand its data, to help them intelligently underwrite.” Uber is interested in extending (but not paying for) more insurance options to Uber drivers beyond its current ridesharing endorsements. He is interested in insurance for drivers for protection against injury when they’re on the Uber platform. “How can they have peace of mind to know that there’s going to be an insurance product there if they’re injured while doing a trip, and then also to continue their income,” he explained. It provides access to health insurance through the Stride Health benefits platform and recently made maternity leave coverage available to drivers in Europe. “These are all just normal life events that create pressure for people whether their doing Uber or something else but I think having really sane and valuable products,” he said. He is interested in doing business with insurers that “really want to solve a problem” and have “people who really understand it from every angle.” He advises insurers to offer products that do the things they are supposed to do well and “avoid the bells and whistles.”
- Big on Gig. “The real big difference and change that the gig economy brought is this blurring of lines between what’s personal and what’s commercial, where it’s addressing the need of the private homeowner renting a room on Airbnb or the Uber drivers using their personal cars for commercial purposes and needing to have insurance by law. Then, too, there are those, like teachers, who enter the gig market for a season,” said Uber’s insurance chief Curtis Scott. Scott and Noah Lang, the CEO and co-founder of Stride Health, said the future of the gig economy depends on portability of insurance and benefits for people as they move in and out of being employers, employees and independent contractors. “People covet the flexibility, but it won’t work unless we replace the benefits. It won’t work unless we create a system that makes it possible and I think what you’re going to see happen,” said Lang. “We have to adapt and create benefits that are for the new world where people are going and that’s important because they’re not trends, they are actually human desires,” said Scott. Scott said the gig economy is where there is combined asset use and flexibility. Stride Health’s Lang defines the gig economy as encompassing “anyone and who works for themselves in some way, shape, or form.” While it includes Uber drivers, it’s also realtors, health care professionals and others. “The gig economy really isn’t that new. Most people in the gig economy are offline and have been doing it for a very long time. Most of them have been doing it by choice.” Nobody has good data on this. The best estimates are somewhere 50 and 60 million people in the U.S. are doing some sort gig work. On Lang’s platform over half are doing two plus jobs. “So, it’s usually an amalgamation of income streams.”
- Brain Candy and Bubbles. Oliver Wyman’s Rick Chavez had advice for incumbents, startups and investors. He invoked the words of Jack Welch — “Whenever the speed of the change on the outside is faster than the inside, the end is near” — to warn incumbent insurance leaders about a talent risk if they do not embrace what he called a modern mindset, which means not only adopting technology but providing leadership. “It’s serious because the best talent will want to go to the best problems. It’s brain candy, right? Why is this that it seems that the Amazons and Facebooks and Googles of the world are attracting that talent? Well, they’re attracting excellent talent because they’re providing a proving ground, for future proof of their company.” For the insurtech players who may think they are currently operating in a bubble: “I can tell you, if you want to succeed and thrive in a bubble, make yourselves indispensable to those incumbents. Prove yourself in the problems that matter to, not enthusiasts, but to pragmatists. Find them, work with them.” And he, advised, learn from them. He called on the investors in insurtech to consider taking a more active role as investors in other industries appear to be doing, helping to manage the startups. He sees a way where everyone collaborates in a way that “actually helps this industry shift, not tip in a radical way,” learn from but not fall prey to the mistakes of others, and “make products with intention.”
- Transparent Collaboration. “Partnerships are the answer,” proclaimed Tony Kuczinski, president and CEO of Munich Reinsurance US. He sees incumbents and insurtechs collaborating to do good not only across a company but also across the industry and society. To have this kind of sweeping effect, partnerships must embrace customers, third parties, even competitors, and their collaboration must be transparent. As an example, he cited the need to speed-up delivery of claims services in times of catastrophe so insureds can be helped sooner in their time of need. His company’s own Innovation Team Lab in Munich began working with its own claims professionals and policyholders to train robots in claims adjusting. By the time they were done they had visited a catastrophe site and partnered with a nonprofit, several insurtechs, various clients and several competitors. “To find the right partners, you have to be humble enough to know you need them, but you also have to have the tenacity or the drive to pull them in,” he said. “In effect, words like ‘competitor’ and ‘clients’ and ‘disruptors’ and ‘dinosaurs’ in this world become obsolete.” A shared purpose brings everyone together and changes the discussion to partnerships. We’re helping each other because we can’t do it without you, and you can’t do it without us.” According to Kuczinski, this “transparent collaboration” is lighting a path for other groups to start looking at perils like tornadoes, mudslides and earthquakes. “You see, in effect, what this has done is it started to re-channel our focus on why we exist in the first place and to help us deliver sustainable value together. My hope is that it’ll create shared value not just for ourselves, our clients and their customers and it will clearly make the customer experience better, it’ll help our partners and society at large.”
- Doom and Boom. Conference co-founder Caribou Honig doesn’t disagree with those who believe that the winners and losers will be defined by the customer experience. But he sees both incumbents and insurtechs capable of winning: “Insuretech can be a bit polarizing. On the one hand, you sometimes get the reaction, ‘Oh those startups they’re doomed, they don’t know what they’re doing. They don’t understand risks, they don’t understand how to operate in a regulated environment, they don’t have the capital you need to do this right. Those startups are doomed.’ On the other side you sometimes get the reactions of, you know, ‘The sky is falling. Insurers are doomed, insurers are doomed.” Honig believes neither of these is right. “Both the incumbents and the startups have an important role to play in capitalizing on the digital revolution that’s happening right now in insurance.” Whether blockchain will be among the winners remains to be seen. He is a “long-term optimist for blockchain” but, in the short term, he still hungers for “the proof point, not that blockchain can work, that it can function, but that it can work better than what’s already out there.” Of one thing, he is certain. In the area of whether artificial intelligence will take over humans, there will be clear losers. He said this battle is more between robots that replace human and cyborgs that assist humans. “I still don’t know who’s going to win robots versus cyborgs, but I am convinced that those doing nothing will lose.”
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