June 18, 2020
Insurance Innovation — Alive and Kicking
by Denise Garth
An abundance of startups shows the industry adopting a two-speed strategy, around speed of operation and speed of innovation.
Insurance innovation is alive and kicking, and gaining traction, as represented by the wide array of submissions for the 2020 Innovation in Insurance Awards, sponsored by Efma and Accenture. Last year, I was honored to be selected as a judge, and the winners were just announced in a virtual award ceremony. Congrats to all for carrying the commitment to innovation for our industry!
With customer demographics and expectations changing, with new channels and competitors appearing and with so many technological possibilities opening up, we see a two-speed strategy around innovation: speed of operation and speed of innovation.
Speed of operation focuses on optimizing the existing business model while speed of innovation looks at new business models that will disrupt the business. This two-speed strategy aligns well to AM Best’s innovation ratings.
Innovation That Stands Out
So, how are insurers innovating? In the submissions this year, there are leaders who understand the intersection of customer, technology and market boundary shifts and are blazing trails.
See also: COVID-19: Innovation, Your Time Has Come
Here are six interesting trends and focus areas that stood out to me:
1. Personalized digital platforms
While a number of portal or mobile app submissions focused on niches such as bill payment, they did not provide the engagement offered by personalized digital solutions that delivered the kind of great experience customers increasingly expect. One submission offered services and rewards to clients with life insurance and monitored customer behaviors to provide personalized recommendations and rewards that would encourage healthy behavior. The result was a fully executed digital platform for behavior change.
2. Home and wearable IOT ideas
IoT and wearables have matured rapidly over the past five years. As I discussed last year, Insurance at the Intersections of Protection and Prevention, the real opportunity for these technologies was to create a bridge from P&C and home security into home health and wellness. P&C insurers (using IoT devices to protect the home) can use health awareness devices to serve those who choose to age-in-place – connected home and health all in one. With more than 10,000 Baby Boomers retiring each day, this is a huge market opportunity. One submission used smart technology to safeguard clients and their home while providing access to a range of services, including home repairs and maintenance, food delivery and medication reminders. The concept, a creative use of traditional P&C and life & health, epitomizes a customer-first approach, rather than a product approach. In today’s COVID-19 environment, and with the cost of nursing home care increasing, this option could appeal to a lot of customers.
3. Data ecosystem
Innovative uses of data are driving growth, and ecosystems can accelerate it. One submission built a data ecosystem with partners across a wide array of industries that allowed the entrant to visualize and use data for underwriting and helping clients minimize risks, thus increasing the company’s business. The opportunities to build on this concept are enormous.
4. Travel insurance’s customer experience
While buying travel insurance via an app seems commoditized, one submitting team changed the policy transaction into a broader customer experience, driving engagement, value and loyalty. Travelers receive recommendations on where to go, safety and security alerts (using geo-location from the mobile phone) and other services that improve the experience while reducing risk. This submission is a great example of thinking beyond the traditional risk policy to a broader customer relationship.
5. Family insurance
A number of years ago, the concept of a single insurance policy that would adapt as you went through life was discussed within a company where I worked. But the idea could not be done on the old mainframes prevalent back then. Fast forward, and the idea has morphed and emerged in one of the submissions. The entry looked at a single policy that would meet the needs of the family, including facets of home, accident, health and pet protection – all wrapped into a digital service that helps manage common, high-level family needs over the lifetime of the policy. This concept is radically different – approaching the need from the customer point of view, not from our long-held insurance point of view.
The last area that stood out is near and dear to my heart – agriculture. As an “Iowa farm girl,” I see the rapidly changing agriculture landscape and the use of technology to aid farmers from planting through harvest – well beyond just for potential risk and claims. There were three submissions that stood out to me. The first was a digital experience for farmers in India that focused on providing crop insurance but also included services such as cultivation recommendations that would help increase crop yields. The second was insurance that also provided intelligent traceability of agriculture products to minimize potential risks – all about secure sourcing and food safety. The third was parametric insurance for coffee growers. All of these highlighted how a centuries-old agriculture industry is ripe for new products and services to help optimize it while also protecting it.
See also: Step 1 to Your After-COVID Future
Innovation is Defining the Future of Insurance
Each of these companies – and others I did not mention – are reimagining the future of insurance with the customer at the forefront. They are taking control of their future before someone else does. And they are doing it with a focus on both operational and strategic innovation, fitting within A.M. Best’s innovation criteria.
These companies and the winners are well along the path to becoming the innovation experts that will reshape the future of insurance. Congratulations to all! I can’t wait to see next year’s innovative ideas come to life!