‘Innovation’ is becoming a key driver for business generally, and insurance specifically. While there has been some hyperbole around the topic, we have found a few insurance industry analysts who have looked hard at the disruptive innovations that are beginning to be seen in the insurance domain.
We recently featured a post from Celent’s Mike Fitzgerald pointing out the requirement to provide strong leadership in order to achieve results from innovation. Today we turn to another analyst, SMA, for an example of an tech behemoth taking its model to insurance.
Both Celent and SMA will be addressing innovation at the Insurance-Canada.ca Technology Conference 2014 in March. A panel of experts will be addressing innovation in a keynote presentation. We’d welcome your comments and questions for these experts.
Google has an innovative toe in the insurance door
In a recent research brief, SMA Partner Denise Garth, puts forward thoughts on Google (innovator from birth) and its potential in the insurance industry. Garth points out that Google’s entree is just a preliminary exploration of opportunities.
In 2011, Google acquired an auto insurance aggregator in the UK, entering an extremely competitive market. As we noted in this space, the approach was not strictly price driven; it emphasized fairness and value. According to Garth, this is the heart and soul of Google’s overarching strategy: “embedding their technology into the lives of every user, gathering new data to use in new, innovative ways.”
The report notes there are 3 legs to the Google stool:
- Data and Technology. “Google is organizing data, information, and technology around people and users, rather than the traditional business processes or industry views”
- Location. “<Google’s> location based capabilities are rich and extensive, having mapped the world – which is now embedded in many software applications.”
- People. “customer- focused, changing and enhancing peoples’ lives by using enabling technologies.”
Garth notes competitors such as Google are challenging current business practices: “The report emphasizes the speed with which the future of insurance is changing – more rapidly than most realize or are prepared for – and puts into question the long-standing approaches of wait-and-see or being fast followers.”
We have met the enemy and he is us
Are insurers getting the message? Not so much, according to Doug McPhie, Partner & Canadian Insurance Leader, EY, writing in CanadianUnderwriter.ca. Mcphie cites recent EY research which found that almost 80% of insurers surveyed, “do not see themselves as digital leaders, believing instead that they ‘only play the digital game’ or are ‘still learning to use digital capabilities for a competitive advantage.’
More significantly, insurers are not seeing urgency in developing a digital strategy. McPhie writes:
While more than two-thirds of insurers polled globally feel they have delivered some quick, easy wins, it has not been accompanied by a long-term strategy to realize their ambitious digital objectives. In fact, nearly half of insurers say that they have no single cohesive digital strategy business case.
McPhie acknowledges that when planning digital strategies, insurers face competition for scarce budget resources. However, McPhie warns that paying lip service to digital in this day and age is penny wise, but pound foolish, writing: “in order to grow, insurers need to evolve and respond to digital pressures, or risk losing their competitive advantage.
Google’s innovation is customer, not technology focused
Garth says that the innovation Google is displaying comes from an ‘Outside-in” view which should be a message to other insurers.
“As Google continues to drive innovation and the integration of their technologies into everyday lives, Google is creating a new level of customer intimacy and loyalty due to a seamless user experience that is unheralded,” Garth said. As a by-product, Google gets the right to “vast amount of data and insights made available about individuals and their cars, homes, and bodies… <which> will fundamentally change the insurance value chain.”
What do you think?
This is pretty fundamental stuff. We’d be interested in your thoughts. Is the industry in Canada prepared for a model the likes of which Garth describes? If so, what are the examples. If not, what should we do?
We’d look forward to your comments below. Better still, we’d welcome you putting the questions to a panel of innovation experts who will be kicking off the #ICTC2014 on March 17 in Toronto.