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Is Distribution a Second Thought In Insurance Innovation?

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With all the high pitched noise about digital innovation and resulting disruption, the distribution side of insurance has had less attention in North America, other than to assume that agents and brokers could be left on the side of the road.  There are exceptions, however, and I’d like your thoughts.

Digital is capturing people’s 1655-HQattention ….

…offering value, choice, and convenience.  Banks and other retail financial service providers have seen seeing strong uptake by consumers and business partners in the use of digital tools, starting back in the 1980s with bank machines.  Each success continues to encourage new digital services for customers.

A working assumption is that insurance would follow suit.  And it has in other jurisdictions.  A 2015 article in The Economist,  noted: “With customers increasingly footloose and picky (which explains the success of comparethemarket.com and the like) – and with Asia rapidly coming online – a digital champion could make a killing around the world.”

However, North American insurers seem to be less enthusiastic…

…than their counterparts elsewhere.  A recent KPMG global survey of insurers’ innovation efforts found that:

“North American organizations lag behind their European and Australian peers when it comes to digital. Just 38 percent of North American respondents say they see opportunity in digital, versus 61 percent of Australian respondents and 55 percent of those from Europe.”

And, significantly, these organizations  are seeking internal improvements: “When asked what would improve business prospects, 62% replies improving processes and process improvement and use of technology.  52% said digital technology and integration into processes.”

Capacity seems to be a major roadblock to innovation 

The KPMG survey data suggest that innovation projects are taking a back seat to  regulations, new customer demands and new expectations.  The survey found that “79 percent of respondents across the globe told us that they were already running at full tilt just keeping up with their core requirements.”

Are we going to keep innovation in a well defined corner so it doesn’t disturb ‘business as usual’?

There are exceptions that prove the rule 

In Canada, it seems that a number of award winning exceptions are focusing on distribution and the client.  Here’s a quick look at some of the nominations for the 2016 Insurance-Canada.ca Technology Awards (ICTA2016) competition:

  • Bullfrog Insurance provides small business users up to four different insurer quotes, with bind capability, for select business categories through a consumer friendly web site.
  • Desjardins General Insurance Group introduced its Ajusto smartphone app, a first in North America, which dramatically improves the customer experience by providing real time feedback and a more complete evaluation of driving behaviors.
  • Cornerstone Insurance Brokers Ltd. licensed a technology package which automates provision of  timely and relevant information, tailored to individual clients and prospects.
  • Sharp Insurance – provides iMobileBroker app service for insurance clients that allows immediate access for policy information, pink cards, documents, and payments.
  • Gore Mutual Insurance partnered with eight insurance brokers to launch uBiz, which enables small business customers to design their own insurance coverage and buy it instantly and securely online.
  • The Guarantee, inspired by clients who have suffered harsh weather / water-related losses, the GUARANTEE GOLD Mobile App helps clients proactively take safety measures to protect their homes and belongings.

So, there is evidence of distribution innovation, but will it be sustainable?

Innovation is a very effective Siren song, until we see what all is involved.  Distribution has been in flux for some time, and it is tempting to leave innovation aside until we better understand the lay of the land.

However, there are pioneers who are looking to innovate the distribution model (as some of the ICTA nominations describe) to better meet existing – or new – consumer segments.

What do you think?  When we look back after the current phase of innovation, will distribution be an afterthought, fore thought, or no thought at all?

 

 

 

 

 

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