Insurers have to be agile and ready to co-create with those from outside the industry as part of the new digital-led insurance ecosystem, said speakers at yesterday's panel on developed market dynamics at the Global Insurance Forum, held in London.
Mr Denis Duverne, Chairman of the Board at AXA said insurance companies are moving from merely being payers to becoming genuine partners in improving the well-being of customers. And this would require new skill sets which can be acquired through partnerships, especially with the InsurTech community.
“Fintech and insurtech companies have great talent, knowledge and imagination while insurers have the customer base, so I see a partnership between insurtech and insurance companies as the way of the future,” he said.
Sompo America’s President & COO Lisa Davies also highlighted how insurers need to modernise from being just a traditional risk taker to also being a service provider, which means engaging customers beyond just an insurance transaction.
“At Sompo, we’re looking to evolve into a theme park business model, so if you went to disney world you go for the rides but you also can’t go leave without buying the food or souvenirs so what we’d like to do is make insurance our main business but also move to other things as well.
“Our motive is to be a ‘theme park’ for the security, health and well-being for our customers so we’re looking to find ways to touch them throughout their lives and not just when they have a claim.”
For example in Japan, Sompo offers additional services such as nursing care and home remodeling, she said.
New risk landscape
With increased connectivity and the prevalence of IoT in the developed markets, insurance companies are having to deal with a rapidly changing risk landscape where a lot of risks reside beyond physical assets, said Mr Gaurav D. Garg, CEO of Personal Insurance at AIG.
He also cited how liability is moving from first party to third party, as in the case of driverless vehicles where it is unclear whether the driver or software manufacturer would be liable in an accident.
Another example quoted is whether an end-user of a device should be liable in a loss event when he or she had failed to update a software.
“Insurers need to identify the various gaps in coverage and come up with new ways and products to fill these gaps,” he said.
Fitting into sharing economy
Meanwhile, Ms Davies said the industry needed to align itself with the realities of the sharing economy, whereby the line between personal insurance and commercial insurance becomes increasingly blurred as assets that were intended for personal use is also being used commercially.
“So developing products and services that you can opt in and opt out, depending on the use of that product, is very important for us to capitalise and not to lose customers because if we don’t then there are assets that will move out of the commercial insurance platforms.
“And it becomes cost-prohibitive for people when they have to buy separate insurance,” she said.
That explains Sompo’s recent investment in Trov – a provider of on-demand insurance for individual items.
Innovation certainly needs to happen at a quicker rate in the insurance industry, although some momentum is building up in the area of savings and retirement amid ageing trends in many parts of the world, said Mr Michael Sherris, Professor of Actuarial Studies at the University of New South Wales.
“There is a lot of innovation that is happening and will have to happen in many countries especially those with DC schemes with large groups entering into retirement, and there are moves towards products which combine retirement income with other needs such as long-term care.”
Ms Davies added insurers needed to continually garner new ideas from outside the industry, to complement recent efforts in building innovation labs.
The panel discussion was moderated by Mr Ken Mungan, Chairman of the Board, Milliman.
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