The impact of innovation within the insurance sector
Technology has the power to impact our lives in a number of ways. Businesses are constantly assessing the ways technology can drive innovation and the Insurance sector is no exception. We spoke with Matt Cullen, Head of Strategy at the Association of British Insurers, and Ak Lloyd, Head of Insurance for Huxley, to gain more insight.
The changing face of insurance
So many sectors have faced significant technological disruption and the insurance sector is now experiencing similar levels. According to Matt, this has been happening on some level for a while now. He says, “The industry has evolved a reasonably large amount over the last few decades – we’ve gone from door-to-door sales to the rise of telephone insurance and onto comparison websites.”
Barriers to innovation
But still, when it comes to innovation, the industry has faced accusations of lagging behind. Matt offers a reasonable explanation for this, saying, “If people see potential for their lives to be revolutionised, businesses will capitalise on this. Therefore an industry such as retail is ripe for innovation. In comparison, most people don’t take out insurance policies on a highly regular basis and so the demand for innovation has shifted much more slowly.”
Insurance is a highly regulated sector; complicated frameworks create barriers to innovation with numerous rules having to be meticulously followed. It’s difficult to drive change when so many procedures need to be adhered to.
In addition to this, insurers aren’t renowned for having innovative cultures, as Matt explains, “Stereotypically, insurers aren’t known for taking risks and being willing to fail. Attitudes are changing though, and a more innovative environment is beginning to emerge.”
A more innovative outlook on the sector
As the sector starts to innovate more drastically, different segments of the industry will likely develop at a faster pace, “While commercial lines may not necessarily be the area that hits the headlines, there’s more scope to change things quickly here,” explains Matt. “This part of the industry has a customer base more often willing and able to engage with new approaches, so we’re more likely to see change happening at a rapid rate.”
The back office is certainly a key area that lends itself to innovation more easily, “Simplifying back office processes to produce more efficient operations offers large potential for innovation. There’s huge value in updating and re-imagining processes that can develop more robust systems across the board.”
However, in terms of truly disrupting the sector, innovation needs to touch the customer propositions at the front end. As soon as disruption occurs in the customer facing aspect of the industry, we can expect to see large levels of change. Matt says, “When front office innovations begin to gain traction, it’s likely the entire landscape of the industry will begin to snowball.” We’re already beginning to see a wider variety of roles opening up for candidates within insurance. As the industry continues to develop, it’s likely that in the long term, opportunities will continue to grow.
Insurtech driving innovation and partnerships
A significant boost to innovation within the sector has come from insurtech start-ups. In 2016, insurtech was responsible for over $2 billion worth of investment deals globally. This innovative branch of insurance is leading to a range of partnerships between start-ups and established firms. We looked at the benefit of this in our article on mergers and acquisitions within insurance.
With insurtech companies significantly impacting the sector, many assume this could lead to the absolution of some insurance firms. However, Matt has played down this cause for concern, “Generally speaking, insurtech firms who want to come in and innovate don’t want to take over - they want to work in partnership with firms to deliver better customer solutions than ever before.” As insurtech continues to grow, so do job opportunities for a wider range of technical candidates.
The future of the insurance landscape
The ongoing evolution of the insurance sector means the future has the potential to look dramatically different. While there is some uncertainty, Matt has some predictions as to how we could see the sector being revolutionised.
As he explains, “Over the next year, I think we’ll begin to see more and more partnerships coming into fruition that will bring mutual benefit. It’s also likely we’ll see offerings become real as opposed to piloted programmes. At the moment, we’re seeing things happening at a very basic level; moving forward we should start to see more growth and more value created. And, as insurtech drives innovation, there are risks that will come with these developments. With the sector evolving, businesses need to put procedures in place that account for the risks associated with the technological developments of insurtech companies.” As organisations prepare for these risks, this will lead to a demand for more risk professionals within the sector.
Innovation is driving opportunities for a more varied range of professionals than ever before within the industry. To learn more about the various insurance roles we have access to at Huxley, contact Ak today. You can also reach Ak via telephone on 0207 469 5046. And to hear more about Matt’s opinions on how insurtech is re-shaping the face of the industry, visit his blog today.