Insurance - Disruption is Coming

First posted here: https://www.linkedin.com/pulse/20141106003928-275760-disruption-is-coming-but-not-as-we-know-it

In response to a great piece by Barry Rabkin here, for those that know me well - you will know I have a strong opinion on this, it doesn't mean to say I'm right here, but just my point of view from all the customers and partners I have spoken to at length on this over the last many months. I've included the full comments below.

Barry, really interesting piece - I hear and get asked this question nearly every day. But equally, I have heard this nearly every day for the last 24 months now, maybe longer. This question won’t go away and will continue to spark ideas and pique the interest of individuals and boardrooms up and down the country, fearful for the large, digital, (perceived) nimble enterprises that could engulf them in a swift clean swipe.

I think if you break it down further - to Personal and Commercial lines the story may evolve even further. Take the SME side, particularity the S part of this I think we can have a very healthy debate. These organisations (and I include our traditional carriers here) have an ideal opportunity to further leverage what we do so well today, but equally as you point out, its well known what they do and how to imitate or improve on.

Whilst I agree with you, they are highly unlikely to become direct insurers themselves, they are already heavily involved in the Insurance Value chain as creators and orchestrators of data. These organisations are Data Company’s and we are an industry of risk based data. We have some good examples already of Google in the US proving advanced weather data and subsequently crop insurance and in the UK, they have an Insurance price comparison site, albeit loss making at present – however, don’t let this fool us.

These are the guys that help create the data, the internet of things (IoT), internet of customers or internet of everything (whatever todays buzz word is) - from your mobile location (Nexus, android), your home (Nest, Google TV), your location (driverless cars, maps, Android), your health (wearables) and so much more! This volume of data on us as individuals has immense value and power in the right hands to reduce the inconvenience on our everyday lives.

However, what if they were to partner in the same way they do with Hardware providers for mobiles and other devices with a re-insurer, not having to worry about the things you clearly highlight and instead focus on the one thing they do well – the customer (google), the supply chain (Amazon), the Experience (Apple) and the community (Facebook) – you have a very powerful story! (queue scary music!)

What if this community were to all club together with the digital networks and relationships that exist today and monetized in a way that would disrupt the very tenants that have formed the backbone of this industry for decades gone by with the platforms they have created to break down the sequence and focus on the parts they truly dominate in. The worrying situation here therefore would mean the traditional product manufacturer is further removed again from creating and maintain customer and brand loyalty. We simply disappear into a land of brand unknowns.

The only thing I would add to your list, would be there are two customers here – our customers and our shareholder and we have a clear obligation to both.

I think they could be here anytime they want, however like you – I don’t believe it will be anytime soon. In my view, they will only enter when our margins are good enough or theirs are bad enough and for now that doesn’t look like anytime soon.

Just don’t rule out the partnerships or consortiums on the personal lines side. It will be a harder debate in the Complex Commercial world.

Disruption is coming!

Cheers
Nigel