InsurTech Rising: Surviving in a disruptive world
The first InsurTech Rising event kicked off in London this morning with a well-received strategy keynote, Responding to disruption – threats and opportunities, presented by Costas Markides, Professor in strategic leadership at the London Business School.
Opening the first session, Digitise or die – innovating for survival in the age of the consumer, Markides listed a series of lessons to be learned as to why some companies respond to disruption and others do not.
“Disruption is labelled as everything, but if disruption is undermining your business then that’s not disruptive. What you need to do in response depends on how disruptive that disruption is. Don’t over-react, for that may cause problems,” he warned.
“Disruption is not guaranteed to succeed. Instead, learn from it, take away those lessons you have learned, and adapt them to your own business,” he said.
Those who failed deemed disruption to be a threat, while those that were successful did not view interruption such as the internet as an opportunity. “Seeing it as both a threat and an opportunity is key to success,” he stressed. “When people feel threatened, they get a sense of urgency and the adrenaline flows, galvanising them. You need urgency rather than simply thinking how to respond to a disruptive threat. You need a strategy to defend yourself against an attack.”
You cannot scare people into changing, he said, giving the example of the government’s campaign to persuade the British electorate to vote to remain in the EU. The strategy used was to scare them, with the message that to leave would threaten the British economy. And that strategy famously did not work, he said.
He said there need to be two strategies regarding disruption: firstly, to defend the core business, and secondly to explore new markets.
In the process, he said it was necessary sometimes to ignore customers. Of course you should listen to them, but you should also listen to non-customers, he said.
He concluded by saying traditional insurance companies should not underestimate just how constrained their thinking has become after many years’ experience in the insurance industry. “Use any tactic you can to escape the mental mindset and sacred cows of the insurance industry,” he said.
The opening strategy keynote address was followed by a panel of digital and innovation leaders from three leading European insurers who were moderated by Association of British Insurers assistant director Matt Cullen. The panel was entitled Digital leaders - acting today to win tomorrow.
Delegates were told that research shows half of existing traditional insurers believe that 20% of their business is going to be disrupted by InsurTech. Cullen asked the panel how they thought the insurance industry should act today to win tomorrow in this regard.
Generali global head of digital transformation Moshe Tamir said this should firstly be achieved by transforming the core around customer and distribution experience. “For many years, insurers have attracted millions of customers to build a strong traditional distribution channel that is now under threat from innovative technology start-ups. Most customers suffer from a lack of clarity of information and transparency,” he warned.
“The UK has many direct insurers, but each of these tends to still be backed up by physical people rather than a technology only solution,” he said. The challenge he said is to create an eco-system in a culture that has not changed.
Aviva head of digital innovation and new business Paul Heybourne said it has never been more exciting to work in start-ups world in the insurance market. “No way would we have filled a conference hall like this and with content for two full days just two years ago,” he said.
He said hackathons are a very powerful way of bringing effective change to an existing insurer. In 2014 the company ran its first weekend hackathon and in the space of a weekend they managed more than would traditionally be achieved in months, and the event led to the formation of the digital garage in London’s Shoreditch. “We share expertise and risk with start-ups, but we also share that risk with customers. We have a huge amount of data, to increase interactivity,” he stressed.
MetLife head of direct and digital Francoise Lamotte said the challenge is to rebuild relationships. But responding to the idea of combining the insurance model with social media, she rounded off the panel with a warning about the need importance of innovators being very careful not to breach data protection laws.