Show me a carrier that deployed and end-to-end digital platform that is also a customer, internal employee and supply chain orchestration hub! That is stage 1.
Show me a full stack insurtech hat has done more than deploy a simple product in limited geographies. A broad portfolio of products and geographies is an essential outcome for Act 1 and must be achieved before you have a hope of delivering Act 2.
Carriers have generally tinkered with digital components of a full stage 1 solution. An easier way to buy or self-service FNOL from the smartphone. Most are constrained when even new Insurance Platforms deliver a very structured and hard to change customer experience. A bespoke "Saville Row" suit at a similar price and that long time to wait. Once bought that's it. Can't afford the time or cost to change or renew.
Lemonade is shaking the world but still with a single category product.
"Schreiber said technology is being used to both “collapse costs” and “delight consumers.” As an example, he pointed to his firm Lemonade’s use of bots to sell coverage and manage claims, resulting in the company having about 2,500 customers per human versus much lower numbers for traditional carriers: State Farm (500), Geico (400), Allstate (246) and Farmers (143)." That is to be expected with a simple product.
How about incumbent carriers that have doubled and even trebled customers per human across Motor and Home with a digital customer engagement platform.
But I agree with much Daniel Schreiber says and he is laying down a big challenge. Insurers should beware the long term vision, strategy and partnerships at Lemonade.
“Insurers need to build their strategy on globally scalable platforms where data analysis becomes a decisive competitive factor. Both are still in their infancy”
Oliver Bate Allianz CEO.
If Oliver Bate recognises the fact then so should other insurance CEOs.
"Chavez suggested there are lessons for insurance from other industries including retail where Amazon is now more valuable than Walmart; hospitality, where Airbnb is challenging Marriott; and banking, where PayPal has eaten into Bank of America. He also pointed to the energy industry where suppliers are using data to help customers manage their consumption."
That danger may come from another quarter. Walmart maybe on the ropes but retailers that have taken a major digital leap in retail and own full stack banking and financial operations could be the disruptive surprise. The digital goal is not only being attacked by Amazon, Google et al.
There is a key lesson in this article. Insurers must master and deploy stage one over the next 18 months. They have no option as otherwise they will fight a long tail of slender premiums and profits. First movers will prevail. See McKinsey's "Winner Takes All".
But they must also be able to plan for Insurtech Stage two and deploy that 18 months to 36 months from now. That mans mastering data, analytics, AI and organising people to make the decisions that AI can't or at least only help humans make better.
Don't forget that AI is not something you plan and deploy in isolation. It will take longer and cost more than you think but you will have to do it.
So when you chose an Digital Platform partner make sure it will ensure a successful Stage 1 deployment starting within months and completed across the whole value chain within 18 AND be the platform and enabler of stage 2 which you must plan now to deploy in years two and three.
Challenging times indeed but with solutions.
Glaser agreed that “digitization changes everything” and that the industry will have to embrace AI and machine learning. But he does not see these technologies becoming a differentiator in the long run. He predicts companies will at first go about creating proprietary AI and machine learning applications but that those will not be sustainable any more than proprietary CRM systems were. “No one will have proprietary capability,” he predicted. “People will buy AI.” Glaser said the industry will likely pivot from emphasizing product and protection to instead emphasizing a better client experience He said incumbents like MMC and others spend too much on running their operations and not enough on modernizing them. Yet they do have to find a way to do both. “We have to be able to deliver the future and the third quarter,” he quipped.