"According to the World Insurance Report, almost 30% of consumers would be willing to buy insurance from tech giants like Amazon and Google. If that’s not alarming you yet, consider this: this figure has almost doubled since 2015. It’s clear proof that technology companies represent a growing threat to insurance sales for traditional companies, should they choose to move into the market."
Martin Stewart on LinkedIn today.
So is it not better to apply Amazon's strengths as an insurer? Follow the link to Martin's article at bottom of my blog and consider my actionable observations here.
Lesson One: Put customers first.
I believe this should be the priority. A laserlike focus on customers working back to the challenges of internal processes and legacy systems. Too many digital transformation processes start with current customer journeys and just try and make them better.
Attending a number of workshops with Ninety Consulting will open eyes to true innovative ideas. Better still Ninety promises to take these to market with you in 60 days.
Lesson Two: Selling direct is efficient but....
Whilst true the fact is that many customers want independent advice and often have more than just one insurance need. Brokers and agents have a place in the value chain but to create en efficient and effective distribution chain insurers need digital platforms that encompass both the insurer and the broker/agent.
A single digital record used by all parties (redacted so each party onlee sees that which they are authorised to review). That means transparency and effective communications and supply chain orchestration.
I found exactly the same when digitally transforming Hilton's reservation systems. Hospitality clients need to be able to always get the best deal direct online but many will also want to book whole travel requirements including hotels, flights, hire cars, insurance, cruises, excursions via other channels.
Lesson Three: Be willing to experiment
Here is good advice from Marteen Ectors Chief Innovation Officer at Legal & General.
"Digital transformation is not the solution because it risks automating antiquated business models and creating many digital Blockbusters that still get bankrupted by the Netflixes of this world.
Here are some simple tips:
Find the “Why?” every employee needs to get up in the morning. Reorganise around products. Introduce one important innovation key success indicator: 3M’s NPVI, i.e. new product vitality index, would be a great start. NPVI measures how much percentage of revenues come from products that did not exist 5 years ago. 3M makes more than 10,000 products and they have their NPVI at an amazing one third. Want to predict the future? Create a Wardley Map (https://leadingedgeforum.com/advisory-service/wardley-maps/)."
Lesson Four: Diversify your offering
Insurance is evolving so rapidly and in the longer term the focus will move from risk-sharing to prevention.
"Amazon may have started as an online bookseller, but today they sell everything from streaming services to groceries. They’ve also partnered with a multitude of small vendors to offer a broader range of goods and services."
Lemonade, Root, Hive, Slice- the number of new products and services multiplies with time. Make sure your product and services portfolio diversifies in the same way so that you are indispensable for customers. Choose a digital insurance platform that supports that strategy.
Lesson Five: Think Long Term
I think about the business plan I had to present to digitally transform Hilton's customer journeys. Not just a CAPEX justified plan but a five year revenue expense factored in. Innovation is not just for Christmas.
Amazon first opened its virtual doors in 1994. Back then, the main question Bezos had to field from potential investors was “what’s the internet?”. To be able to see a future where people not only embraced the internet but were willing to use it to buy products was Bezos’ special gift.
If insurers are to keep up with digital disruption, they also need to be able to look into a crystal ball. That means leaving behind the temptation to react to short term problems by bolting on solutions that don’t integrate well. In the long-run, this will slow down your organisation’s ability to adapt and take advantage of opportunities as they arise.
Try:Taking a holistic view of your operations by examining every touchpoint along the value chain for opportunities. Some digital disruptors have already changed the insurance landscape, so look to them for a benchmark on how much you may need to change. A digital agile system that is flexible enough for ongoing adaptation may give you the armour you need to succeed.
Anticipate disruption whether from Amazon, Lemonade or any quarter by applying these five lessons and chose a technology partner that delivers the right outcomes rather than just technology.
Amazon believes in ‘True Customer Obsession’. In the most recent Amazon Annual Report, Jeff Bezos describes this philosophy: “There are many ways to centre a business. You can be competitor focused, you can be product-focused, you can be technology focused, you can be business model focused, and there are more. But in my view, obsessive customer focus is by far the most important. Even when they don’t yet know it, customers want something better, and your desire to delight customers will drive you to invent on their behalf.”