How can the insurance industry adapt to better serve clients as they become more dependent on the digital supply chain and are exposed to new emerging risk?
We in the insurance industry have been very good at saying: ‘come on into our insurance shop and pick one of our fancy products off the shelf’. That worked in the past, but the technology-enabled companies of today and tomorrow want more than just products. They need a strategic partner that collaborates with them to deliver carefully crafted solutions.
Businesses come to us to insure an array of things, but they want a different experience than what we are used to delivering. They want to be able to say: ‘These are the risks we’re overly concerned about. Can we work together to create a solution?’
A lot of risks in the digital space are still emerging, so there’s little data to rely on. That’s a major frustration when trying to create new insurance solutions. It can be overcome successfully by adopting a culture of innovation. We need to put the client first, determine the aspects of the risks they face which they really want and need to protect, and tailor our insurance offer so that it does exactly that. We need to make it fit for purpose.
To achieve that, we need to embrace and understand our clients, spend a lot more time with them, and create something bespoke at the core of a partnership. Otherwise, we will simply compete on price, offering the same sort of product everyone else has.
If we sit on our hands and do not engage in those strategic partnerships, we face obsolescence. We might think our sector is too big, too entrenched, and too important, but the list of the biggest companies today is completely different than just ten years ago. Today’s top five are big tech, digital, data companies. The old leaders didn’t keep up.
We’re reminded every day about the need to keep innovating to avoid decline. My favorite reminder is Tesla. Elon Musk says that if insurers continue to ignore the data and the safety advances Tesla is making, he will in-source insurance. I don’t think companies like Tesla want to become insurers – ours is a difficult, very highly regulated business – but they will do it if we allow insurance to block innovation. They have the capital to create their own insurance solutions. If we can embrace those strategic partnerships instead, we can create solutions that not only work for a company like Tesla, but for lots of others too, and avoid the risk of obsolescence.
Most people in the insurance industry would say cyber is our biggest opportunity, but we should be looking at other verticals as well. We’ll only get to know what they are if we embrace a culture of change and learning, engage in those strategic partnerships, be better with data, and become more digital.
We need to get out of our 12-month coverage cycle and speak to our customers more than once a year at renewal. We need to abandon the vertical classes that leave big gaps between risks, and we need to be more flexible, more agile, and set out on a journey with our clients. The future of the insurance sector is very bright, but only if we change with the times and begin to adopt a flexible approach to the way we provide insurance protection to the technology-enabled companies of today and tomorrow.
Christopher Moore is head of Apollo Underwriting’s ibott syndicate 1971 at Lloyd’s, a technology-focused syndicate dedicated to resolving the risk challenges of the sharing economy, new mobility, and other emerging sectors. He made these comments during a webinar hosted by Parametrix, in collaboration with RIMS, the Risk & Insurance Management Society. To read more of the participants’ views, download the complete webinar transcript.