Big little highs
As general insurance undergoes transformation, it’s the large and small things that count, and players will need agile thinking to flourish.
Taylor Fry's Scott Duncan explains.
Paradigm shifts are well underway in the general insurance industry, signalling a change from old-world thinking to new. To thrive in the new world, insurers must think both big and small. Big-picture items include understanding social changes, refreshing product offerings and ensuring agile thinking to capitalise on opportunities. Thinking small involves placing yourself in the customer’s shoes to build a better understanding of their lifestyle and requirements.
Here’s our take on three areas undergoing the change from old world to new, and recent initiatives showing the way forward.
Old world: Partnering with organisations that share the same DNA, and will therefore complement your existing offerings. The old-world terminology used to describe the benefit of these relationships is ‘synergies’.
New world: Building partnerships on a micro and macro level with organisations that think differently from you and will therefore challenge the way you do business.
Launched in 2016 and backed by a $75 million investment, IAG’s Firemark Ventures is described as the ‘strategic investment group within IAG for start-ups and emerging growth businesses’. Firemark is concerned with exploring:
- New and innovative sources of data
- Anything that has potential to impact the insurance value chain
- New business models and technologies that expand or redefine insurance needs.
In other words, IAG aims to think like a start-up and change the way it does business.
Old world: Primary focus is on the customer’s short term needs. Companies attempt to create additional value by offering discounts for multiple products and customer loyalty.
New world: Developing a clear picture of the customer’s life stage, their lifestyle and needs. Reorienting the business to support a holistic view of the customer and aiming to interact with the customer on a regular basis.
Suncorp allocated $142 million in FY18 to accelerate its marketplace strategy by creating a network of ‘brands, partners, solutions and channels’. The intention is to build a platform that encourages greater customer engagement and connection, and builds loyalty. To Suncorp, the value is clear: ‘Those [customers] who hold four products are nine times the value of those with just one product line.’
New products and services
Old world: ‘Squeezing’ customers into core products.
New world: Flexibility, flexibility, flexibility – building on partnerships and developing greater understanding of the customer in order to offer appropriate products and respond to new ways of owning and using assets.
Players are exploring opportunities to develop new products as risks to continued growth in traditional classes of business emerge. Examples include:
- On-demand insurance. For example, Trov, in partnership with Suncorp, provides ‘on demand’ insurance for phones, laptops, tablets, wearables, headphones and photography gear.
- Micro insurance in the sharing economy. Kevinsured.com offers cover for online interactions. Kevin uses blockchain and reviews the reputation of the buyer and seller in the transaction and presently, if approved, provides $100 of free cover.
- Sharing economy. ‘Mobilise’ is a platform that allows businesses to hire out equipment they are not using. Mobilise launched in association with Aon, which will source cover for the equipment while on hire.
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