Some observations from one of our fellow partners, Robin Merttens, make me think that taking an innovation leap must be a particular difficult task for for the insurance industry. The future benefits of that change are not so obvious from within. The level of comfort on a few executive and operational levels within the industry is still relatively high. Why change? Today we just get on with the way we produce and provide insurance and reinsurance products and services like we did five or ten years ago. People and businesses will still buy our products because they need it. In risk we trust.
One can probably have a long argue whether the failed Hamburg's Olympic bid is the right example for the prosperity that hampers innovation, especially in the context of the timing and the scale of the refugee crisis in Germany. Neverheless the thesis is pretty much spot on, although I would not apply and generalise that one too far for the insurance industry.
I like the example about a paper copy of an insurance policy for an almost driverless car. I even believe that if at some stage in the future most things around us are digital we will still be able to buy an insurance policy on paper. The reasoning is the insurance industry itself. It is pretty much self-contained unlike automotive industry, or comparing rather like for like, banking or asset management. In order to survive and grow a highly prosperous asset management industry turned digital decades ago. Insurance as a sector did not historically experience or had to endure any significant technological revolution or a fight for survival. It slowly starts to feel pressure now from a digital customer, IoT, mobile distribution and all those other catchy trends. So, that's B2C and as long as we are talking about millions of customers the pressure will rise and perspectives for innovation are excellent. But what about B2B?
I wonder what should happen to the reinsurance industry, so that we stop being comfortable with writing down the prices off the computer screen onto a paper quotation sheet, wet-stamping it, scanning and sending it by e-mail to the client. The prices will go back into the computer on a client's side, hopefully without re-typing mistakes. No one involved can be possibly happy with that process and with the amount of time wasted. That was just a tiny example but there are lots more. Why are we still doing it to ourselves? Are we just comfortable enough with that as yet? Will we wait for something big to happen or are we, being a customer to each other, able to change it ourselves?
The insurance markets in both London and Germany seem to suffer from the same malaise that affected Hamburg’s Olympic bid. There’s too much money being made, too many people who like things as they are and too few people prepared to show the necessary leadership to make the changes required of a digital age. In terms of start up activity and investment in disruptive technologies, Germany and the UK are more active than perhaps any other countries other than, predictably, the US. In terms of real changes in the way insurance is transacted and the experience provided to customers, it’s still woefully behind other service industries and what is possible given the technologies at our disposal.