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How personal value decommoditizes insurance technology

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In May I had the great fortune to attend Digital Insurance Agenda (DIA) in Amsterdam. There I got my fill of the latest in insurance technology innovation, which included insurance aggregators, chat bots, damage claim fingerprint technologies, and online on-boarding. While all of this was fascinating to see, I started to think about insurance technology from a consumer standpoint. Would any of them really change anything about the way I go about buying insurance?

Despite the great things I saw in Amsterdam, I realized the honest answer was, “Probably not.” It’s not that I won’t ever use that technology, I will, but it’s not going to change how I go about buying insurance. That’s because I still use an insurance broker, as I firmly believe insurance and relationships should go hand-in-hand.

Recently I was at a meeting with a consulting company, and I told someone that. He looked at me as if I were an unknown survivor of an extinct species. He had a good laugh and said, “Then you are overpaying.” Maybe he’s right, but the personal relationship I have with my broker is worth it to me, and insurance technology could learn a thing or two from my preference.

What insurance technology must learn from brokers

I completely trust my broker of over 20 years. His expertise goes beyond existing policies, it’s the knowledge he has about me outside of insurance that makes the difference. He knows everything about me; including my family, my interests—he even knows my dog. This deep relationship allows him to present personalized ideas about the insurance I need and at what levels to protect my assets, help me achieve my goals, and reduce risk. When I need something, it’s simple and fast to get it done. I don’t have time to search for the best deal out there or become an insurance expert myself. Call me strange if you like, but of all the things I want to do in my free time, researching insurance is not top of the list.

Incumbent insurers need to be as much focused on value as they are on insurance technology. The inventions I saw at DIA were interesting, some of them brilliant, but insurance isn’t something I use day-to-day. To be honest, most of the time I never think about it. And that’s the point. I have insurance so I don’t have to think about the risk.

Within reason, the better the advice and value I receive, the less likely I’m going to be concerned about whether I could switch providers and buy insurance for some slightly lesser amount. That long-standing personalized relationship and lack of worry are worth more to me than saving a few dollars.

How new insurance technology can fit in

Of course everyone doesn’t have a broker that they have known for 20 years. But that’s where technology can help. Using data from both inside and outside of the insurer, it’s now possible to understand customers with a level of detail previously unimagined. That customer understanding needs to be at the forefront of new technologies, otherwise they will quickly become commoditized, and likely faster than anyone thinks.

The Digital Era and technology have revolutionized the business, and all things seem possible in modern insurance. But it’s still about knowing your customer, simplicity, and personal value; just what my broker gives me. Let’s hope that insurers keep these things in mind as guiding lights in their digital transformations. After all, insurance technology is a commodity, but advice and value are not.

If you’d like to learn more about how insurance innovation can improve with the help of personal relationships, I invite you to attend the SAP Financial Services Forum 2017 on 4-5 July in London. The theme for this year’s Forum is “Winning in the Digital Moment” and it will be a great opportunity to learn from financial leaders from around the world.

Register for the SAP Financial Services Forum here.

 

James Eardley
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June 7, 2017
James Eardley

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