Will technology companies help maintain relevance?

Technological advances are happening at an ever increasing rate. Businesses are evolving and crossing traditional borders that would previously not have been thought possible.

From a technology perspective the biggest threat for traditional insurers does not come from another insurer, but from technology companies like Google, Amazon, Facebook, Garmin and many more. The reason is simple; these companies own the information that can be used to clearly identify and target their client base and have the trust of their clients. These are traits that are hard to beat.

Up against unbeatable traits

Facebook knows who you are friends with, where you go, what your preferences are and even how you look. Waze and Garmin know where, how and when you drive and your start and end points. Google and Amazon know your buying preferences, interests and those of the people you interact with. Google earth even knows the potholes on the roads that you drive each day.

These companies give something to their clients that build trust and in return they have built up a data source insurers cannot match. More importantly, their clients have done all the data capturing themselves.

Insurers would love to get this information on their clients, but they struggle to build their trust and get them to volunteer this information.

Some insurers have realised the value of this and have changed their approaches to getting the information they need to target specific market segments. We have one local insurer who is building and giving away games that reward players (drivers) for providing their behaviour patterns to them.
These drivers need not even be clients, but they realise that the collective patterns will help identify new indicators of good risk analysis. Another insurer has used marketing to encourage potential clients to provide additional information as a means to reducing their premiums.

New standards, big prospects

Technology builds new methods of getting information on your client and on potential clients. Different companies are amassing information on geophysical for various purposes from town planning to mining. Knowledge based systems can transform this information in order to be used to reduce risk through identification of flood plains, high risk density, dolomite and other purposes.

This information has value and technology firms should learn to co-operate better to provide greater understanding of risk factors which can be used for pricing and risk mitigation.
Legislative and business environment changes are making it possible for new entrants into certain markets. The Retail Distribution Review (RDR) and Binder regulation changes together with the enormous investments made by several large insurers makes for an interesting perspective on the broker market.

Fast tracking traditional methods

If or when STRIDE comes into full production, this could lead new entrants into the market providing simple accounting systems for brokers who interact with multi-quote facilities as opposed to having full blown policy administration systems. Further, insurers who are not compliant with these technologies may be left out in the cold.

This provides technology companies with an opportunity to fast tracking these companies in becoming compliant.

An area of increasing interest is that of crowd sourcing. This is often used to fund new start-ups, but the insurance opportunity of building a crowd funded insurance solution merely requires the spark to set it off on an appropriate technology. Groups of like-minded people can go back to the original coffee shop concept of insurance, but on a global scale. The virtual insurer with millions of clients, users and underwriters managing their own risk profiles is an exciting prospect enabled by technology.

Technology companies can assist traditional insurers by extending their enterprise into their clients’ domain through adding benefits to their clients, combining various sources of information and enabling disruptive business processes which build on the trust required.