digital marketing specialist and 2015 ICNZ/ANZI
IF scholarship winner Matt Giles
has pointed to two emerging digital trends posing the highest risk to the global insurance industry in his winning essay Embracing Digital Disruption
His analysis came about from answering the question: To what degree is the insurance industry prepared to respond to quickly emerging technologies and rapid societal change?
Giles cited peer-to-peer (P2P) business models and the potential of a new digitally-focused entrant operating on what’s being called the ‘interface layer’ as being the highest risk to the industry.
Regarding P2P, he said the personal loan industry in New Zealand had a fantastic success story in the case of Harmoney.
“A P2P model in the insurance industry will be no easy task to execute with the simplicity required for rapid societal change, but will be very lucrative for the organisation that achieves this,” Giles said.
Meanwhile, innovative technology companies that facilitate transactions were ‘gaining enormous audiences at an exponential rate’, he said.
These companies frequently operate as business-to-consumer and share certain characteristics.
For example, quoting T Goodwin, he pointed to: “Uber, the world’s largest taxi company, owns no taxis.”
Another comparison Giles made was that unlike Co-Op Taxis, which is a transport company that does digital, Uber is a digital company that does transport.
“To date, there is no insurance company in Australia or New Zealand that truly can be classified as a digital company that ‘does’ insurance,” Giles said.
“For an insurer to fully commit to embracing emerging technologies the process begins with a fundamental shift in culture – from an insurance company that has a digital department to a digital company that does insurance.”
Giles said so far the industry was only geared for incremental change, and in order to prepare for innovation and rapid societal change, the industry needed to prioritise four important considerations.
These were investing in the right human capital; investing early and focusing on emerging markets; accepting that failure is to be expected; and moving upwards within the innovation pyramid.
“It is argued that it should not be the insurance industry’s goal to respond to emerging technologies,” Giles summised.
“Insurers need to innovate from within and be the industry that initiates and leads its own change.
“Collectively, the New Zealand insurance industry needs to lay to rest the era of incremental wins that equal our competitors.
“Let’s move to the era of reconsidering the entire customer experience. We need to look beyond our own brightest stars here in New Zealand and take inspiration from global developments in digital technologies.”
He concluded: “There is no doubt the target on the insurance industry’s head is growing larger as venture capitalists rapidly shift focus towards insurance.
“If we don’t actively disrupt our own industry, it could rapidly become their industry.”
Read the full essay here