How insurers are future-proofing their businesses by innovating

How insurers are future-proofing their businesses by innovating | Insurance Business

How insurers are future-proofing their businesses by innovating

Innovation isn’t just a fad for many insurers – it’s a here-to-stay trend that’s shaping the future business model of many companies. It’s also a trend that’s not slowing down. According to Accenture’s Technology Vision 2019 survey of 577 business and IT executives in the insurance industry, 96% reported that the pace of innovation in their organizations accelerated over the last three years because of emerging technologies.

Some global insurers are already taking note and adapting their businesses to the insurance industry of the future. In January 2019, AXA Group launched AXA Next, which will focus on building new services and business models beyond insurance with an annual investment of €200 million from the group. AXA Next brings together five vehicles that were already in operation at the organization, including Kamet, AXA Venture Partners, AXA Labs, AXA Partners, and AXA Global Parametrics.

“The reality is that AXA is now a $68 billion market cap company [with a] huge balance sheet,” said Bastiaan de Goei (pictured above), head of AXA Next US. “What we have done is to say, let’s bring these different units together under one roof called AXA Next, and harmonize the investment boards across these vehicles so that you have natural interactions between the different vehicles and natural synergies as well.”

For example, AXA is incubating a company called Fixter that can pick up a customer’s car within a 30-minute time slot, take it to the best repair service, and return it to them at their requested location. At the same time, the company also has a partnership with Uber where it provides liability insurance to European drivers. The question of potential collaborations between the two businesses then can be addressed through the AXA Next entity, where all of the separate innovation vehicles are operating under one roof.

Besides also ensuring that innovation is focusing on the same priority areas across the group (mobility, health, business continuity for SMEs, and the platform economy), there was a big-picture reason for launching the AXA Next entity.

Read more: AXA on the interconnectivity of emerging risks

“AXA Next is meant to become the future revenue driver for the group, and its sole dedication is to build beyond insurance business models,” explained de Goei. “One of the functions of an insurance company is protection, so here, we take basically our understanding and analysis of risk, which we are very good at, but rather than pricing and packaging this up into a product and selling it as a policy, we wrap this up and provide it to customers as advice.”

That ‘more than insurance coverage’ approach is vital as customers’ expectations evolve. Applying innovation to insurers’ operations isn’t all that’s needed to stay relevant and provide the best value-add services to insurance clients.

“That alone will not be enough. No disrespect at all to our entities, but at the end of the day, you’re not going to win by building a faster horse. You need to create something new and be more to your customer, and this is where we see that trends outside of our own industry are growing very rapidly,” said de Goei, pointing to classic examples of digital giants that have been able to deliver on customer needs, like Amazon. “All of these guys recognize what is the real need that a customer has, and they innovate and deploy aggressively in order to make that happen, and it’s the same for us. At the end of the day, a customer doesn’t really want compensation after the damage has been done. Yes, that’s great in order to repair [the damage], but it would have been even better if we could have avoided this in the first place. So, it’s an expanded look on the way our role as an insurer [is changing to become] more of a partner to our customers, rather than just somebody who compensates after financial loss.”

Read more: Injecting the Amazon experience into insurance

The people-first approach is also driving Zurich’s innovation, which is one of the key pillars of the company’s business strategy.

“We strongly believe that innovation starts with the right mindset, and we are continuing to foster an innovation mindset by creating several platforms through which our employees, our customers, and our distributors can participate on innovation,” said Sumeet Bhatia (pictured below), head of innovation in North America for Zurich.

He pointed to an idea center, where Zurich can source ideas from its employees, as well as the launch of a summit last year that brought together customers and distributors from Zurich’s four key businesses. The insurer could share its approach towards innovation, in addition to the capabilities that Zurich is building, while focused group sessions took the temperature of the attendees to understand what are some of the things that Zurich customers are looking for, to make sure that the organization aligns its initiatives based on that insight.

The risk management piece of the puzzle is important for Zurich as well – evidenced by its approach to preventing water damage to homes by providing water leak sensors to customers – as is keeping a close watch on emerging risks, whether it’s micromobility in the form of e-scooters or the growing gig economy, and building new solutions for customers that address those new risk areas.

“We all know change is happening at a very rapid pace and I think every organization that wants to survive needs to make sure that they continue to develop new capabilities,” said Bhatia. “As an organization, that’s a journey that we continue to [be on]. As an example, the companies that won at the innovation championship this year, we were able to, in a very quick time, complete a couple of pilots with them. So those are some of the things that we are continuing to do – continuing to make sure that we have scalable and repeatable processes, so that we are executing things much faster.”