Adaptability

July Edition (looking at June), 2024

Artificial Intimacy in Customer Experiences

We are in an over hyped race to get somewhere with Generative AI, and often confusingly AI in general as well. Distinguishing these two being a seemingly impossible task for most people, proving how misaligned the hype is to reality.

Most of us couldn’t articulate the end game destination of this next wave of AI, and we don’t really want to talk about what it is likely to be too much either. We just know that right now we’ve been told the positive potential is endless, and stock prices have gone mad, making a small number of people we don’t know even richer. And we admire this because it feels like it’s a potentially accessible wealth generator, if only we get on board with it all, we too could be rich!

Rebranding companies AI <insert old brand name> or strap-lining our businesses <brand name> The AI powered company of the future, seem to be commonplace strategies now.

And whilst all of this is true, and I believe this acts as a reasonable summary of where we are right now, it’s also still true that over an undefinable period of time there’s huge value potential in AI. There always has been, since WWII really!

Here’s the thing. Nvidia is currently valued forty seven times its revenue. And others who are also seen as the next potential major tech players are seeing less, but nevertheless strong valuations on the same basis. For those in the stock market game this has therefore already been successful, all they have to do now is gauge when they exit and the profits are all there's. Easier said than done.

And this isn’t the first time we have seen boom and bust in technology driven markets, huge bets on the future have always been commonplace. I was around and involved in the internet bubble of the late nineteen nineties. And I was working with a web agency at the time, whilst trying to launch the first internet banking services. That agency fired all of their staff via text message out of the blue when all the money disappeared overnight. Three of those people never turned up for our meeting that day, but remained friends and became future colleagues.

And there have been multiple “S” curves ever since. These are periods of change where we move from one revolution of change to the next. Initially value declines after a period, as learning is required to build an understanding of the new value potential before growth really happens. This is at the bottom of the S, and this is a common economic observation of people like Malcom Frank and others. Let me provide some examples.

The mobile phone market was almost certainly in the hands of Nokia and Ericsson until it wasn’t. And just as Microsoft gave away its market share over this same time period to Apple, mobile did the same. Apple became the pioneering frontier of a mobile industry, despite incumbents that seemingly had it all. And they even had most of the technology and OEM advantages as well as the brands, customers and distribution power.

It always fascinates me that AirPods alone are worth around $20bn in revenues to Apple. That’s the same scale as most large leading System Integrators, for example. So, just their share of “headphones” in the Apple machine is as significant as these massive organizations.

The lesson here is also that originators or firsts, are nearly never the ones that take it all.

So, the real questions are what will it take to apply GenAI successfully to customer experiences and who are the likely winners?

In the successful application of GenAI capability in the consumer context it is likely to be the businesses that are closest to us, our daily lives, our working lives and those we trust the most with our data that will have the best chance at market dominance or in a few cases increased market dominance.

These businesses are the market leading businesses of today, and they typically got here by being the custodians and best users of our data, turning this into insights and acting on them increasingly near real-time. And they are ever present in our lives as well. From Social Media to Device and Operating systems they are ecosystem businesses which seek to own, control and orchestrate us. And we let them. Because they can bring extraordinary value to our lives. Convenience, entertainment and every so often even joy. Those little intermittent reminders on our phones of past experiences with family and friends, or the music we share, or even just the times when we are in distress and they connect us, these are all super powerful. And GenAI is likely to make them even more so.

The likely winners are therefore those that possess the potential for artificial intimacy.?

For businesses like insurers this paradigm is probably the most likely to succeed as well. The issue is most of them don’t currently possess this level of intimacy or role in our lives. So, how do they get there? The short answer is, ironically, a long one. Let’s do our best to summarize this.

Insurance companies have profound effects on our lives, businesses and societies. IT frees us to take risks that we wouldn’t otherwise be able to afford the financial consequences of. Allowing us to rebuild if those risks are realized, provide loved ones with some financial support, or repair or replace something we need. Wonderful. However, the business model has done its utmost to industrialize this value. Reducing costs and maximizing distribution, not customer relationship value.?

Instead we begrudgingly take out a “policy” that feels mandatory to us even when it isn’t. No one really deliberately decides not to take out travel insurance, it’s mostly a mistake or an affordability issue. And when we take out these policies the financial penalty is high, and the value of the product is the one thing we never want to realize, unless we are committing fraud. This is then cemented by the fact that until we need to renew we are essentially dead to most insurers, merely a DD, a risk on the balance sheet, essentially a statistic. And if they do communicate, it’s likely a newsletter we don’t remember signing up to, a cross sell out of context or a trite “happy birthday” (I am cynical, I know). This is a false paradigm, and many insurers have long wanted to change this.?

Moving from paying out after the fact to risk mitigation based models, or embedding ourselves into people’s lives and things in order to provide usage based, dynamic propositions that adapt to our changing lives and needs. Or to simply provide benefits in the relationship - the more we know about them the more valuable we can be. Examples of this are umbrella products, multi-covers, cover that switches from professional to personal activity, ransom cover that is simply tied into our company travel systems and knows when we are going into increased risk, and so on. There are examples out there, but these are one-off reminders in insurance of the potential for more intermittent interconnected relationships that we can have. These offer huge potential for GenAI capability. The key to unlocking this is to rebuild insurers on strong data and operational foundation. Built around the customer in MACH architecture the same way as Apple or Amazon is possible and vital for those that want more Artificial Intimacy in customer experiences.

Insurance Underwriting: The Risks of Further Transformational Failure

I was lucky enough to participate in 凯捷咨询 ’s world property and casualty insurance report 2024.

?? Titled ‘How to Become an Underwriting Trailblazer’?? - the report asked why underwriting transformation has failed, and what needs to happen for it to be successful?

And Insurance-Edge.Net and Alastair Walker let me talk a little about my own takeaways from this. ??

I say stuff like:

?? "This is about unlocking the potential to successfully transform. Putting underwriters back at the heart of products. Getting them to start to develop new propositions and business models like it’s their day-to-day. To do this, we need to make sure they are operating in data fluid, intelligent, and highly productive environments and organisations. This will take a lot more than just tech." ??

Click here to read more.

The claims model is changing - about time too!

Confused. Don't be. this month I put out a new format called ?? Adaptability Deep-dives ??.

These will usually be on areas I typically get asked a lot about. And this first one is the good 'ol moment of truth in insurance - claims!!

Click here to read more.

?? Home is where the heart is. ??

I was taken by some recent data on under / uninsured rates from Go.Compare on home insurance. So I've written some of my thoughts down here.

This is a personal one for me having worked in a number of home insurance transformations, I am always taken by the emotion in depth interviews and focus groups from people who have experienced claims. And the power of home insurance to bring people's lives back on track, in what for many is one of the worst experiences they might have had in their lives at that point. ??

Read why I think it's on us all in the insurance industry to continue to do more, and how there's a need for transformation now more than ever!

Trailblazing people are key to unlocking trailblazing underwriting

Underwriting is a cornerstone of our industry. And ultimately trailblazing people will drive trailblazing success.

And like most of insurance, #underwriting is set to transform. ??

?? ?? ??

In this article with the exceptional PropertyCasualty360, and using the work I was lucky enough to participate in from Capgemini and the WORLD PROPERTY AND CASUALTY INSURANCE REPORT 2024, we looked at what it takes to become an underwriting trailblazer: Charting transformation across a shifting risk landscape.

In this article I take a further look at talent, data and the best drivers of transformation success. See why I say things like:

?? "The future of underwriting has the potential to look very different from today. Over 20 years, insurance has slowly progressed from being one of the last paper-based industries to one that embraces digitization. During this period of dramatic change, the amount of actionable information available to underwriters has increased year-on-year." ??

Click here to read more.

Cloud Considerations in Insurance: Critical Factors for Adoption & Success

There are c.9,500 insurers globally, encompassing around $6tr of gross written premiums and spending around $250-300bn+ annually on information technology (IT).

According to PwC, on average about 70% of an insurer’s annual IT budget is spent on maintaining its legacy systems. And these systems are increasingly not fit for purpose. In today’s dynamic insurance landscape, insurers are still struggling to deliver modern experiences, with 41% of CIOs reporting legacy systems as the main barrier to tech success.

Given this attitude, it’s no wonder that Gartner found that 68% of insurers plan to increase investments in application modernization.

This market is set to grow fast.

In this article from my colleague Michael Dwyer he unpacks successful cloud adoption as part of this shifting landscape. See why he says thing like:

?? "...These challenges highlight the limitations of legacy technology and underscore the imperative to harness adaptive cloud services. However, the way insurers approach cloud adoption will be pivotal to their successful transformation..." ??

Click here to read more.

General Election: Manifesto Analysis and Implications for the Insurance Industry

It's important that we see greater collaboration between politicians, policymakers and insurance companies. So I took a look at the General Election manifestos and tried to find out what impacts they are planning to have on insurance.??

The truth is that it is deeply disappointing to see so little interest in insurance:

?? "My first big takeaway from the General Election so far — none of the parties have displayed any real understanding or commitment to this industry." ??

I've received this image in three DMs, and it's been circulating on here too. It's like a mirror reflecting all my flaws and quirks! To those who shared a laugh with me, I'm right there with you! ?? #relatable #humor

Click here to read more.

Unforeseen impact of generative AI on insurance

In this Insurance Post article (in AI Week) I explain why labelling everything as generative artificial intelligence is confusing at best, and at worst could be a very dangerous mistake.

See why I say things like:

?? "Certainly, AI has the potential to revolutionize insurance. From fraud and underwriting to automating and optimizing the customer experience, its latent benefits are myriad, but it’s also bubbling with risk not just from misuse but from its unrestricted implementation by insurers who mean well but don’t understand its implications for their business." ??

If we are going to unlock the value we need to take a broad look at AI and ask ourselves how we are going to best unlock the undeniable value it posses.

Click here to read more.

Embedded Insurance: The Transformation Gems that will Unlock its Potential

This is a topic I've covered a number of times and number of ways (see our hub for embedded insurance on my profile).

However, with the impeccable Finance Derivative I got to take a fresh look at what will make #embedded insurance strategies work.

See why I say things like:

?? "...The important things to consider are the three “new’s” for your organization. You’ll be aiming to create new value, in new technologies within a new working model. Most insurance businesses aren’t set up to harness the extraordinary value potential embedded insurance offers..." ??

And take a look at how to unlock this potential. ??

Click here to read more.

General Election: Manifesto Analysis and Implications for the Insurance Industry

We are in the midst of General Election here in the UK. ?? And I got to delve into the party manifestos in an attempt to find out what's in store for insurance.And, sorry to kill the surprise, but ... there's something missing, and it has got me a little angry tbh!! ?? Go check it out. I love the editors notes at the beginning as well!

Click here to read more.

BCIC Launches the Caribbean’s First Omnichannel Insurance Ecosystem on EIS SaaS Platform

Peter Levy said:

?? “We chose EIS because their platform is modern, digital by design and provides a development environment in which we are the masters of our own destiny.

We felt constrained by our legacy technology, but with EIS, we get an open, flexible, platform we control. It gives us a digital technology engine to scale, launch new, relevant products and adapt to our customers’ changing needs, without increasing the cost of doing business.” ??

Another insurer with ambition creates an adaptive ecosystem future!

Well done to the EIS teams, and of course to British Caribbean Insurance Company Ltd. (BCIC).

Click here to read more.

How AI is transforming the Insuretech sector

With Nick Martindale in Information Age, we shed light on the evolving landscape of AI within insurance technology.

Highlighting genAI, we explored its applications, including the groundbreaking work of esure Group in collaboration with Amazon Web Services (AWS) (link to the case study in the comments of the original post).

Click here to read more.