Adaptability

February edition (looking at January), 2024

Happy New Year! I know, I know, it's already way too late, but this is the first adaptability newsletter officially in 2024 so you'll have to forgive me.

So, why is Adaptability so important in insurance?

Well, as you can imagine, it's always been important. The real issue is that adaptivity in insurance has become vital in shorter and shorter time frames. And it's not just about the underlying "mechanics" of insurance, which are arguably always changing. Things like pricing strategies, risk, cover and so on. And even those are getting more frequent and adaptive, especially as they are also operating across and within widening ecosystems of data and partnerships.

Insurers are now also having to adapt ever quicker to macro environmental change, and a lot of this is emergent, not just trend based. Combined with a competitive and consumer driven world that arguably has a reducing tolerance for things that aren't truly adaptive to them as well. And both are on a collision course.

Adapting to the macro environment has a lot to do with being adaptive to your customers. Let me explain.

As an industry we have talked a lot in recent years about embedded, risk removing (or mitigating), adaptive, human centric and more recently carbon neutral. I call this the DNA of the Ambitious insurer. And all are really about getting closer to our customer lives and businesses.

As an example, "embedded" in insurance is limited by parallels to embedded finance, which then becomes this idea of insurers merely interrupting or seamlessly integrating with a purchase process. "New holiday? Why not have your travel insurance pre-added to your basket at checkout?". Assuming we do what is needed to make this a clear purchase decision for the customer, then arguably all for the better. For a lot of us though this scratches the surface of embedding insurance into people's lives and things.

For example, in this emergent model I buy my car, it has multiple usage (delivery driver and personal use etc.). My priority is to keep moving, in as much comfort, style and performance as I can afford. To do this I need to know the car is optimal, risk is avoided where possible and my insurance cover is adapting to all of this. And the fact that I may not even be the only owner of the car, and that my wider mobility needs also need to be included in this, the customer seems to have some unmet needs. And, added to this, the expectation is typically that in the event of a loss or damage, the insurer should be able to direct all this data to drive an outcome. Along with a well orchestrated experience to go along with it.

The reality is that whilst automotive manufacturers (now self proclaimed software companies that happen to make cars) are trying to intermediate or provide this, they are struggling. And that's because in this ecosystem whilst a lot of the "active data" sits with the car the ability extract and apply value from it in this context sits with insurers. And most of that car data is open and available or can be made so.

So the tipping point to adaptivity in this example is to operate in an ecosystem led mobility world better. Built around humans, changing risks and embedded into our lives, insurers will need to become incredibly different businesses.

Most software vendors in insurance that I work or compete with have some sort of "insurance in 2035" viewpoint. If asked for, ours is nearer term, and we tend to talk about 2030. This is skewed by the markets we most dominantly operate in, but you get the point.

In these visions of the future we can see lots of common views across them - which is mostly a good sign. And in one way or another they all suggest this ecosystem utopia. What they often omit to express is why this isn't simply a "build on top" of what you already have opportunity. This doesn't suit the interests of most. However, medium to long term this is vital to address.

To get to this future state we do often need to rebuild the foundations. Insurance does need to adopt the lessons of other industries further ahead in this process. Common to all is that they are built around the customer. A data fluid core of customer data that is capable of seamlessly being expressed in products, services or experiences. And that to gain the most value these aren't just provided by the insurer, they are orchestrated across many companies. So, when your tyre tread or brakes are low insurers can orchestrate a replacement. Removing risk and extracting more value from this ecosystem in the process.

This will remain a key theme over 2024 in insurance, we will need to circulate back over this as we talk about Gen AI and other hot emergent capabilities. As these technologies are applied to insurance regulators and increasingly customers will want to know that the application of this intelligence is controlled, secure and applied responsibly and in the best interests of humanity.

This is a marvelous opportunity. And adaptivity will continue to be the defining competitive characteristic of our market.

Quote of the month

"Digital transformation isn't really about technology, it's about business. And it's not really about business, it's about people. It’s less about software and more about culture and how we work. It's often less about your industry and more about consumer expectations.The answer is almost always found thinking about people, not tech" - Tom Goodwin

A brilliant challenging mind. If you don't already, you should follow and interact with Tom. He often finds the balance between provocation through new ways of looking at something, but without prescribing all the conclusions. Merely the potential benefits of thinking differently about something. And I love how some people comment on his posts suggesting he has concluded the outcome incorrectly, it often allows him to open up the debate and people's minds further.

Hot topic

My initial viewpoint:

Insurtech Insights Amazon to Close its UK Insurance Store After 15 Months of Operation

Amazon has made the decision to shut down its UK Insurance Store a mere 15 months after its launch in October 2022. The move comes as the US tech giant cites “prioritisation” as the primary reason, emphasising the need to redirect its focus towards other core areas of the business.

A statement by Vassil Gedov , head of the Amazon Insurance Store, was shared with media. It said: “Over the last year, we have been evaluating various businesses and programmes, and as a part of that we’ve made the difficult decision to discontinue the Amazon Insurance Store."

Rory Yates, SVP Corporate Strategy at EIS, commented on the move, saying: "Leveraging your assets always seems like a sensible way to go. In this case their customers."

Click here to read more.

Here's a much extended viewpoint in Insurance Thought Leadership where I got to dive a lot deeper into the learning, and talk at more length about what insurers can do to move towards their ecosystem futures.

Click here to read more.

Poll of the month

Earlier this month I asked Linkedin: Do you have a clear view of what Underwriting 3.0 means?

In all transparency, I got a low response. However, these were decent minds so I am going to give it merit. 57% said they didn't have a clue and 29% said it was just tech co's marketing. I think the consensus view is "it's wrapping up the evolution of increased use of data, analytics, and automation as a new era by tech companies." Stolen from Mike Daly

As I study this space a lot at the moment, and there will be a lot more coming on this, I am increasingly challenged by it. If you have views, articles, reports etc. you think are interesting on this topic please DM them to me.

The sad truth about insurance technology

It was great to see this article make the top viewed of 2023. I've received a lot of comments and DMs on it and it appears to have struck a chord.

There's so much to look forward to in insurance. Vital to everything we do and strive for, it's critical that we make progress towards the adaptive insurers of 2030.

To do this we need to get the core technology foundations right and we need to think of this in terms of data fluid, intelligent and evolving ecosystems built around customers (people).

Click here to read more.

What Do We Need to Know About AI That No-One Is Talking About?

Asked "what do we need to know that no one is talking about with AI?" with The Fintech Times and Thomas Bleach I think this was my initial response. It's a hard hitting and important one, and one I absolutely stand by.

Responsible AI is paramount in this next phase.Along with many things on this topic including participating in and launching the BSI PAS440 for Responsible Innovation (BSI PAS440 Launch: https://www.youtube.com/watch?v=ctto_1PMY6w ) I also participated in the creation of Eddie Longworth 's upcoming Code of Conduct for the Use of AI in Claims, and the launch event is next week (Upcoming Code of Conduct event: https://sender6.zohoinsights-crm.com/ck1/2d6f.327230a/1677a130-b938-11ee-beca-5254000e3179/5d5323ea9df6361c6bdc82f6c40c97058430d78c/2 ? ).

There's so much we can gain from these new technologies, and the more value we create for humanity the better. This requires a human first approach and taking responsibility for everything from understanding the implications of open source vs. proprietary through to how we track, manage and monitor AI use and the outcomes it drives. And Lisa Wardlaw covers so much of this in her Podcast series (highly recommended, Insurance Unplugged AI in the City Pod: https://podcasts.apple.com/us/podcast/insurance-unplugged-with-lisa-wardlaw/id1715343865 ).

Click here to read more.

Reshaping insurance’s IT roadmap for digitally savvy customers

What an article this is in Insurance Post , by Fiona Nicolson.

See why I say lots of things like "Data is a perishable asset. If you can’t leverage its value quickly, it’s lost forever.” alongside the likes of Mark McDonald Andre Symes Tom Lawrie-Fussey Natasha Davydova René Schoenauer . What a line up!!

This article covers data, mindset, emulating other industries, embedded insurance and more.

Click here to read more.

Lots coming up in February with the likes of Insurance Post the incredible Lisa Wardlaw (my personal "voice of 2023") and many more.

Let me know what you are up to and if you see anything interesting at there. Especially if it relates to - automation, claims, data, underwriting and the move to true SaaS. Doesn't leave much out tbh.