What’s that coming over the hill? Is it a disruptor?
A recent survey published by Fujitsu found that a fifth of European consumers would buy insurance or banking products from Google, Amazon or Facebook. As an insurer, how does that make you feel? Is it a real possibility that a firm like Google could become a market leader in the next 10 years?
In our opinion it definitely is. What firms like Google and Amazon have shown in recent history is their adaptability. If they see an opportunity to do something more efficiently whilst generating a profit, you can bet that they will be working towards it. History is littered with examples of businesses suffering because they opted for the status quo, look at Blockbuster turning down multiple offers to buy Netflix; Excite failing to buy Google and Kodak continuing to focus on traditional film cameras.
The fact that corporations such as Facebook and Google are deeply engrained into people’s lives is a major advantage. They have access to vast quantities of personal and lifestyle data. In addition, the use of wearable technology and smart devices creates an almost continuous stream of data. This data can be utilised by insurance firms to provide clients with a completely tailored policy based on that person’s lifestyle. Because risk is calculated on a much wider spectrum of information, many policies could be cheaper as a result.
Process innovation is also an important factor to consider when looking at new entrants to the insurance sector. Many of whom will adopt new business models that automate tasks, disaggregate work to lower paid employees and use big data to make informed decisions. This approach will result in a lower cost to serve which could in turn reduce premiums.
If a major corporation does enter the insurance market then it will cause waves of disruption. The best advice for traditional insurance firms worried about potential disruptors is to not stand still. Digitise your business, disaggregate and automate processes to improve efficiencies and work with the likes of Facebook and Google to open up new avenues of data so you can better understand your clients and provide a bespoke service on a giant scale.