For better or worse, I spend a lot of my time assessing how new technology will impact businesses, including the insurance industry. So when I recently upgraded my phone, taking the shiny black slate of glass and metal out of its box, it made me pause for a moment to consider how our relationship with the phone has changed over time.
Most people would probably agree that the first major shake-up in how we used our phones started when Apple introduced the iPhone around 10 years ago. Smartphones, as far as they existed then, tended to be e-mail tools, incorporated physical keyboards and were aimed at the enterprise market. Consumer phones were more feature-based, with a focus on the external design, with companies releasing multiple models to appeal to different market segments with limited functionalities and simplistic games (although in my humble opinion, nothing has really surpassed Snake on those early phones).
So when Apple introduced a simple-looking phone with limited features and no keyboard, the industry wasn’t sure what to make of it. While it is relatively easy with hindsight to understand that Apple had set its sights on the opportunities of the wider ecosystem of apps, games and music, few in the market predicted the direction it would take. Apple saw the value beyond the then-current industry mindset. It was looking at what consumers could (eventually) do with the phone and, in doing so, redefined our relationship with the phone.
Spinning forward to today, the majority of manufacturers have adopted that same general style – a touchscreen wrapped by a fairly featureless slab of metal or plastic. What has changed is our relationship with these devices. They are now pretty much an extension of ourselves. We take for granted the ability to instantly access information and services, wherever we are, whenever we want. Our phones are our map, encyclopedia, camera, photo album, translator, restaurant guide, social circle and wallet. And occasionally, we can still make the odd call.
What struck me about the design of my new phone, and that of many similar models released recently, was that it is almost all screen, hard to distinguish from the next black slate when lain down flat. It seems as if phone manufacturers were working to make the phone disappear altogether, with the focus on an all-screen design.
To me, these companies are trying to make the technology transparent and not get in the way of the services they are providing. Apple looks like it’s taking that to the next stage through its annual upgrade cycle – the phone becomes a commodity, seamlessly upgraded every year, so that there is no interruption to the services being consumed.
That’s where the real value is found in these technologies – not in the device itself, but from the services accessed through that window. The technology and the device are becoming invisible, which is something that Jobs had reportedly aimed for:
“Steve used to say, technology can either be beautiful … or technology should be invisible, which means simplifying.” — John Sculley, former Apple CEO
And that’s where I think the insurance industry is right now. Despite huge moves forward to improve the experience of buying insurance, whether through direct online purchase or via brokers, the process generally does not offer a great customer experience.
As an industry, we still ask a multitude of questions, requiring a considerable level of effort on the part of the customer. We then pass the information among multiple parties, often manually, to get through the application process. It’s so painful that, as an industry, we can only face doing it once a year.
However, emerging technologies offer insurers and brokers the chance to redefine this model and their relationship with customers. The connected world of smart buildings, smart cars, smart factories and smart wearables is creating a deluge of relevant information. This is an opportunity for insurers to gain unprecedented insight into the risk of the businesses, individuals and assets they currently protect.
Our typical response is to use this information to better understand the risk being covered and influence rating and pricing. The other obvious step is to use this information to intervene to prevent claims, reducing the impact on customers’ lives and businesses, and ultimately the cost to insurers.
As an industry, however, we should look beyond these models. Just analysing how we price risk and mitigate claims is similar to making a better feature phone – producing a colour version of Snake is not going to protect our industry from new challengers. With this in mind, when considering other technologies, like Internet of Things, the industry should seek to understand how we can use our unique insight to provide new services and value to our customers.
At the same time, we should also use these new capabilities to make insurance increasingly invisible to the customer. Why do we still insist on asking a host of questions on a proposal form, when we either already hold most of that information or it is available through data service providers? In the same way that phone manufacturers are looking to make it easier than ever for customers to access their services through a transparent pane of glass, surely insurers should be looking to do the same.
For established brands, which face the challenges of legacy systems and processes, and potentially legacy ways of thinking, this is both a challenge and an opportunity. New entrants in the market (such as Lemonade and Neos) are already taking steps in that direction, working to address some of the more frustrating parts of the insurance business model.
If we can use these new technologies to improve customers’ lives by making insurers “disappear,” the question then is, what do insurers become in the future? We investigate this in more detail in our new research paper “Insurance at the Intersection,” which explores the different responses the industry can take and how insurers should seek new sources of value as traditional services become more invisible.
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