Third party collaboration accelerates innovation in a fast changing world
By Bart De Smet, CEO of Ageas
The world of insurance is changing at a pace: so too the role of insurer, which demands greater sophistication and specialization, and increased access to the right knowledge. Insurers have a choice to make: embrace change and invest in the future, or stick with what they know and risk a drastically diminished role. For Ageas our choice was a very simple one; embrace change and firmly insert ourselves in the process, adapting our business model as needed to ensure that our priorities reflect the future not the past.
The concept of partnership just got bigger
I believe that the secret weapon for those who decide to employ it is “third party collaboration.” Every day the insurance sector is witnessing more and more examples of collaboration, and from my perspective as a CEO, that’s a very good thing. It is also a concept we are very familiar with. But even within Ageas, we are looking at this on a much broader basis. Suddenly a whole new cadre of partners are emerging representing a vital piece of the insurance puzzle and special areas of expertise we need to understand. Third party collaboration brings with it enormous benefits far beyond those that come with traditional distribution partnerships: education and learning; access to specialist skills and expertise; proximity to developing new technologies; increased understanding of the customer and their motivations; improved risk assessment; and competitive advantage through customization by product and pricing.
Our three year strategy - Ambition 2018 – has been built on our strengths as a Group including a strong ongoing commitment to partnerships and joint ventures which have become synonymous with our profile and brand as an insurer. When we set out to develop our approach we also looked at our business from an external perspective, identifying as part of that process the important drivers of change. It didn’t take long to realise that by accelerating our engagement with new partners, our strategy could potentially gain traction more quickly and with greater clarity and certainty of success.
The future will demand even greater knowledge and specialisation
Most of the changes occurring in the world of insurance are driven in some way by technological, economic, regulatory or social developments. In looking at what might disrupt our traditional business model in the future, it became clear that we needed to increase our understanding of these trends and their long term impact on our business. The good news is that “partnering” comes very naturally to most insurers and it is something we have been doing for decades. We have traditionally relied on partners such as banks and retailers to provide important distribution capabilities in the local markets in which we operate and this will of course continue. But the challenge was to take what we know and apply this experience to other new less conventional partnerships; and to partners that could add value.
New trends around for instance connected homes, wearable sensors in the health sector, and autonomous cars, are driving new and less conventional alliances. Car manufacturers, energy companies, security firms are suddenly potential allies and information providers to insurers, and the discussion around the management table is a very different one to those we may have had historically.
As an insurer we are investing in order to be better informed about each of these developments to ensure we can anticipate and prepare for change. Developments such as connected homes and driverless cars are nothing short of revolutionary. We need to understand how the dynamics will change what we do today and what role we can play in the future. And even in the area of Healthcare, data and technological advances will also drive new types of partnerships between insurers and hospitals, pharmacies and elderly care homes etc. – those who own the data and provide the service.
The customer will continue to drive our actions
Another important driver towards greater third party collaboration is the customer. Customers have become far more discerning, demanding a more customized approach; and their choice of suppliers is extensive. Creating a compelling customer proposition means creating solutions based on real data. As insurers we are one of the biggest collectors of data in the world but we haven’t always used that data as well as we might. In addition to investing in these skills internally we will align with specialists who understand how to dissect and interpret enormous amounts of data from a multitude of different sources allowing us to deliver a true Omni-channel experience; the internal and external outreach acting in alignment.
Technological advances and smart use of data improves customer experience
Intelligent usage of data enables us to extend our reach beyond the traditional areas of underwriting, pricing and claims to other parts of the value chain, engaging with customers at an earlier stage. Our ability to step in at the right time based on what we learn becomes a reality. Making it happen demands alignment with the right partner and service provider.
We are operating in an environment where the talk is of predictive and optimisation modelling, data mining and behaviour-influencing data monitoring (for example Telematics, in which Ageas is actively engaged.) But these are still relatively new developments in context of insurers compared to other more mature consumer-led industries. Predictive techniques like telematics, not only helps generate sales but it leads to improvements in risk selection while improving customer retention, customer safety and brand loyalty. Again, the right technology partner is critical.
So where does all this lead us? Insurers are at cross-roads where they need to decide what role they want to play in the future and invest accordingly. They need to gain access to those who are driving change and align and leverage interests. Successful third party collaboration can provide important competitive advantage but the time to act is now. Understanding the drivers of change allows you to identify the right partners to work with. But a final word of caution. While data analysis brings with it potential improvement in the customer experience, it also introduces a risk of over segmentation whereby the very principle of insurance could be threatened. One thing for sure…the world of insurance just got a whole lot more interesting, complex and collaborative!