One of the most interesting aspects of our role as recruiters is the insight we gain from our conversations with clients and candidates. It is a real privilege to listen and learn from the people that are the most closely invested in their business.
Our networking events and subject-focused dinners are a great source of networking and knowledge. As an example, we could see that the Blockchain was emerging as a disruptive technology more than two years ago, and we discussed this at a roundtable dinner held in the city of London.
One of our guests at the table was Dorota Zimnoch. Dorota is passionate about technology and finance and her views on financial services disruption, including insurance, were inspiring. Two years on, we are in the thick of that disruption and Dorota’s role as an influencer is even stronger. We are working extensively with the Insurance Sector introducing great talent for a variety of senior roles. Dorota talked to us informally about the insurance sector – and why Insurtech exists.
Is InsurTech the new Fintech?
Dorota explained that the Insurance sector was lagging, yet it recognised the urgent need for change. Other industries were ahead, due to competitive pressure and demands from customers. The customer is now forcing change within the insurance sector as they seek a frictionless experience. In addition, products were overlapping and merging, and the insurance sector had to respond.
Following the financial crisis of 2008 a lack of confidence from investors had created a stagnant market. Fintech then got the market moving. We saw great innovation in areas such as payments and lending – yet the market soon became saturated and less attractive to investors.
The insurance sector became the natural place for opportunities; a relatively untouched sector and ripe for disruption. Also, we could see that some of the best talent was moving to insurance, attracted by the innovation and excitement of disruption.
Insurance’s unique challenges
Insurance is so interesting because of its complexities. A key ‘pain point’ is that insurance has very different customer relationships compared with a bank. Insurers have no day to day contact with customers. They are not logging in daily to look at their cover, and deciding to stop a policy is a simple process. Often the only contact is at renewal time.
But there is now a shift in how Insurers will make profit. As customers become increasingly savvy – helped by comparison sites – insurers are moving towards a culture of prevention rather than protection. Insurers are encouraging consumers to lower their risk of needing them. As people reduce their risks, insurers will need to pay out less frequently – which ultimately reduces premiums.
How insurtech is changing the landscape
The rise of Insurtech is changing consumer behaviors. Our millennials, used to a sharing economy and on demand services, are seeking cover appropriate to their lifestyles. This has led to some amazingly innovative companies such as www.boughtbymany.com. These organisations gather groups of people with similar challenges and specific risks, and take the risk to the reinsurance market.
Meanwhile, automation is allowing companies to remove overheads and focus on specific problems to create customized and personalized solutions. For example: does your TV need to be covered if you are at home watching it? It’s unlikely to be stolen in this situation, but you will need cover when you go on holiday for two weeks. A solution is insurance that can be quickly turned on or off as needed.
As a society we are facing new risks that require new innovative products such as protection against cyber attack, fraud or data breach. A new product was recently launched for ‘influencers’, which provides personal protection against loss of reputation.
These examples demonstrate the rise of Micro Insurance products – which were once seen as unprofitable business.
So, the Insurtech revolution is happening: we have the disruptors and the enablers. The enablers are improving customer experience and the disruptors are creating the technology to make it happen.
Implications for big players
Yet despite all this, some major companies will remain mostly unchanged. Their size is a challenge. While large companies are becoming more contextual, addressing some issues and perhaps investing in innovation companies, overall it is too risky and expensive for them to implement major change.
This will be important to the economy. Insurance is a huge market. Dorota wraps up by observing that as innovation grows, the focus must remain on mitigating risk to thrive and create.
Dorota spoke to Cathy Kay on 26th October 2018.
You can find Dorota on LinkedIn: https://www.linkedin.com/in/dorotazimnoch
Dorota has over 20 years’ experience working in Financial Services internationally. Her experience is in Consulting, Sales and marketing and technology innovation. Her strengths are in applying the most relevant and able technologies to achieve maximum financial return for her clients and that includes implementing operational improvements.
Dorota is a contributor to The Insurtech Book – available on Amazon: https://www.amazon.co.uk/INSURTECH-Book-Technology-Entrepreneurs-Visionaries/dp/1119362210