Is the writing on the wall for
the Insurance Industry?
Perils of Insurance Industry
The incumbent insurance industry has been sitting on its hands for the past few decades. There has been virtually no innovation despite advances in technology. Most still run on mainframes, COBOL and RPG back end with layers of front end, so that at least some of their customers ever increasing demands could be met.
Their online presence for instance, is an attempt to sugar coat what was an insurance agent’s job. Mobile presence is still a hit-and-miss affair for most insurances.
However most incumbent insurance companies know deep down, that their time is coming to an end. Some have already wisely sold out by selling to competitors.
What does it mean to the insurance industry when Tesla, Amazon and Google are entering Health and Motor Insurance?
Unlike incumbent insurance industry who are little more than glorified accountants, calculating odds and reaping profits by re-insuring and re-selling through brokers, newcomers have innovation on their side and are prepared to use it to give customers what they demand – a personalised service.
Take Tesla for instance, using telematics from a crash, triggering fixes in the next update, which further lowers the insurance cost, is a true master stroke.
Similarly Google and Amazon are trying to use health data they have acquired through their portals (ethics can wait), to offer similar lower cost to consumers.
Revolt a leading fintech start-up with 40K customer base in UK alone, is planning to launch health insurance.
What can the ageing insurance industry do?
For starters they could start sorting out their internal IT so they can position to compete with big players who will try to start a price war with their parent company war chest.
Whoever survives that wave, will be in a position to compete with the newcomers.
Look at how Walmart didn’t go out of business but thrived when they got rid of legacy debt and revamped their entire IT. If Walmart delayed the restructure by a year, they would have been acquired by Amazon.
So why wait? Why rely on outdated systems? Transform them now, so you are ready for the big challenges ahead.