Why the industry needs to focus on “accidental” disruptors

The insurance industry is used to looking for “intentional” disruptors, but it really needs to focus on “accidental” disruptors, says a P&C insurance consultant.

“We all can see the real disruptors out there, the ones that are finding the ways to deliver our product differently and selling direct to the consumer,” said Phil Cook, CEO of Omega Insurance Holdings. “If we don’t also look for the accidental disruptors, we’re missing the point.”

For example, a person who buys a homeowner’s policy has probably been told to do so by their bank or lending institution; the person who buys their auto policy does so because the law requires it.

“Think of the accidental disruption… if the banks decide to include a value proposition within the mortgage that doesn’t require you to buy homeowners [insurance],” Cook said during the Insurance Institute of Canada’s Industry Trends & Predictions: 2019 breakfast last week. “They are what I would call accidental disruptors and they are the ones we need to watch. We can spot the real disruptors, but the accidental ones could change our industry significantly.”

“If we [manufacturers of insurance policies] get hung up on the fact that the consumer actually wants our product without looking behind to say, ‘Why do they want our product?’ we’re missing the boat,” Cook said. “Why do people want our policy? They don’t get up in the morning and say, ‘I think I’ll go and buy a policy.’ They need it because of something else.”

Consider the accidental disruption that would occur if a bank decided a customer didn’t need home insurance for their mortgage. The banking industry would disrupt the home insurance sector without necessarily meaning to do so.

Part of Cook’s presentation focused on Top 10 predictions for 2019 and beyond. One prediction was that insurers and intentional disruptors – those that actually changed the way in which a product is delivered – will find ways to work together. This is already starting to happen, Cook said.

“Many of the larger insurers are looking to join venture with those disruptors to take advantage of their capabilities and to match the product to those capabilities,” he said. “They’re the intentional disruptors.”