Satisfying unmet customer needs key to helping prevent disruption: CIP Symposium speaker

If the insurance industry doesn’t start meeting unmet customer needs and responding to trends like the sharing economy, new entrants will likely continue to disrupt the industry, attendees to the CIP Society Symposium 2017 heard on Thursday.

“The big risk for us is the new competitors that may come in to meet these needs really have the user centric design at the core of who they are and what they do,” said Karim Hirji, senior vice president, international and ventures, with Intact Financial Corporation. “Disruption really is meeting unmet customer needs through the use of technology. Technology is moving at such a rapid pace today that this is where we are at risk. Technology isn’t entirely what’s driving the sharing economy, but technology definitely is enabling sharing to happen.”

Hirji suggested that the sharing economy is an opportunity for the industry “to look in the mirror” and examine what it is doing in terms of meeting customer demand. “We are very complacent,” he argued.

Consider that Millenials, the roughly 18- to 35-year-old age group, is the largest cohort in the world today and will be represent about 70% of the people buying insurance products and services by 2025, Hirji said during a session titled  Social/Sharing Economy: Implications for the Insurance Industry in Canada.

“Generally when we talk about Millenials from an insurance perspective, we talk about how we are going to incorporate Millenials into our workforce. How are we going to attract them to the insurance industry? How do we build tools and processes to support them? Sometimes we forget the consumer aspect,” Hirji said during the symposium, held at the Toronto Region Board of Trade.

One thing that Millenials are teaching the insurance industry is that they’re looking at “owning experiences more so than they’re valuing assets,” Hirji said. “That’s the heart of what the sharing economy is all about,” he suggested. “When we were growing up and looking at our career path and our future, we were all about owning assets.”

From a mobile device perspective, the industry is still trying to catch up on this shift, Hirji said, using the examples of creating “a good customer experience” or developing apps. “Customers are even moving beyond this,” he said. “The world is moving beyond apps and mobile and from structured data to unstructured data. People are interacting voice to text; now you get into a whole different world in terms of what [artificial intelligence] can do and what data can do.”

Another challenge is that the industry still tries to classify insurance in “pre-packaged” terms, including by commercial and personal lines. “Generally, if we don’t have a pre-packaged solution with reliable data,” it’s passed off, Hirji said. “How is that customer centric?” he asked. “When you are taking a look at the sharing economy, our pre-packaged policies and ways of looking at the world is not going to work.”

Another speaker, David McGown, senior vice president of strategic initiatives with the Insurance Bureau of Canada, acknowledged the challenge in making insurance policies for the sharing economy. “In the world of commercial lines and personal lines, a lot of this new evolving technology, a lot of where our customers are, I describe as inhabiting the gray space between those two bookends of how we’ve traditionally seen the business,” he said.

When designing a new solution, the industry also usually starts by asking what the product needs to look like, instead of what consumers and stakeholders want, Hirji added. “What’s the level of coverage that should be required and let the market decide how it comes to bear,” he suggested. “Perhaps Uber decides they want to come in and buy one policy to protect everybody. Fantastic. Perhaps Lyft will come in in two months and want their drivers to buy individual certificates. Fantastic. As long as the coverage is there, let the market dictate in terms of how these models will evolve.”

Paul Kovacs, a research consultant for the Insurance Institute of Canada (among other titles), also spoke at the session about the institute’s new research report on the sharing economy.