Innovating for the ‘Next Normal’

As the world battles a second wave of COVID-19 infection, insurance companies find themselves adjusting to new realities and scoping out new opportunities. The good news is that ten months into 2020 insurance companies have been through the fire of the first wave and now have the digital capabilities to ready themselves for further uncertainty and disruption.  As panellists on the Insurance Innovators’ recent webinar Innovating for the Next Normal agreed, now is the time to capitalise on the digital acceleration that has taken place across the industry to make the most of the opportunities ahead.

“We’ve absorbed the shock of the first six months, and we’re now planning for the next six to 12 months”


Steven Zuanella, Generali

“We’ve absorbed the shock of the first six months, and we’re now planning for the next six to 12 months,” said Steven Zuanella, Group Chief Digital Officer of Generali. “This means reassurance for our customers who have been through difficult times in terms of their health, jobs and personal restrictions. We also need to deliver our plan, making trade-offs between the top line and bottom line to make sure we have a successful business now and in the future. And then there’s digital transformation, which has already been turbo-charged by the shock of the last six months, and making sure we use that to cope with the uncertainty that lies ahead.”

“We’re already seeing the long-trailed upsides from a cost and efficiency point of view of an acceleration towards the end of cheques, physical documents and wet signatures… It does make you wonder why we did not do these things before”


Mark Budd, Zurich

Mark Budd, Head of Innovation UK at Zurich Insurance Group, said the pandemic had acted as a catalyst for digitisation, with capabilities once considered optional now a hygiene factor in the era of physical distancing. As a result, said Budd, it was clear that cheques, physical documents and wet signatures are now well on their way to being phased out, something that might otherwise have taken ten years to achieve.

“And we’re already seeing the long-trailed upsides from a cost and efficiency point of view and it does make you wonder why we did not do these things before,” he said.  “The benefits we had been talking about for a long, long time are now a reality.”

While our panellists are hopeful of a vaccine or other scientific breakthrough that may see a return to pre-Covid times, it seems they do not expect 2020’s wave of digitisation to be reversed. “My forecast is that 70-80 per cent of what we’ve changed will stick,” said Steven Zuanella of Generali. “There will be more face to face interactions but the way we are doing business now works and, in some cases, improves the proposition for the customer.”

“Digital documents and e-signatures dramatically improve efficiency and customer experience”


Laura Drabik, Guidewire

Laura Drabik, Chief Evangelist at Guidewire, identified a number of innovations that are here to stay, most notably digital documents and e-signatures. “It dramatically improves efficiency and customer experience,” she said. “Carriers want to be easy to do business with and digital documents and e-signatures really facilitate that.”

Business impacts and new opportunities

The pandemic has clearly had far-reaching impacts on insurers, not just in how they interact with customers but also on operating models and business lines. “It’s a health crisis that has led to an economic crisis, which will probably last longer than the health crisis,” noted Steven Zuanella of Generali.

Travel insurance has clearly taken the brunt of the hit, with carriers now having to ask big questions about how sustainable this line will be going forward. Motor has recovered from the initial fall-off during the Spring lockdowns and home insurance has proved stable throughout.

“Life products and long term savings are being challenged by the knock-on effects of the Covid crisis, especially the drop in interest rates,” said Steven Zuanella of Generali. “How do we rethink these products to make them relevant to customers and profitable to Generali and the life insurance sector as a whole?”

Change and uncertainty can be a time of opportunity for insurers, noted Laura Drabik of Guidewire, who spotted new opportunities for insurers willing to innovate. She expects Pay As You Go models to take off in auto lines, both for domestic customers and also fleets and delivery drivers, and cyber will be another growth area.

“There’s been an 800 per cent increase in cyber attacks since the onset of the pandemic”


Laura Drabik, Guidewire

“There’s been an 800 per cent increase in cyber attacks since the onset of the pandemic,” said Drabik. “Hackers have focused on entry points caused by working from home and there’s also been a rise in Covid-19 themed attacks. And then there’s parametric insurance for business insurance for pandemics. So far only Marsh provides this but there’s lots of opportunity there for innovation in those lines.”

“Parametric models have clear benefits for customers and insurers”


Mark Budd, Zurich

Mark Budd of Zurich agreed with this analysis. “Parametric models have clear benefits for customers and insurers,” he said. “The customer knows what happening, there’s an independent trigger, they know what they’re going to get and they get paid immediately. And the insurer does not have to process that claim. It’s frictionless so it’s attractive to customer and insurer.”

Hélène Stanway VP, Global Head of Technology Innovation at AXA XL, said that when it comes to product innovation she expects there to be a shift from episodic transactions to real-time as a result of the convergence of AI and the Internet of Things. “It will be about telling customers about risks they do not even know about yet,” she said. “It’s detecting a change in the temperature of the fridge and getting that fixed before they even have to make a claim.”

InsurTech: still valued but harder to meet

“Investment is increasingly skewed towards late stage and more mature offers rather than start-ups.”


Hélène Stanway, AXA XL

Capitalising on these trends and keeping pace with changing customer behaviours will require on going investment in innovation and collaboration with InsurTech disruptors.  Hélène Stanway of AXA XL said investment in InsurTech was still holding strong but was increasingly skewed towards late stage and more mature offers rather than start-ups. “But it does create an issue, where’s the pipeline of early stage innovators, how do they get through to maturity?” she asked. “And it’s getting harder to find them now we’re all working from home. Conferences were a great way to meet start-ups, to identify the emerging trends and fill that pipeline.”

Mark Budd of Zurich also lamented the loss of serendipitous meetings and connections in pre-Covid times. “Those opportunities have gone now,” he said, although he noted events such as Zurich’s annual innovation competition still yielded great results. “The thing is sometimes you do not know what you are looking for until you stumble across it,” he said. 

Steven Zuanella of Generali backed this. “The management of a start-up is about 70 per cent of the weighting, along with the idea and the technology,” he said, adding that 2020 has been one of the group’s busiest years for working with InsurTech start-ups. “That’s more difficult to assess now. It will be interesting to see how the pipeline develops or fades over the next six months.”

Beyond Covid-19

Regardless of the pandemic, companies have been tackling big themes for some time, from climate change and sustainability to the rise of the gig economy and an aging population. “These all represent new ways of working and living and these all create new risks,” said Mark Budd of Zurich. “Insurers are risk management companies and we’re working with InsurTech to uncover the value and services we can offer in changing times. The danger is we adopt Insurtech before you know what you are adopting it for.”

“Cloud gives access to leading edge infrastructure without being on premise, providing the flexibility to rapidly prototype new lines of business”


Laura Drabik, Guidewire

The good news is that new technologies adopted to cope with the pandemic have put insurance companies in a better position to flex and respond to fast-changing market conditions. “In the past insurers implemented new technology on on-premise platforms, which is complex, expensive and disruptive,” explained Laura Drabik of Guidewire. “But the shift to cloud-based solutions, which was accelerated by Covid-19, means it doesn’t have to be that way anymore. It gives access to leading edge infrastructure without being on premise, providing the flexibility to rapidly prototype new lines of business which are on demand and scaleable.”

“Open Insurance is definitely the direction of travel”


Steven Zuanella, Generali

This should put insurers in a better position as they grapple with the trend of Open Insurance, as the API economy facilitates data-access and data-sharing, spurring competition and innovation. “It’s definitely the direction of travel,” said Steven Zuanella of Generali. “It won’t happen immediately and will taken longer than Open Banking but it will happen over time in gradual steps.”

“The benefits of APIs are speed, scaleability and low cost operating model,” said Mark Budd of Zurich. “The barriers are unpicking complex ecosystems, the investment to build the API stack which is not insignificant and the readiness of consumers to adopt them.”

The panellists discussed the SuperApp phenomenon in Asia, such as China’s Ping An, which is now offering its technology to third party insurers around the world. “It’s only a matter of time before they get traction with that because their solutions are good,” said Steven Zuanella of Generali. “They will have a bright future and those able to imitate some of those components successfully, whether it’s QR codes or apps, will really make an inroad because ultimately we are all trying to get a greater slice of the customer wallet and that’s what Ping An does fantastically well.”

Mark Budd of Zurich agreed. “We need to learn from the successes in Asia and should not be arrogant and assume it will not happen here,” he said. “Yes, the culture and regulation is different but how long before those things start to converge.”

New ways of working and thinking

Budd pointed out that the Ping An business model is very different from traditional insurers and will require companies to work in very different ways. “We need to flatten our internal structures because there’s no real room for bureaucracy and our decision making needs to be much faster,” he said.

One good thing to come out of 2020? Mindsets have changed. “People are now more open to new ideas,” said Steven Zuanella. “It’s been forced on us but it’s definitely making a difference.”

Hélène Stanway of AXA XL said successful teams are curious and always learning, pointing out that AXA has set up an academy for its underwriters to keep pace with a fast-changing world. “We’re used to underwriting cars and drivers but how do you underwrite an algorithm when the car does not have a driver?” she asked.

“We need people who think differently, who are connected inside and outside of our industry. Diversity is not optional”


Laura Drabik, Guidewire

Laura Drabik of Guidewire agreed that there was a need for new skills and perspectives, particularly now that algorithms increasingly hold sway over our daily lives. “When it comes to skills, we need people who think differently, who are connected inside and outside of our industry,” she said. “And to eliminate bias, we need diverse teams. Diversity is not optional.”

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