In January 2014, SMA published the research report, "Google and Insurance: Far Reaching Implications," which hit a nerve in the industry and generated a lot of talk and speculation. We followed up in August, 2014 with the research report, "The Shifting Competitive Landscape: A New Breed of Industry Challengers," which generated even more interest and discussion within the industry. We noted in both reports that the future of insurance is changing more rapidly than we thought it would and certainly sooner than we had prepared for. And for those insurers operating with the long-standing approach of taking a wait-and-see attitude, we cautioned that ignoring the pace of change and putting off the use of emerging technology would put companies at risk of losing the competitive edge, not to mention losing relevance altogether. We strongly encouraged insurers to track these trends along with other outside industry influencers to assess and strategize an approach and response based on their vision as a Next-Gen Insurer.
Now it is January 2015, and our expectations for Google have come to pass. Google is getting the approval for selling insurance on their compare site in a large number of states via a number of different insurance partners. As we predicted in the reports, companies like Google would not underwrite the risk, but they would be the primary point of contact for the customer relationship, making insurers the providers of the insurance product within Google’s ecosystem.
Some in the industry may discount this as just another aggregator site from which to search, compare, and select insurance, but that would be foolish and dangerous. This move has much bigger implications for insurance. It represents a major disruption by a recognized innovative giant who brings an outside-in approach to customer-driven engagement and empowerment. And it demands that insurers rethink, reimagine, and reinvent a technology-enabled future.
This is just the beginning. Other industry companies from retail, automotive, technology, and more are looking to leverage their influence, their offerings, and their platforms to extend their customer relationships and experiences, which will either force traditional companies out or force them to change. In particular, the technology companies have critical business attributes that are underpinning their rapid growth and influence:
- Customer Engagement. They are leading the disruption, re-imagination, and transformation of customer engagement models across all industries, setting higher bars for customer expectations.
- Customer Demographics. These companies are part of the daily lives of customers, from baby boomers to millennials, representing a merging of the traditional with the future to create a new generation of insurance customers.
- Digital Businesses. The companies all started, adapted, and emerged as digital-based businesses, creating customer-driven, technology-enabled, user-friendly business and operational models that have now become the table stakes in the digital revolution.
- Innovation Leaders. Innovation is also table stakes. The investment and commitment of resources to innovation dedicated to driving new products, services, and partnerships are redefining businesses and industries.
- Data Masters. These companies have enterprise data management strategies and capabilities that position them as innovative and transformative market leaders equipped with game-changing insights.
- Capital-Rich. They have access to internal and external capital for acquiring or investing in new technology companies that can expand market reach, deepen customer engagement, and put them at the leading edge of innovation and the digital and technology revolutions.
In a world of rapid change, the new competitors, emerging technologies, advancing innovation, and fading industry boundaries are intensifying the challenge to traditional insurance business assumptions. How insurers respond to these changes with a fresh set of views that combine both inside-the-industry and outside-the-industry perspectives will very likely influence their future.
Google and other industry challengers are moving at breath-taking speed and on a high level, with new innovations and capabilities emerging regularly, either through their own development or through acquisitions and partnerships. With each new capability, they are redefining everyday lives by what and how technologies are used and then creating new products and services that leverage those technologies. And more companies outside insurance will follow, not only to compete, but to capture the customer relationship and thrive in this new technology-enabled world. While Google’s move was expected and is challenging, it is the coming unexpected moves from unexpected challengers that will intensify the challenge to traditional insurance.
The future continues to unfold before our eyes. We must assess the influencers of change and develop vision and strategies for a new future. We must begin to break down our legacy assumptions and open our eyes wide to the possibilities of a very different future a future with new competitors and blurred lines between industries. A future that reimagines, rethinks, and reinvents the business of insurance.
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