I put Tavio Roxo, CEO Owls Software, in the hot seat with a few rapid fire quotes from Insurtech21
Insurtech2021 significant quote one – Your own quote at Insurtech2021:
“Now the question to ask is this, has the industry lost its soul, or is it fully intact and just digitally enhanced?”
Tavio: There was a big discussion around what insurance originally was, the pooling of risk and being able to accommodate and provide cover to insureds who otherwise would not be able to get cover, by pooling the risk. With the evolution of insurance, we are moving towards a digital technology-based type of product, where you are then able to understand risk at a more granular level. My comment at the conference was really centered around the idea that there is now this evolution towards understanding Tavio Roxo as a person of one, rather than understanding my demographic of being a certain age, a certain race, certain sex, and based on other metrics, trying to establish my risk profile. So, change is uncomfortable, but is this necessarily a bad thing? Personally, I do not think it is a bad thing because, if you do behave correctly, you then do get insurance at a preferential rate. If you do not behave correctly, then you get insurance at a loaded rate, which I think is the way that insurance must ultimately work if you fast forward years from now.
Asked whether he thinks there is room for a bit of a spectrum as to how personal it is, versus full on group risk where you fit into a pool, Tavio answered:
I think that they are two distinct sorts of risk appetites. So, when you are trying to understand the risk as an insurer and you understand that risk at a group level, you obviously have much more leeway, because of the premium income, because of the nature of the risk, because you can limit the risk and you can actually understand a group of people working in the same sort of industry or in the same company, and you are able to get some gains out of understanding that group and being able to ensure it.
But if you are looking at specific products, like for instance, medical aid or medical gap cover, which are specific to the individual and how that individual comports themselves in trying to understand your risk as an insurer for them, then in that instance, I think that it is a granular risk assessment. So, I think it is a combination of two, a combination of both the group versus individual and it is a combination of the actual underlying product that you are looking to give insurance on. I mean, it makes no sense, right? If I am a bad driver, to pull me into a group scheme, and I’m driving up the claim’s ratio in that group scheme, I should be eliminated out of the group scheme, or at least corrected by loading my premium.
Insurtech2021 significant quote two – Daniel Guasco, the CEO and founder of Click2Sure:
“Embedded insurance is a massive growth opportunity, which enables retailers and manufacturers whose products they stock, to offer a value-added service to consumers, gather information on consumers and grow a deeper relationship with them.”
Tavio: It is an agenda from embedded insurance to be able to become more personal and do better business into the future and you see embedded insurance fitting into that. With embedded insurance I think one must understand that the actual underlying product is a commoditised one, with a very limited risk profile. So, it would be a product that is capped off with 10,000 Rand benefits or 20,000 Rand benefits or certain cell phone benefits. Is that the kind of embedded product that you are speaking of? Or are we talking about a cross selling opportunity, where you have someone on your books as a lifetime client and you are trying to cross sell a commercial or short-term vehicle insurance product to?
In the retail environment, if we are going to debate it, is it not very similar to what has been happening for many years with bancassurance, in the sense that you have almost embedded products or a “cross selling” of products, across to the same client from multiple areas within the business. That has worked significantly well for banks over many years. So, if this is to be extended to the retailers and they have the capability and the capacity to be able to cross sell or to embed insurance into the financial services products which are sold to the end customer. I think it has a lot of use for sure.
The information that is gathered, getting that information, what do you think he has in mind? Apps maybe, I am imagining a pick ‘n pay situation where they are selling funeral policies with embedded cell phone insurance, the information that is gathered, other than the initial contact primary information, is there going to be any other information like in discovery world where they are going to start tracking and understanding clients’ movements and understanding the profiles better?
Embedded insurance is also very much centered around a frictionless ability to onboard a Policyholder, which perhaps previously, was incapable of being onboarded because they did not provide the correct information. Now within that retail environment, they can give that.
Insurtech2021 significant quote Three – Sumarie Greybe, Co-founder, Naked insurance:
“bringing true personalisation to insurance cover is key to changing how customers perceive and feel about personal short-term insurance.”
Tavio: When you talk about frictionless, this is part of the idea that, with your motor insurance, you get to a point where you don’t switch it on and off, it just does it automatically. So with anything else, where you have insurance, you don’t necessarily speak to your insurer but your insurer intuitively based on the AI and the IT systems that they have, actually increases or decreases, switches on or switches off, on your behalf. As Sumarie mentioned when she uses the word feel, she says “how do customers perceive and feel about personal and short-term insurance”, I think the key attribute is how do you structure products, sell a product and onboard a client in such a way that they feel like it has been a nice journey.
I think there is a lot of discussion around the client journey and omni-channel and how a client interacts with an insurer whether they come to you via WhatsApp, or via a call Centre or the web. That personalised insurance very much ties into the channel with which that customer is going to approach you. You must be good for all the channels in order to give them that feeling of a personalised product.
Insurtech2021 significant quotes Four – Lee Brumfield, the CEO of FNB Insurance,
“Bancassurers are best placed to facilitate and embed holistic money management, given the mounds of data they house and their access to a client’s balance sheet”
Tavio: There has certainly been some evolution in bancassurance and banks understanding their customers. I logged into my FNB app the other day, and based on my transactions, and based on the way I conduct my accounts, they automatically provided me with a short-term loan, which I could choose to accept or not, to opt-in or opt-out. You know that is the first step of it. 10 years ago, I don’t think that would have happened, I would have had to have gone into the bank and tried to convince the bank manager to provide me with a loan. And now with AI and with understanding the troves of data which they sit on, they can push that to me through my app automatically and say, look, the way you are, we can sell you x y and Z. The next step is to then offer me life insurance, which they then subsequently did. Based on the conduct and on what we have seen about you, we are offering your life insurance at x rate.
What they haven’t offered me is any sort of medical gap cover or anything else. But I don’t think it is a “turn it on and everything else comes on”, it is like a stepping stone, but as much as you say that they aren’t there yet, I kind of agree. I think that they are very aware of it, and they are very alive to the fact that they must get there. Certainly, my experience has been that they are kind of moving in that direction already. FNB life has done significantly well in a relatively short period of time, and I think a large component of that, is understanding that underlying data that sits within their perimeter.
Insurtech2021 significant quote Five – René Schoenauer, Guidewire software.
“An innovation enabler for the business and the insurer can heavily focus on its core competencies, optimise operational efficiency, and improve customer satisfaction.”
Tavio: We could say he sees IT as an innovation enabler for the business, so that the insurer can heavily focus on its core competencies. Looking at what the insurer’s core competencies in your estimation is I think the absolute core is understanding risk, and being able to quantify risk and price it and then design products around that understanding. That is the insurer’s core competency that differentiates it from anybody else that wants to do insurance. It is that core competency of understanding the risk, pricing it, and being able to fit the correct product. For this the insurer needs a lot of data. The IT system is where everything lives. I mean, the idea then is just to optimise operational efficiency, and improve customer satisfaction and let the system do that.
So you design a good product, you distribute it out to market, you use an IT system in order to extract the information in order to design the product, and then use the very same system to be able to push that product into the market and be able to attract an inset and onboard client in a frictionless way.
But that very IT system needs a lot of elegance around the way that you do it. Because if it is done incorrectly, the system becomes a hindrance, it becomes an encumbrance. I think we chatted about it some time ago, where you were saying that you had come across a couple of guys who had spent a fair amount of money on IT systems only to find that three years later, they weren’t being utilised and business was still being conducted in a manual fashion.
That is something that happens less and less as people go down this journey. But absolutely, I think a question must be asked by the insurer at the beginning of this process. And that is, how do they see themselves utilising the system? How do they see the customers interacting with them five years from now, and then work everything back from there?
It lies with the finesse of the system. If it wants to be an innovation enabler, then it must almost be a bit open ended. Because you can’t predict innovation. You can maybe have trends and look at them, but things happen out of the blue and then your system needs to be able to cope with it. If it wants to be an innovation enabler.
So, to sum up, we’ve discussed five presentations here now, a quote from each of them and all of them seem to indicate data, personalisation, and being able to take advantage of whatever you get out of those two things by being innovative.
I think that personalisation can be unpacked even further. Personalisation in terms of product design, personalisation in terms of the client’s journey, both onboarding as well as servicing the client during the time that they have a policy with you.
So personalisation is not just a monolithic kind of thing, where it is only one item that you are measuring, there is a lot of data points in that in order to get to Sumarie’s points, which is that you want to make the customer feel like they are having a good experience.