Forming a “club”
A club-like ethos pervaded many of the early insurance ventures. Shipping owners would congregate at Edward Lloyd’s coffee house in the City of London near the docks to exchange news and gossip, and – over time – share risks. In the 1890s, dry goods merchants in New York came together to create the first reciprocal exchanges – a type of mutual insurance organization – under similar circumstances. Personalization and connectivity
Club members today are often flattered by the notion that they are obtaining benefits unavailable to non-members. An aura of exclusivity is important. “We’re not for everyone, but we might be perfect for you,” says PURE, a reciprocal exchange that serves the high value homeowners’ market (see profile on page 28, “Join the club”).
“Consumers expect an experience delivered in a fashion as seamless and elegant as an Apple product, that understands them as well as Google, and is delivered as efficiently and cost-effectively as Amazon, all in a curated Netflix-style queue.” “
This alluring vision was articulated by Haden Kirkpatrick, vice president of innovation at State Farm, in a speech delivered at the Future of Insurance USA conference in 2023. It feels far removed from the current experience of most insurance buyers. Generative AI holds out the promise of a radically different customer experience: talking to a computer may become far more like talking to a “real person.” But even more value may derive from tapping the large volumes of underwriting data now available – particularly from cars and connected homes – to make personalized insurance products a reality. In 2021, a report produced by the Geneva Association 10 , an insurance industry think tank, described “the hyperconnection between people, machines and organizations” as “a prevalent megatrend that we see at almost all levels of society and around the world.” A 2020 study by the UK insurer Aviva found that the average U.K. home had over 10 internet-enabled devices, an increase of 26% in three years.
Sensors can be used to improve safety and avert accidents in two ways. Risks can be reduced or averted without any human intervention, as autonomous driving systems (ADAS) do in cars. Alternatively, sensors can trigger human intervention, such as a water leakage alert that activates an emergency repair service. “The industry is approaching a point of inflection,” wrote Jad Ariss, managing director of the Geneva Association, in the foreword to the report. “[The] availability of data should give greater insights and opportunities to influence behaviors and risk. This ability to offer actionable advice and develop risk prevention services will open new markets for insurers.” It should also offer attractive new brand-building opportunities. Risk management services are free from the conflicts of interest that bedevil indemnity-based insurance coverage. In fact, they help align the interests of both insurers and their policyholders more closely–providing firmer foundations for strong brands.
10. “From Risk Transfer to Risk Prevention How the Internet of Things is reshaping business models in insurance”, Geneva Association, May 2021
Page 20
Made with FlippingBook - Online magazine maker