Insurance. You probably spend about as much time considering it as you do a quick sweep of your Facebook feed. As Andrew Brem, chief digital officer at insurance group Aviva says, it is “unbelievably dull”. However, “whether or not you find it dull, it is bloody important”.
Brem’s role at Aviva is to take a business that is “not known for its incredible radicalism” and “make the boring interesting”. Developing mobile apps, investing in digital channels, hiring game developers and analysing customer data are just some strategies aimed at taking the UK insurance industry into the digital age.
Firstly, the industry needs to change the way it communicates with customers and start treating them like consumers.
“For me a fundamental change in these industries is to shift to a retail consumer mindset,” says Aviva’s Brem.
“If I think of the nomenclature of financial services, even on digital you are filling out a form. The button says ‘apply’. When do I apply for something from Amazon? This notion of a form, of applying, of a quote or of acceptance is entirely outmoded.”
Gordon Rutherford, head of marketing and e-commerce at AXA Insurance agrees with this characterisation of the industry as “old, stuffy and antiquated. That comes down to the process of buying insurance and many insurers still use a language that is alien to customers, but some insurers out there are breaking that.”
Insurers like Aviva and AXA want to simplify the process by utilising the information they have on file. As Brem says: “Historically we treat every application as if we had no clue about who was applying. That’s going to get totally turned on its head.”
Opening up data
This all starts with the data. “We have this incredible insight,” says Brem. “We know a huge amount about where you live.
“Historically, this might mean risk of subsidence, risk of burglary, risk of unexpected weather events. We know this stuff not just in a generic way, so for London, or that the Peak District gets high winds. We know it because we know topography, we get hyper-local weather data, we need it to do our underwriting. Now the industry is turning it around to the customer.”
The consumer wants this information at their fingertips too. A survey of 2,005 British adults, conducted on behalf of GMC Software in March 2016, found that 85 percent of consumers with insurance would like their insurer to give them insight into how they could lower their premium, for instance by suggesting changes in behaviour.
The survey also found that consumers want to see greater use of technology by their insurers beyond just digital communication channels, with 56 percent of current insurance customers happy to see health monitors or connected cars to provide a more accurate premium.
“Data is a fundamental part of this digital revolution across the insurance industry,” Keith Misson, former digital innovation director at Aviva told The Economist Intelligence Unit for its report (pdf) on digital adoption in the insurance industry last year.
“In the past five years the explosion of digital information and the technology used to exploit it means insurers now have vast amounts of data available to understand consumers’ requirements and behaviours; the best digital insurers will use this data to benefit consumers,” he adds.
Using data collected by wearable devices, like Fitbit, Pebble or Apple Watch, to assess life and health insurance and encourage healthier lifestyles, and subsequently lower premiums, seems like a win-win for insurers and consumers.
However, there is always the flip side of consumers becoming uncomfortable with the idea that they may be punished by higher premiums because of poor health behaviour ratings from their device. A narrative the insurance companies are naturally averse to discussing.
Andrew Grill, global partner at IBM Interactive Experience in The Economist report, says: “The premium of the future will have very much a mobile, a cloud, an analytics, a social and a wearable-type component. I think consumers are itching to have their digital social life integrated with these [insurance] products— but they will only do that if there is a benefit to them.”
Brem raised some eyebrows at Aviva’s London office last year when he hired a chief designer away from Call of Duty maker Activision. “People at Aviva were gobsmacked,” he said. “Half the people got it: That person created a digital experience that millions of people come back to every day. The other half had no idea why anyone from gaming could tell us anything.”
Dawn Mortimer, data and analytics market strategy director at Guidewire Software agrees with the move, telling Computerworld UK: “Gamification can have a significant positive impact on consumers because it enables them to learn more about the products and services of the insurance company, in a fun and engaging way.”
A success story for this shift to gamification for Aviva is its Drive app, which now counts more than 100,000 users. The underlying technology, called telematics, has been around for more than a decade, but uptake has been traditionally slow. Turning it into a game makes it feel less like a spying eye to consumers, and democratising it via smartphones has driven uptake.
“I’m not here to be Big Brother, and if you really want to drive dangerously I can’t really stop you, as long as it is within the bounds of the law, but we would like to be able to let our customers make smart choices," says Aviva's Brem.
“The reason I think that is so powerful is because it’s not a do-goody instructional thing, it’s actually in effect a game. Everyone thinks they drive well and everyone thinks they drive better than their mates.”
Engaging with the startup community
Lastly, the insurance sector is taking a leaf out of the financial services playbook and engaging with the UK startup sector, predominantly from a cultural perspective. “They move very, very fast and that is a culture we have got into our own organisation,” says Brem.
Aviva currently approaches the startup sector in three ways: Launching and mentoring them through its London-based digital Garage, partnering and investing. Brem says that Aviva has £100 million to invest over five years in early stage businesses, “some of which will be quite tangential to what we are doing.” For example, Aviva invested in live-streaming video company Cocoon last year as it looks to shift from a protection approach to a more proactive, preventative model.
AXAs Gordon is more cautious, saying: “We are conscious of the noise around fintech and insure tech and we don’t want to emulate what others are doing. Sometimes you see what’s happening in Shoreditch and it’s not really catering to some guy in Manchester setting up his own double glazing firm, and we want to appeal more broadly.”