Over the next few years, where do you believe the most important innovations in insurance will come from?  

According to our research, over 54% of insurers believe the biggest threat to the insurance industry is likely to come from outside players like Google or Amazon. Whilst we’ve been this this for the last few years there has been little evidence but is the tide about to change? And are we about to see disruption coming from the bigger players in adjacent industries?

If you look at most of the major disruptions to any industry, be it taxi's, home movies, music, retail, banking the major disrupter came from outside of the core industry players. What could be a better example than Dyson, a 'vacuum' company which is now looking to build electric cars and disrupt the motor industry? How many car manufacturers saw that coming?

So who is likely to disrupt the insurance market?

In the personal lines space, there is a three-prong attack currently underway, and without a crystal ball, at this time it will be challenging to understand who will win, but without serious innovation, the sure bet is that it won't be the insurers. The lines are being drawn between the car manufacturers, the home security systems providers, and our Mobile Service Providers. Their weapon of choice? Data. Their ability to generate and access data that provides them with the kinds of insights that insurers can't collate or have access to via their existing propositions — ultimately leads them to take "ownership" of the customer journey.

Car manufacturers there for you when you need them

Take the latest BMW, Mercedes, Audi or any one of the numerous executive cars coming off the production line today, with the existing in-car technology if you have an accident the vehicle can immediately transmit details of the likely damage and location to the vehicle manufacturers accident management service centre. You are likely to receive a call before you've even gotten out of the car asking if you are ok. Within a few minutes either the emergency services and or the vehicle manufacturers recovery service has already been dispatched to transport the occupants and the damaged vehicle to the nearest main dealer, a replacement vehicle will be waiting for you to drive away in while they contact the insurer to get authorization to start the repair work.

Great customer experience for the driver but what impact does this have on the insurer and their FNOL process? The first time the insurer hears about the potential claim could be the call from the repair centre when the policy holder is already in a replacement vehicle, realistically is the insurer really going to be able to persuade the policyholder to move the vehicle to one of the insurers network of preferred bodyshops? As the majority of margins for most car manufacturers comes from servicing and repairs they are highly motivated to ensure that their vehicles end up in their bodyshops.

Let’s take it a step further, most car manufacturers believe it will be become increasingly difficult to sell cars the industry is likely to evolve in to new models such as car sharing or subscription services where the consumer pays as and when he uses a vehicle. Insurers are already investigating how they create new revenue streams, one possibility is to utilise the in-car comms module to book train tickets if it is likely to be quicker than driving, booking hotel rooms and using the vehicle key as a door access key so that they can take a cut of the room rate or encouraging consumer to take safer, less congested routes by creating a journey by journey insurance proposition.

Home security protecting the customer

Take a similar scenario where insurers are trying to bundle sensors as part of a home contents policy. Most consumers do not currently trust their insurer not to exploit potential information that may impact a claim such as if they've left a window open or left the iron on. However, they are more than happy to let their home security provider have access to that data as the perception is that they are there to help them not do these things rather than punish them for mistakes. 

Typically most people keep their home security system for around ten years or as long as they've owned their home, the length of the relationship makes it's much easier for a home security system provider to fund the upgrade of technology within their packages whether it's the latest face recognition cameras or water valves. As more and more IoT technology is incorporated into the offerings, the natural result is a plethora of data. This access to so much dynamically generated data over an extended period gives insight into patterns of behaviour and risk profiles that are much more specific and detailed than ever before. This becomes an obvious opportunity to deepen the daily engagement with the home security brand and upsell into new areas increasing the potential revenue per person. Bundling in home insurance as part of the monthly security subscription fee becomes almost a no-brainer.

Mobile Service Providers providing everything

A global obsession, we all wander around daily with our smartphones 'glued' to our hands. More than just a telephone, these "mobile computers" provide access to a vast amount of personal data from location to our actions. With permission, our mobile network providers could easily introduce services that inform them about the way that we drive or when we are on public transport or a flight abroad.

Extending the value of this insight and again looking to increase the "stickiness" of the customer relationship by providing additional value-added services, it makes sense for a mobile network to explore insurance services above and beyond just the traditional phone contracts currently available. For example, as we increasingly book our holidays on our mobiles, our service providers could create a next-gen travel policy that automatically provides cover for travel delays or missed flights, with an option to upgrade cover for cancellations, lost property or medical cover? Could an "always covered" product be created based on the location data made available that automatically covers the user when they leave the country, allowing our growing mobile population the ultimate in frictionless engagement? With the millions of customers that the network providers have could they create a travel insurance product at ultra low cost as part of the monthly subscription?

Service providers have a unique ability to partner with travel providers potentially to create invaluable insurance experiences. For example, based on shared calendar data, could they auto-match a flight or hotel cancelled by one customer and match to individuals most likely to be receptive to booking those flights or hotel rooms thereby taking advantage of the salvage value of travel components often ignored by the vast majority of travel insurers?

The mobile networks are also one of the best placed to create next-gen propositions or eco-systems as they are the pipe that the data generated by the sensors have to travel through to reach the proposition provider.

Innovation as the shield

As we move away from today's traditional 'safety-net' based insurance propositions towards guardian angel "prevention-based" propositions the opportunity for any of these non-insurers to conquer the industry is real. Insurers have often struggled to build lasting deep relationships with their customers, and as new technologies emerge and as data sources increase, it becomes a more powerful driver in building next-gen propositions. Without access to these new data sources and the innovative thinking to create new more relevant and engaging propositions insurers could be left disconnected and sidelined to a supporting role.

Innovation is the insurer's potential armour against these external market players. Organizations must evolve the way they determine their growth path and adoption curve of continuously developing innovation techniques as a critical offensive strategy to the changing competitive landscape. This is vital to stay relevant. 

This means:

• elevating innovation into a cross-functional approach supported by clear sets of tools and techniques;
• Industrialising innovation across the organisation;
• aligning key performance metrics;
• updating processes and structures to specifically drive a forward motion in the adoption and use of innovation; and
• reviewing how your people will innovate for the future success of your organization
• And finally, making sure you start innovation projects now for immediate short term success, medium term growth and evolution of your company for long term survival.

Embedding innovation as a company-wide strategy is now mission-critical for insurers.