Peter Hubbard - UK General CEO in Post Magazine C-Suite: 7 August 2014

I doubt that legendary rock band Cream had the insurance industry in mind when they kicked off “Crossroads,” one of their greatest songs, but when Eric Clapton et al ‘went down to the crossroads, and fell down on their knees,’ they may have found a few insurance CEOs already there, praying for divine guidance.

For more than ever, I believe our industry is at that fork in the road, driven there by technology and rapidly changing customer expectations.  The game changing effect of technology on personal lines customers has been written about ad nauseam, but I’m more interested in what we should do about it. To briefly recap, social and technology mega-trends are fuelling ‘distribution disruption.’ The orthodoxy that insurance is sold, not bought is under threat, so insurers must re-examine their role.

Thanks to a conservative approach, technology implementation has been generally poor in insurance, and tech-savvy non-insurance companies present a competitive challenge. The new generation of tech-savvy customers will buy from providers directly, using their online and offline ‘trust’ network of friends and family to guide their choices.

Social networks are the portal to access online communities, and with access comes purchasing power. Social networks are already developing their group insurance channel capability, and eventually they’ll provide a pooling mechanism for self-insurance.

Insurers and MGAs must become relevant to the end customer. The recent sharing economy workshop at Downing Street came about because sharing companies complained that they couldn’t get insurance. So we must customise our product and service attributes to meet their specific needs. No longer a case of ‘here’s our insurance product please buy it,’ but ‘what do you want and we’ll make it.’

So where to invest?  Given mobility and speed of service are overriding customer demands, insurers should spend their treasure in mobile and interactive technology for multimedia content creation and distribution, as well as transactional capability across multiple digital platforms. 

Operationally, digitalising customer processes and support functions will reduce complexity, lower fixed costs and increase ability to respond to change, obviating the need for unnecessary investment in complex back office systems.

‘Crossroads’ was originally written by Robert Johnson, but his name is virtually forgotten as a host of other bands have covered the song far more successfully.  Likewise, if we don’t adapt, others will take what we do and make it their own.