Risk pooling has always been a tough sell – it is hard for the majority of members who are providing the pool of funds for the few that do suffer an event to focus on the value of the peace of mind purchased by the premium. For the consumer, insurance is a pretty remote value proposition (as they no doubt say in “sales”), a grudge purchase that is infrequent. These issues do feed through to reputational issues for the industry and a long term project to inform the public about the value of insurance was recommended by the Insurance Fraud Taskforce last year. This is a very big project and changing attitudes and understanding will take years and will no doubt be set back by every piece of poor press that so easily re-enforces misinformed stereotypes.
We should however remember that we are not operating in a static environment and a recent article published on the CII’s website, “How insurtech is helping insurers deliver more personalised services” and tweeted under the hashtag #insuretech (and how long will it be before # is recognised as a letter of the alphabet?!) goes beyond the discussion about the safety and risk management issues of telemetry and autonomous vehicles. The downloaded app that either records or reports on driving behaviour in real time (or near real time) “connects” to the consumer in a very real way. Modify your behaviour by driving more slowly or carefully and your premium is adjusted for the accident that you did not have.
The connection directly links risk management and reward and demonstrates the value of insurance through the device that has become ubiquitous. And it is also the device that connects to the consumer who is hardest to reach for the insurer: the millennial. This is the generation least likely to value insurance yet has a mobile glued to their non-dominant hands (or at the very lease sewn in to the back pocket of their jeans – or genes?) So perhaps #insuretech will change the way that insurance is valued, connecting risk management and price and will do so more quickly than we might have anticipated. And the headline and the immense social good is that we will also be saving lives as collectively we drive more responsibly.
Written by Terry Renouf, partner, BLM