It's that time of year, when we look back fondly at the year just gone and forward with trepidation and excitement for the year ahead. 2015 was all in all a good year for most with a number of significant events that saw a good end to the year. Weather on the whole was mild, with the UK floods over Christmas being responded to well by all. Regardless of the news/political agendas, we are still investing £2.3bn into flood defences over the coming years.
As we look forward, here is my thoughts on how we start 2016. What do you think? As always, I look forward to your feedback!
1. FinTech and InsurTech. 2015 will be remembered for the year of the zone, loft, garage, accelerator. This will continue now with a new level of maturity and focus. We will see the emergence of the first 3-4 successful candidates from accelerators, as well as more failures (we need more to help hone the focus). Either way, this trend will continue upwards as we look for the next Unicorn and existing carriers worry about FOMO (Fear of Missing out).
We will see more acquisition in this space too, where existing carriers acquire to improve or extend their value chain and reach, as we did last year with Generali & MyDrive as an example.
2. Evolution of IoT. The Internet of Things buzz has reached fever pitch, (I've even written about it myself). 2016 will be the year we all realise it's just another data/automated question set. From connected homes, cars and fridges to the connected self. Focus will move to strong use cases and business cases, but anything here on its own will not survive. It needs a partner or three.
3. Digital & Data. 2016 will continue to be a big area of growth for both and I've bundled them as I believe they are intrinsically linked. That said, if you have done nothing here yet, then you are very late to an already crowded party. Both will continue with huge levels of interest and hype, but needs to move into genuine execution of all the plans, POC's and more made last year. Ultimately, the only thing that matters here is the customer. Don't just have a plan because others are doing it. It needs to be right for you and your particular customer segment.
4. M&A continue, but will slow. 2015 saw a record breaking year for M&A in the Insurance world. As the economic climate changes and we see interest rates rise in 2016, I see this slowing down whilst the current set of newly combined companies focus on bringing together the multiple new units into one cohesive efficient fighting machine.
5. Will the CDO Survive? And by this, do I mean the Chief Digital or Chief Data officer? As with my first point, the focus and drive in these areas has been great, it has had the right effect and wake up call - however, for organisations that implemented these 'change agent's' and 'purposeful' disruptive roles, I suspect we will see a move back to the Chief Customer Officer.
6. New Business Models. To take advantage of all this data, technology, customer intent and more, we need to find and be clear on what the new business model will and needs to be. Will be for the customer and needs to be so that carriers continue to make a healthy profit.
7. What we buy & sell. For this, we move away from a product mind-set and become both more relevant and more convenient. My two favourite terms when it comes to insurance. Rick Huckstep did a good piece on Engagement Insurance, which to me sums up how we better embed ourselves into the daily life, rather than once a year or the current cycle. This is where organisations such as Trov will come into play. Trov and others will be more integrated into our everyday lifes, hence become more convenient, seamless & relevant to us, driving more engagement. From a convenience perspective, companies including Cuvvamade the news last year. This is just the start of things to come, the key questions are, can they scale and will they make money? Peer to Peer also made lots of noise, however I think the same questions here apply.
Whilst both of these demonstrate Relevance and Convenience, I still feel we will move away from the current product mind-set we have today to just buying complete cover for the individual and anything they do, regardless of where they are. I called this previously the 'rise of the personal SME'. I expect to have Insurance rather than 5-10 products.
8. Cyber is the new digital. While the last few years have focused heavily on Digital Transformation & Data, this year will see a big focus shift to Cyber. Both on the buy and sell side with organisations moving quickly to not be the next headline for the wrong reasons. So each organisation needs to have the right measures in place, followed by the right cover. For carriers, this means new products and opportunity with specialists including ACE, XL Catlin and Beazley already making strong moves, amongst others.
We started 2015 by calling out that the risk was simply too big to cover and finished it with calls for a government backed reinsurance scheme for Cyber, as we have already created for flood. Real need or a political agenda? My view is real need, regardless of the politics.
9. Partnerships & Bundling. Like many of these points above, on their own they are significant issues and opportunities, but perhaps don't answer the key questions around relevance, engagement etc. For this, I see a big rise in the partnerships between insurers and 3rd parties or the orchestration/bundling of services that just happens to include insurance. Insurers could become the systems integrator for lifestyle services, by default increasing relevance and engagement.
Finally, let's equally not take our eye off the here and now. Organisations will continue to need to run the ship, BAU is still BAU. We must aim to reduce internal costs & inefficiency. Not one organisation I have spoken to over the last year is not riddled with legacy, through organic or inorganic growth and has clear ambitions to reduce costs and improve efficiency - all to drive further support for the Year of the Customer.
However we look at things, 2016 is looking to be an exciting year ahead. I look forward to sharing it with you!.
Nigel Walsh | @nigelwalsh