Mix 7,000 insurers, investors, and technology entrepreneurs together in Las Vegas, add a healthy dose of ideas, provide opportunities for discussion and networking, and what do you have?
Day 2 of InsureTech Connect 2019.
The plenary sessions brought in points of view from potential disrupters like Microsoft and Google and from incumbents like Markel Corporation and Travelers Insurance. Afternoon sessions dived deeper into the disruptions driving change in the insurance ecosystem.
What were the highlights of Day 2’s discussions? Here are four that caught our eye.
Ask Big Tech
The proverbial tech elephants – Amazon, Facebook, Google, Amazon, Microsoft – have been in the room over the past day-and-a-half. The opening plenary session at ITC brought two of them on stage: Microsoft and Google. Brian Warren, Director, Risk Management, Microsoft and Loren Nickel, Director, Business Risk and Insurance at Google, talked about their experience buying insurance for the two tech giants and their view of what’s needed to meet continuously evolving set of risks and opportunities for themselves and their customers. Both agree that the annual process of buying insurance from more than 50 companies is cumbersome. What do they worry about? Security in an increasingly cloud enabled world is one concern. Finding security talent is another. What’s not on the agenda? Both executives talked more about partnerships and exerting influence on insurers in order to drive transformation than about either company moving into the industry with an offering. Brian pointed out that as service agreements overlap with cyber insurance there will be a need for collaboration. What else is needed? Loren underscored the need for an industry pioneer and for increased attention to diversity of perspectives and approaches.
The view from the c-suite: Oliver Wyman’s Lisa Pollina and Richie Whitt, Co-CEO at Markel Corporation
“Don’t count us out.” That’s Richie’s guidance on how the incumbents look at the prospect of disruption from and competition with insurtechs and tech giants. In a wide-ranging discussion across the nearly 90-year history of this diverse holding company for insurance, reinsurance, and investment operations around the world, Richie discussed the firm’s core values and admitted that he admired Amazon. He noted there was much to learn from them: their closeness to the customer and the customer experience they provide. And they would indeed be fierce competitors. But incumbents have a lot going for them, and he doesn’t see them rolling over in the face of competition.
Pressed by Lisa on the threat of innovators in Big Tech, Ritchie pointed out that a lot of the innovation in insurance isn’t happening only in insurtechs or at Google. All insurance companies, he observed, are becoming more innovative out of necessity. As for the war on talent, Ritchie reminded the audience that insurance, at heart, is a relationship business built on trust. From his perspective, AI, digitization, and tech disruption will help the industry make human connections. People will still be necessary to build those relationships and that trust that when the unexpected occurs, someone is there for them.
Ritchie closed with an appeal to the audience to embrace the purpose of the insurance industry. He recalled Lippincott’s Chris Colborn’s appeal at the ITC opening plenary to be more than just a product – to create shared purpose. Insurance has a noble undertaking, a noble purpose: commerce doesn’t happen without insurance. To Ritchie, it’s the oil in the gears.
Oliver Wyman’s Paul Mee and Marsh’s Tom Reagan on Building Confidence in Cyber
Setting the context for a discussion of cyber security, Paul Mee reminded the full house over lunch that the challenges in cyber are a rapidly moving target. And the bad guys are definitely out there. 5 billion records stolen or compromised in 2018. Of those, 2 billion as a result of insider circumstances. And the challenge? By 2023 there will be 1.8 million vacancies in the security industry. Companies are spending more on cyber security – a lot more by recent calculations. Regulations are evolving . . . but slowly, and not uniformly.
Tom provided additional date from Marsh’s recent survey on cyber confidence. What is the impact of that spending on cyber risk? Conducted in partnership with Microsoft, the survey asked 1500 respondents globally across regions, industries, and roles about the state of cyber risk perceptions and risk management. Compared with 2 years ago, organizational anxiety has gone up. Cyber concerns are peaking, and 80% of those surveyed now rank cyber threats as a top-5 risk. At the same time confidence in managing cyber risk has declined markedly since 2017. There’s a sense, Tom observed, that companies have never spent more, and it’s never felt worse.
So how can the insurance industry build confidence? The themes of collaboration and innovation heard throughout the morning’s plenary sessions came together as Tom Reagan outlined Cyber CatalystSM, which Marsh is launching to help organizations identify cybersecurity solutions that can have a meaningful impact on cyber risk, based on evaluation by leading cyber insurers (including Allianz; AXIS; AXA XL, a division of AXA; Beazley; CFC; Munich Re; Sompo International; and Zurich North America; Microsoft is a technical advisor to the program).
Paul and Tom moderated a discussion among representatives from the first group to be designated as Cyber Catalyst solutions on how this kind of collaboration and designation brings benefits – and provides confidence - in the cyber security space. Key take aways? Confidence starts with strategy and understanding where your individual risk is, and it flows from there. Keep implementation in mind – the follow through once controls are in place is where many companies get into trouble.
The Future of Mobility
Oliver Wyman Partner Prashanth Gangu moderated a panel on the future of mobility. What does the term really mean in the context of insurance and insurtechs? Where is mobility now, and where will it go in the future? Prashanth was joined by Claudius Leibfritz, Member of the Board of Management & CEO Allianz Automotive at Allianz Partners, Fred Blumer, CEO at Mile Auto, and Sten Saar, CEO & Co-Founder at Zego.
Transportation starts with going from point A to point B, most agreed, but the discussion soon moved to customer preferences, ownership structures, and how frequently and why people are moving. Echoing a common theme throughout the ITC sessions, panelists described the pressures brought by changing demographics and customer needs. Mobility options are springing up to meet these needs. Not merely autonomous vehicles, but ways to provide mobility when it’s needed, for only how long it is needed, and in the form that best suits the customer. And insurance will need to keep pace.
Key take aways? As people cluster in mega cities, the notion of ownership will change. So, too, the experience of mobility, which will grow out of current ride sharing and short term rentals. There is an option to create a seamless experience, but it is not without hurdles – data privacy, and government regulation not least among them. Insurance will still very much have a role to play – but how visible that insurance will be to the customer remains an open question.
If this year's event was anything to go by, there's much in store for the industry in the year to come.
For more on insurtech, including video interviews with insurtech innovators and deep dives into the issues driving the discussions among incumbents, insurtechs, and investors, go to insurtech.oliverwyman.com. To keep up with the latest from ITC and elsewhere, be sure to follow Oliver Wyman on Twitter (@OliverWyman), LinkedIn , Facebook and Instagram (@oliverwymanconsulting). We are also tracking #OWInsurTech and #ITC2019