February 9, 2015 by Ronan O'Beirne
Professional services and Formula 1 may seem like strange team mates, but that didn’t stop KPMG from going for a ride with McLaren Group.
Two months ago, the consultancy and the speed freaks announced a “strategic alliance,” where the F1 team’s data spinoff, McLaren Applied Technologies, will share its predictive analytics with KPMG’s advisory services. Mary Trussell, a KPMG partner who recently moved to Canada from the UK, says that’s the kind of thinking insurers and brokers need to adopt to innovate. “McLaren are applying some of the skills that they developed in Formula 1, and if you think about that, that’s right at the cutting edge of innovation, and it’s a sector where… you’re constantly having to innovate to get a competitive advantage.”
Trussell was speaking to Top Broker at KPMG’s Insurance Issues Conference, where she presented findings from Transforming Insurance, a new publication that outlines where the industry needs to go—and what’s stopping it. One of the biggest barriers, they found, was people, including “the availability of the talent to manage and analyze data.” With so many industries already deftly navigating a digital world, we asked Trussell how insurers and brokers can capture the attention of the younger generations. “I think it has to [happen]… by focusing on what is attractive, what resonates with you.” And because it’s a consumer-facing industry, you need “people who’ve got the creativity and flair to be able to innovate and put themselves in the shoes of the consumers.” She adds that one sector that’s done this deftly is telecoms, which have “basically invented their business model in the last 15 years. Whereas, actually, if you look at the big names in insurance, a lot of those have been around for a century. And they come with that sort of heritage and tradition… [which] doesn’t necessarily help them adapt and respond to change. And it doesn’t necessarily help them put themselves in the shoes of generation Y.”
Trussell says the industry can overcome this late start by looking beyond their borders, both geographic and social. “We see a lot of big, global insurers setting up innovation hubs. And in particular, they’re often locating those somewhere offshore, somewhere that’s got a dynamic community, because they recognize that they do need to create an environment of greater agility compared with what’s gone before.” She says one hotspot garnering a lot of attention is Singapore. “It’s a relatively young country, so it’s a country that’s having to adapt to change… [and] it’s this tiny little city, so it has set itself up as a magnet for innovation.” On the life side, MetLife recently announced that it was creating an “innovation centre” in the country.
The report Trussell co-authored suggests that the industry also recognizes the need for small-scale innovation; not everyone needs to set up shop in Singapore. A strong majority of survey respondents— 82 percent—said they’re going to use digital technology to improve customer relationships in the next three years, while only 65 percent said they’ve been doing that for the past three. This was the trend across all uses of digital technology: more people said they would use it to manage risk, engage with employees and enter new markets than had done so over the past three years. The only thing fewer people plan on doing is enhancing corporate performance (63 percent plan on doing it; 71 have been been doing it).
Hoping to capture the spirit of innovation, Trussell carried out the survey again during her session, asking audience members to text or tweet their answers. Watching the results come in—at a good rate, considering the hour on a Monday morning—she said, “We’ve got really quite a significant focus here on enhancing customer relationships,” which she called “quite heartening.”
Though insurers packed the audience, Trussell said brokers would be the main drivers of enhanced customer relationships, since they still dominate distribution in P&C. “Brokers don’t eat if they don’t innovate”—just like a Formula 1 team.
Copyright 2014 Rogers Publishing Ltd. This article first appeared in the November 2014 edition of Canadian Insurance Top Broker magazine
This story was originally published by Canadian Insurance Top Broker.