February 28, 2017 by Greg Meckbach, Associate Editor
Competitors outside the property & casualty industry are trying to “bite away” at the P&C market, while fintech is starting to “emerge in spaces where banking isn’t,” a senior executive with a major insurer told industry professionals Tuesday.
“Over the last year and a half we have seen a proliferation of fintech companies entering into the banking market space,” said Carrie Russell, chief strategist of FinTech Growth Syndicate during the Insurance-Canada.ca Technology Conference in Toronto.
“When you think about how you buy books on Amazon today … you go to the Amazon site, it’s personalized, it recognizes you, it says welcome back, the product is really quite a commodity today but what makes it different and what brings you back is the compelling and relevant experience that they curate for you,” said Russell.
For example, she noted Amazon will recommend other books for customers.
“They allow you to purchase it … straight through processing with a credit card, and you have the option of having it delivered on your Kobo, tomorrow or next week at various price points,” added Russell. “That level of experience and expectation this is where the new fintechs are really entering into the marketplace, certainly in the wealth management arena – making experiences relevant, fast and easy and meeting customers where they are.”
She made her comments during a panel titled Fireside Chat: Omni-Channel – How the Customer Chooses to Engage.
Also speaking was Jason Storah, executive vice president, broker distribution for Aviva Canada.
“Just like any other industry the P&C insurance industry at the moment is seeing lots of people around the edges trying to bite away at the market, at the opportunity,” said Storah. “We see a lot of people trying to come in, trying to change the custom experience and everything comes back to the customer experience because in insurance, the bar is so low.”
The fifth annual Insurance-Canada.ca Technology Conference was held at the Allstream Centre, the former automotive building at the Canadian National Exhibition grounds.
Insurers and intermediaries “have set the bar really really low for many years,” suggested Storah. “Part of that is the regulatory environment. Part of that is, quite frankly, you have to have auto insurance. This is one of those few sectors in the world where you have people that have to buy your product. Auto insurance used to be the first contact that people would have when buying insurance.”
But today, Storah suggested, not as many young people are getting their licenses right away and the use of car sharing and ride sharing services is growing.
Therefore, the business model of clients having their first insurance encounter with an auto insurance provider is “changing massively,” Storah noted.
“The advantage that the incumbents have is they have an active customer list,” he said. “Any of those new entrants would love to have access to a customer base rather than having them grow it from Customer Zero. So we see lots of activity around trying to disrupt that customer perception of insurance and why customers buy insurance and what that experience looks and feels like.”
The fintech industry “has tons of capabilities around agile construction of products, great talent,” Russell said. “They do not have the legacy systems that many of our banks have, and so they can get to market quickly. We are seeing fintech emerge in spaces where banking isn’t.”
Storah said when he came to Canada 14 years ago, he chose a bank based on a recommendation.
“Even if I am making a change to something fairly significant, like a mortgage, or want to make a payment or whatever it may be … I don’t need to go in and speak to someone,” Storah said. “I no longer have a relationship with my bank through the branch and through people. I have it through an app on my phone.”
Executives in P&C industry “are concerned about the insurance industry as a people business,” Storah suggested. “It’s a relationship business. Well, I feel like I have a really great relationship with my bank but it happens to be through an app. I am pretty sure that some of my engagement is not through a person. Maybe it’s through an algorithm, maybe with a bot, maybe a very automated process but it serves my purposes.”