I sat down with Mukul Ahuja post Deloitte Canada's Insurtech Summit for a dialogue on key learnings derived from Incumbents and Insurtechs present, and how best to push forward in the face of disruption across the Insurance ecosystem.
The Insurtech Summit was hosted by Deloitte Canada on June 22 with 80+ organizations in attendance, 23 diverse speakers & panelists, 3 rounds of rapid fire pitches and 18 insurtech exhibitors on display.
To provide some context on Mukul, he is a Senior Manager in our Monitor Deloitte practice and has been with the firm for 8+ years. His focus area is strategy & innovation in the Financial Services Industry with a primary focus in Insurance. Mukul's engagements typically consist of pure strategy work ranging across growth and market entry, customer experience, digital strategy and innovative business models / concept development. While 80%+ of his time is spent in the Canadian market, he advises on various global opportunities and is often invited to speak at events across the Americas region where he discusses key trends and future implications of disruption in insurance.
Can you provide context on the Insurtech Summit hosted by Deloitte Canada?
Given the wave of disruptive innovation that is impacting the Insurance industry globally, ‘Insurtech’ has been a trending topic in Canada over the last 12-18 months, and it has quickly become the most invested vertical within the Fintech category globally. We are noticing various players (including insurers, re-insurers, brokerages, accelerators, new entrants) in the Canadian insurance ecosystem starting to think through and bring forward new and different ways to solve for customer friction across the insurance value chain and, in some cases, introduce disruptive business concepts enabled by emerging technologies. While the topic of insurance innovation has become a key part of the industry dialogue and c-suite agenda, Canada needs a cohesive forum to allow for leaders and innovators to come together, inspire and collaborate with each other to discuss the key innovation-related challenges, vulnerabilities and choices they are individually facing in face of a rapidly transforming industry. The goal was to inspire fresh thinking by sharing impactful global and Canadian ideas, accelerate the innovation agendas by analyzing real experiences and case studies, and hence cohesively advance the dialogue in our insurance ecosystem. Deloitte has positioned itself at the centre of the insurtech dialogue through the investments in hosting this Insurtech Summit.
It was noticeable that there was an increased focus on the ‘future of Insurance’ as opposed to the traditional focus on foundational aspects of Insurance like Risk, Underwriting, and Analytics. Where was the inspiration derived for the format of the Summit, and why did we choose to execute this way?
I recently attended the Insurtech Connect event in Las Vegas and was inspired by the collision of perspectives, candid dialogue and hyper-connectivity that occurred at the event. It was distinct from your typical insurance conferences that, as you mentioned, can be very focused on core functions and incrementally improving the insurance business today. While that is foundational, it was that clear focus on the ‘edge’ and what the long-view future might look like that had everyone buzzing. There were a number of Canadian organizations in attendance as well. This inspired me to think hard about how we could address this need and bring a unique gathering of minds with an insurance innovation focused agenda that would resonate: a global wrapper around a distinctively Canadian treat.
What were some of the themes or key learnings coming out of the Summit?
The focus of the Summit was centered on 4 big themes:
1. Disruptive Business Models
Understanding what these emerging models are, which innovators are driving them forward, and what they intend to deliver from a market growth, competitive or collaboration perspective
2. The Future for Insurance
Helping to articulate a vision and key tenets for the long-term 20-year view of the future of insurance, and shifting mindsets and approaches away from just incremental improvements that may not yield the desired value past the short-term
3. Incubating for Sustained Innovation
There is a lot of activity at the incubators, and increasingly at the corporate innovation level wherein companies are setting up labs and building in-house capabilities, while partnering with incubators and other organizations – understanding the dynamics and vulnerabilities on both sides of the collaboration becomes key
4. Incumbents activities in the market
Proof points of what incumbents are doing in market today in response to disruptive innovation and emerging technologies, and where they are placing their bets for innovation and broader business transformation
I find the 20 year vision intriguing. My understanding of how exponential technologies operate is that what we envision will occur in 5 years, will change as early as 2 years from now. With that in mind, how do we predict longer term like 20 years?
I recently went to a conference and heard David Suzuki speak about how the main difference between animals and humans is that we have the ability to paint a picture of the future. Once we are able to envision the future, we can actually build towards it, so, unless and until we are able to paint that vision of what that future looks like, we will be unable to successfully realize this. Think about the Jetsons and how many aspects of that vision are actually close to reality today with smartphones, devices, sensors and digital/social media. With a 20-year vision, it is about truly defining the ‘art of the possible’ and the will to make it happen. Bill Gates once said, “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten. Don’t let yourself be lulled into inaction.” I strongly believe that it is important to think about 10-20 year view to be inspired by the possibility, and then define the tactical actions needed to move towards that vision now.
From the participants of the Summit there seemed to be a general buzz and understanding that globally we are seeing an increased appetite for adopting exponential technologies (i.e. Blockchain). Do you believe this notion will significantly impact how the Insurance industry currently operates?
Certainly, emerging or exponential technologies are at the core of what is driving more disruptive innovation within Canadian Financial Services and within Insurance. Blockchain is definitely one technology, while nascent and in the PoC stages for insurance, with some interesting use cases that will have a structural impact on the market in the future. Other exponential technologies include: autonomous vehicles, IoT, Machine Learning and Artificial Intelligence (AI) which are all key technology areas that are top of mind for insurance. We need to be mindful that insurance is a data rich industry. Insurers currently have immense amounts of valuable, static data (i.e., customer data, financial data, operational data, claims data) and the concept is that a considerable amount of exponential technologies are best utilized and leveraged on the foundation of large amounts of (clean, high quality) data. However, we now live in a world where more than 90% of the data that exists has been generated in the last few years, and is increasingly being considered by insurers to better predict risk and prevent risk events. Fundamentally, emerging and exponential technologies will largely shift how organizations have typically predicted risk (i.e. reviewing the customers historical data) and master real-time data analysis to determine accurate risk prediction and pricing,
Is the Canadian Insurtech/Insurance market advancing towards this shift in the Insurance paradigm? Are there any foundational efforts in place?
Insurtechs are not shackled by existing legacy systems and data structures, start with a digital-first approach while having the capability to focus on a specific pain point / challenge and solve it from scratch - essentially a zero-based approach to building something that is fit-for-modern-consumption and less of a band-aid approach. This approach is distinct from most large organizations with existing constraints (systems, processes, culture, corporate will, cannibalization of the core business, etc.) in place, while needing to manage a complex transition period from legacy to modern platforms. Incumbents are placing different bets with respect to emerging technologies, some are developing PoCs with Blockchain, others are focused on digital experiences and digital advice, with a number of them investing in new / different data sources like 3rd party scores, sensors and wearables as well. The Canadian Insurance market is definitely advancing ahead.
Are we doing any PoCs as Deloitte Canada in any of these spaces?
There are a number of PoCs in the works. As I characterize the theme of the Insurtech summit, a lot of times PoCs are less about trying to prove out a technology but rather more about trying to solve a business problem which can be addressed by the convergence of multiple technologies. In essence, embedding emerging and exponential technologies and data into our accelerators and solutions is becoming a key differentiator for Deloitte with our clients, given our internal investments and prototype development efforts. We have well over a dozen PoCs and working prototypes in Insurance across the global firm that utilize our sophisticated analytics capabilities, IoT devices, machine learning and natural language processing (NLP) as key elements.
In Deloitte Canada, we are the undisputed leader in insurance advisory in our market. We need to continue to stay ahead of the curve and be able to advise, shape, and guide our clients’ thinking around the power of these capabilities to solve customer and business issues, and continue to bring them to life in either client co-creation, or our own prototyping efforts.
Are there any specific use cases or notions from a technology lens that are taking center stage?
As the world becomes more connected, the concept of Connected Insurance takes center stage. We are all connected to a number of devices, through our smartphones and other technologies on a daily basis. The natural extension of this notion is how can we effectively leverage this connectedness and apply it in an insurance context. For example, if an individual has a Fitbit on them, other sensors in their home like Nest, Home Monitoring or a water leak detector, how do we harness the data that comes from that from an insurance perspective to be able to prevent unforeseen risks (like theft, fire or a flooded basement)? That is a prominent use case from a technology-enablement lens, which is ultimately to gather real-time data, analyze and monitor, and be able to deliver smart, tailored communications that are value-added for the customers lives (i.e., knowing when they are home vs not home, and being able to help them manage the costs and risk around their assets while they are away). In many ways, this level of connectedness with respect to insurance reduces friction in customers' lives knowing that there is someone available to help them prevent an incident from happening.
Furthermore, from a technology lens, the notion of “being where your customers are” is imperative and at the forefront. This is a noticeable trend in the Canadian market where we are seeing global-leading penetration and usage of smartphones, enabling insurers to deploy capabilities like chatbots and virtual agents to interact with prospects and customers in real time, in the messaging platforms they most often use. There isn’t a perfect solution in the market just yet, however, this is a space where material amounts of investments have been made and considerable work is occurring.
Also, helping Insurers build better brands and trust with customers can be accomplished by remaining engaged with the customer in other related aspects of their lives, as opposed to just selling insurance and reconnecting upon renewal. This notion ties to Connected Insurance and the Be Where Your Customers Are as organizations ultimately investing in their brand and capabilities to be more reliable, present and transparent to better serve today’s modern customers and improve their lives. The end outcome is developing a higher degree of trust, which currently sits at a huge deficit in the industry.
What are the key takeaways from the Insurtech Summit? There was a great turnout, great discussion, but what's next?
Fundamentally, a key takeaway was with respect to data and analytics as a core, foundational pillar. All players were in alignment that data will change the industry’s legacy practices, and it cannot be under-estimated with respect to the avenues and new data sources that exist. Consequently, a lot of the Insurtechs are honing in on that as a core pillar of their offering, with incumbents in alignment.
Another takeaway was the overall theme of collaboration with Incumbents understanding that while they are established and financially sound, they are a little vulnerable to some of the changes that are going be brought forth as a result of emerging and exponential technologies.
Throughout the summit a key learning for us as Deloitte was how very genuine the conversations were with leaders of multi-billion dollar global insurance organizations coming to the stage and sharing some of their vulnerabilities, challenges with exponential technologies, and relaying how best to work with them as an Insurtech. The same occurred with Insurtechs understanding that they are operating at a different pace than Incumbents, however, in order to scale they may need to work with some of the requirements, constraints, and concerns as raised by Incumbents.
Ultimately, we understood that finding a happy medium and collaborative framework that works is top of mind for all parties. We have a role to play as an advisor, as Deloitte Canada as we understand both sides of the coin to be a strategic integrator or facilitator and ensure results materialize in those partnership structures - and that's where the big theme around cohesion and pushing forward together takes centerstage, and will advance our ecosystem in the coming years.
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