The IT industry is swarming with buzzwords, from big data and the internet of things to social collaboration and...
consumerisation of distribution. Yet despite some doubting their importance, the CIO of insurer LV, Richard Warner, sees all of them as trends that need to be addressed in 2014.
He says these technologies are emerging as technology is becoming more complex, yet simpler for the users.
He is seeing the proliferation of technology at a tremendous rate, and this directly affects not just the back-end IT of the businesses, but LV’s customers.
“Today’s millennials are software developers, even if they don’t know it sometimes,” he says.
Technology and the evolution of the App Store has made technology easier for the consumer to understand while encouraging a trend in business applications, which can be made without any coding. Warner says this means businesses need to provide customers with easy-to-use interfaces.
Customers want to buy their insurance in a straightforward transaction – in the same way they buy goods from Amazon or music from iTunes.
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The consumerisation of distribution
Warner says this is the consumerisation of distribution, and that the consumer wants the company's distribution channels (call centre, web, social media, intermediate broker) to be seamless, no matter which products they are buying.
He also warns about the rise of social collaboration, which is changing fundamental business models for the insurance sector. Warner says purchasing models are affected because consumers can search before they buy and use social collaborative websites, such as price comparison sites, Trip Advisor and similar assets to research their purchase.
He likens this to the early days of insurance when businesses would set up insurance groups to look after each other. Each business would put some money into the group insurance scheme and if one had an incident, it would draw from the fund. “And then insurance companies grew up and took over,” says Warner. “But a few startups have been using Facebook as a medium to set up group insurance again. It’s much easier with the rise of social media for groups to form, and act in a cohesive fashion.”
The next trend Warner says everyone is talking about, is the internet of things. “Mobiles, tablets and desktops all have power that is significantly bigger than they used to,” he says. “And everything we buy has a form of intelligence in them.”
We work with startups where it makes sense and there is value
But it’s the trends that are seen as sci-fi to some, which could shake up the insurance sector. Driverless cars and intelligent medicine - which includes tablets with sensors that can tell when someone has taken their medicine - could have huge implications around the nature of risk and insurance.
Big data is another trend on Warner’s agenda as the world struggles to process and understand the ever-growing volumes of information. “Big data is great, but only if you can do something with it,” he says. “How do you sift through the important stuff to make important business decisions? And how do you do that in a timely fashion so you’re not left behind?”
For Warner, understanding and accessing big data would provide a competitive advantage in the insurance industry. He says if another insurer gets better at managing and leveraging data more quickly, they are able to select customers which are lower risk, which would mean you would end up with the higher-risk segment of customers to insure.
But how does Warner keep on top of all these new trends? He says his inbox is swamped with up to 60 new marketing messages per day claiming to be fantastic products. “But the reality is I delete them all because I don’t have the time, but I’m conscious I might be ignoring a great idea. I need someone to help me filter out those great ideas.”
Warner has been working with Clustre for the past 18 months, which he describes as an “innovation broker”. Clustre looks at small emerging companies and matches them with larger business’s requirements. “Unless you have large in-house capabilities, it’s difficult to research.”
He finds companies such as Clustre valuable in researching new innovative technologies to find the SMEs with great assets and the ability to plug and play products.
LV recently worked with a small Dutch company called Mendix, which is an enterprise app platform. Warner says while the company was interesting, he would not have normally spotted it in the crowd due to its size. But once found, the insurer has used it for a number of initiatives internally to launch new products to market quickly.
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Warner says he works with startups where is makes sense and there is value, but it’s not a “religious conviction” and LV still has a relationship with the larger suppliers including Microsoft and IBM, and they equally provide innovative ideas. But the difference is that companies in the startup phase have more flexibility. “They’re also commercially a bit easier to deal with, and the smaller companies really want the business.”
He says startups usually focus on a particular specialty, and the companies are made up of passionate experts. “They’re very knowledgeable about their product and how it might help you, they’re not trying to sell you a whole range of other services,” he says.
The future of LV as a business
LV on a whole is looking at its foundations and is beginning to think a little differently about its business, and how it can leverage the digital economy to its advantage.
It has recently launched a new website which is optimised to work on a number of different devices, and it also has a presence on social media.
“We’re looking at our digital marketing strategy, and we’ve got more to do in that space,” he says.
While LV is not as active in social media and tying up its various channels like other sectors such as retail, it does not want to rush far ahead before it understands the economic value from investment.
“We’re not omni-channel yet, we want to do that but at what pace and over what time? As the technology emerges we will find different ways to do that.”