What is the New Normal?

Summary

In May 2020, in the first months of the pandemic, I spoke alongside Cenk Ecevit on the first live broadcast the Insurance and Reinsurance Brokers Association ran together with Sigorta Ekranı. The topic was where the new normal would take insurance; in the host's words, for once we would not talk about motor liability. My main thesis: the pandemic did not invent anything new, it sped up a transformation that had already begun and opened the way. I recalled that online insurance, which began with price-comparison sites in the late 1990s, had taken close to eighty per cent of motor insurance in the UK, and I read the sector's evolution in four waves: ventures fixing inefficiencies in existing processes; models using technology to push revenue up and cost down (automated claims, fraud analytics, better underwriting); solutions that go beyond insurance; and the public-health dimension the pandemic brought forward, like online doctor consultations.

I gave concrete examples on the internet of things. Vehicle telematics had existed in fleets for years; once speed, manoeuvre and maintenance data could be read, pay-as-you-drive motor cover became possible: you pay no premium while the car sits in the car park, you pay for the kilometres you drive. This is not just a new product but a business model that lowers risk, reduces claims frequency and opens the door to real-time micro-insurance packages. My favourite example was the smart sock built for diabetics: this device measures a cut on the foot, blood pressure and anomalies and sends an alert to the phone; while it manages a health risk, it turns into an insurance business model when an insurer gives a discount to customers who use it or sells a monthly policy inside the app. We also discussed a pendant, described at a meeting, that sends employees' location and body temperature to the employer; alongside the privacy objections, we talked about contagion and business-interruption risk becoming measurable. The real issue is not the technology itself, but turning the data it collects into insight and correct pricing.

In the second half I turned to consumer behaviour. Behind spending hours choosing a restaurant abroad lies an urge to reduce regret and risk in advance; the same behaviour holds for clothes, shoes and insurance. Technology makes it possible, and that is also where the threat lies: just as travel agencies retreated before booking.com, some insurers whose names we know today risk being wiped out in ten years; this is not only the intermediaries' problem. Cenk Ecevit described the other side: a trusted referral is still stronger than the internet; nobody questions the price of the insurer who stood by them in a claim. The example of an agency in Anatolia that bought forty-five cars to give customers a replacement vehicle at the moment of a claim showed how a service difference is built.

I proposed two concrete paths for the intermediary's future. First, identify a real problem in one vertical and own that field: motor, fire, liability; build a daily service flow first, then turn it into an online product. Saying you will sell insurance digitally from where you sit does not work; you have to create value in the field first. Second, drop the language of threat: instead of asking whether the digital future will hit us, ask how to position yourself in the new world. The intermediary is evolving into an advisor, even a risk manager; the bond with a customer who tells their advisor what they have not even told their spouse when buying health insurance is the proof. I closed with a call for unity: there is no group that holds digital and no group that will be crushed; by sharing knowledge and building shared platforms we stay standing together.

In this talk

• The pandemic did not create something new; it sped up the existing transformation and opened the way
• Four waves: fixing inefficiencies, cost and revenue through technology, beyond insurance, public health
• Close to eighty per cent of UK motor insurance online; an evolution that began with comparison sites
• Pay-as-you-drive motor cover through telematics: no premium in the car park, pay per kilometre; lower claims frequency and micro packages
• The smart-sock example: a wearable that measures a health risk turns into an insurance business model
• The employee pendant debate: location and body-temperature data, privacy objections, measuring contagion and business-interruption risk
• The real value is not in the technology but in turning data into insight and correct pricing
• The restaurant-research behaviour: people research to reduce risk and regret in advance; the same in insurance
• The threat is not only to intermediaries: the travel-agency example, insurers that could be wiped out within ten years
• Trusted referral and service difference: the insurer who stood by you in a claim, the agency with forty-five replacement cars
• The intermediary's path: specialise in one vertical and own the service, then turn it into an online product; evolving into advisor and risk manager
• A call for unity: no group holds digital and no group will be crushed; staying standing together through shared knowledge and platforms

Instead of asking whether the digital future will hit us, we should ask how to position ourselves in the new world.