19 February 2016
An Asimo for the protection market
When we think about modern robots we often picture the Honda’s walking, talking robot Asimo that brewed and served Stephen Fry a cup of tea a few years back.
In financial services, by ‘robot’ we mean the automation of processes and relationships across computers, tablets and smart phones. Yet if a financial services Asimo was sent out to talk to the public, most policymakers would want him talking to older people about their retirement decisions or, if younger, their pensions and investments.
Does this mean the robots will pass protection by, concentrating their laser eyes on supposedly more glamorous topics? At Space, we think the answer is a resounding ‘no’ although technology has been transformational. Technology has changed things so fast perhaps we didn’t notice.
Go back twenty years and e-commerce was really only in the planning stages. Fifteen years ago, and most life office CEOs were discussing its contribution to the bottom line when they reported their company results usually as direct business. Now it is almost taken for granted that most business, including intermediated business is, in some form, e-commerce. Indeed, to highlight it separately would sound old-fashioned.
Of course, technology has also allowed comparison sites to take huge market share in general insurance, taking a bite out of the market for life insurance in the process and ultimately building a new multi-billion pound distribution channel. Yet this connectivity also drove the success of innovative businesses such as LifeQuote and more recently UnderwriteMe, which in turn drove more industry successes.
Technology has steadily revolutionised relationships between insurers and intermediaries and customers and clients. The risk of disintermediation while real can be overplayed.
Marketing techniques are keeping pace with tech
That said, the technology, particularly around artificial intelligence, is moving at a remarkable pace. Software is increasingly intuitive while the marketing is keeping pace in terms of user journeys, story-telling, use of social media and more. Look at the role social media played in the Seven Families campaign. It isn’t just a matter of easing someone’s passage through a web journey, though that remains important. We are now genuinely engaging customers borrowing from other sectors including, for example, the computer games industry to build and improve customer relationships.
Intermediaries can win if they play to their strengths
Yet our view is that the intermediated market will remain very important. We are yet to see a credible online proposition that can sell a product, where the potential buyer didn’t already know that they needed and wanted it which plays to a protection adviser’s strengths in many ways.
Advisers and mortgage brokers still have the all-important relationship with clients. They still have to convince them to take out critical illness and income protection as part of a coherent approach to insuring their income along with their mortgage or as part of holistic financial planning.
Parts of the process are not automated including – crucially – relationships and communication with GPs although substantial improvements are being made in this area too.
The technology is advancing but it could actually grow the market not cannibalise the existing one. Advisers may have to become ‘cyborgs’ using smart technology to help them do their jobs better. Advisers won’t need any wires stuck into their head; but it may mean incorporating more online interaction into advice processes to better utilise the valuable but also expensive face to face time.
It could allow advisers setting up workplace auto-enrolment schemes to cross sell efficiently, convince mortgage brokers that it is worth their while to advocate or introduce protection, and help wealth managers consider their clients’ protection needs too.
It doesn’t pay to be complacent, yet for now, at least, in protection, we think the robot should be your friend not your rival.
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