“Me, Free, Easy”

“Me, Free, Easy”. The CeBIT speech’s headline of Mr. Bäte – Allianz CEO, is the most summary expression, which covers all revolutionary insurtech activities and gives us the most important hint about how the products for customers will look like in future. And this summary is not applicable just for insurance but also all businesses which would like to sell their products to new generations.

As every insurance professional knows, the main principle of insurance is the law of large numbers. This theorem describes “the result of performing the same experiment a large number of times. According to the law, the average of the results obtained from a large number should be close to the expected value, and will tend to become closer as more trials are performed.” At first sight, “me-free-easy” and the law of large numbers could seem as a conflict, because the law of large numbers requires same and many times repeated practices. Correspondingly, “Me-free-easy” requires tailor made approach and customizes almost every step of insurance experience according to customers’ needs. So, customizing insurance experiment for every client means million different versions of products and until we met with insurtech, it seemed quite impossible.

Above all, the biggest advantage of insurance business is easiness of reaching customer data. In many circumstances, customers are obliged to provide every data that their insurers ask for. The main dilemma at this point was how the data should be managed. I said “was” because with insurtech implementations; e.g. artificial intelligence, learning machines or big data management, managing millions of details about millions of customer is an easy as shelling peas. Today, insurance companies have magical tools which find the right data for the right timeframe for the right customer in couple of seconds. So, the first feature of new-age insurance product “Me” is accomplished!

“Free” means a world without intermediaries. Does not matter whenever, whoever, whatever; you can reach, buy and use. The main driver of a world without intermediaries is obviously blockchain. Like many other industries, intermediaries mean checked (relatively trustable) data and incredibly increased operational costs for insurers and also for customers. Intermediaries reach people, make them possible customers, gather data and represent insurers’ corporate identity in many processes. Is not it too risky leaving your company’s reputation into another’s hands? Undoubtedly,  the answer is yes. Thankfully, the insurers don’t need to carry this risk anymore. Like many other insurtech operations, this responsibility will be transferred to customers and all assessment process will be performed by customers in accordance with risk appetite of insurance companies and pre-defined criteria.

“Easy” means easily understandable products that do not required sophisticated financial literacy. So, the policy owner does not need intense assistance with products, beforehand and after sales, as well. Possible dependencies are defined and customers are informed entirely about every detail of products. The key of an easy product is carrying out subcontracting work to customers and letting them configure their own product, which reflects just their own needs. Big data management and other disruptive technologies enable insurers making mentioned configurations with their information technologies. And now, we have more “easy” and more “me” insurance products.

With its different components, insurtech brings deep-reaching changes into the sector. The hundred-year histories of the insurance companies, yet millions of customers and billion-dollar financial statements only, might not be able to keep safe the power and secure their market positions. On the contrary, in this brand new ocean with full of opportunities and threats, only the fastest fish eats others, not big ones anymore.

#MeFreeEasy, #Insurtech, #LawofLargeNumbers, #BigDataManagement, #ArtificialIntelligence, #LearningMachines, #ZeynepStefan

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