According to Zurich's head of innovation, Stuart Domingos, the future of insurance should not be driven by technology but by the need to empathise with customers. He talks to Sarfraz Thind
It is nighttime and you are walking back to your apartment next to a football stadium. Unbeknown to you a match has just ended between two fierce rivals with notorious hooligan fans. The games are known to have sparked trouble and, with much at stake, violence seems assured.
Fortunately for you your phone buzzes with a message warning you about the impending threat and advising you to take a different route.
Few would imagine that text would be from your insurer.
But this is precisely the kind of thing that Stuart Domingos, head of group innovation at Zurich, envisages in the not-too-distant future as insurers are thrust into a role somewhere between nanny and guardian angels.
As one of the leaders of Zurich's innovation drive, Domingos has a pretty good idea of where he sees — or wants to see — the industry to be.
"Right now, the insurance industry today is often viewed as a necessary evil. Some customers are saying they are spending money on something they hope never to use," he says. "We see insurers becoming risk partners to customers in the future and becoming more involved with the day-to-day of risk prevention."
It is a lofty goal.
Despite the growth of insurtech in the last decade, insurance remains behind many other sectors in its embrace of innovation. For Domingos it is the largest industry yet to be disrupted, which is down to its perceived lack of relevance.
"Innovation is a factor of frequency and relevance," he says. "The more frequently something is a part of someone's life the more disrupted it will be. You see that with flights, taxis, books and so on. Things which are less frequently used, like life insurance, are less disrupted."
"Not a lot of people wake up and say we need to talk to insurance companies," he adds.
The aim is to hasten a move to new modes of thinking and doing. It is something Covid-19 has helped catalyse.
Covid-19 the disruptor
The pandemic has been catastrophic for the insurance world and yet, necessity being the mother of invention, it has also led to an acceleration of innovation.
But it is only the start of things. Domingos says the crisis will see a long-term shift in the labour market similar to that seen in other critical moments in history: for example, during World War II when women went into the factory jobs previously occupied by men.
Clearly, going back to a five-days-a-week office job seems unviable for now, and Domingos believes it may be over for good, so adaptation is required. This is likely to both on the practical side — like what kind of insurance applies for the new work paradigm — but also the way in which insurers interact with their clients. The latter is due a sea change.
Domingos' background is firmly on the maths side having begun life at Zurich as an underwriter in 2006, before switching to innovation and business development in 2016. It means he favours the practical over decorative and is "not blinded by the technology".
"People can be amazed by quantum computing but if you haven't got a use case, it's irrelevant."
Zurich's desire to develop closer ties with progressive companies and spur innovation led it to launch its Innovation Championship in 2018. The contest, divided into four regions covering North America, LatAm, Emea and Apac, has seen it approach some of the brightest innovators in the world.
Last year's inaugural winner was Toronto-based Chisel AI, an artificial intelligence product which can read commercial insurance documents 400 times faster than a human.
But the aim is not to create mere insurance solutions, rather to also work on addressing society's wider and more pressing challenges.
Thus, finalists this year include Pops! Diabetes Care, an app offering real-time glucose monitoring and AI-driven virtual coaching for diabetics; DeepAgro, which develops weed detection systems that can help to lower use of agrochemicals; and climate risk analytics firm Jupiter.
Silicon Valley-based Jupiter already has some significant insurance investors including QBE, MS&AD and Liberty Mutual drawn by the theme of its work. Chief executive, Rich Sorkin, believes more insurers are going to have to wake up and face the stark realities of wider disruptive events, particularly climate change.
"At some point in the next three to ten years we will wake up to the fact that we just ignored these things which can't be ignored," he says. "That will sweep through very quickly. In that sense, we are getting at the front end of an enormous disruptive event that is coming."
Historically, the US has been ahead of the curve in its adoption of new business mores because of the greater willingness — and the deep pockets — of venture capital to seed entrepreneurial ventures.
But Zurich's own example in scouring the globe for innovation shows things are changing. Our increased interconnectedness has led to the creation of a "global village," says Domingos, where innovation and influences spread from region to region much more quickly than in the past.
This is clearly seen in the focus on quality of life, earth issues and wellness that have become ever more prevalent amongst younger generations worldwide.
Domingos says the future of insurance is one which taps into this moving pulse of society where doing things with a wider value is more critical than pure cash generation. Again, this is helped by Zurich's work with entrepreneurial companies.
"There are more entrepreneurs with purpose now," he says. "They are asking how to balance the planet and business."
The cross-pollination of interests and work cultures between insurer and start-up might also help the industry to overcome that age-old perception of being boring.
"There is a contagious entrepreneurial energy involved in working with a startup," he says. "The biggest thing I come across from current generations — millennials in particular will say this — is that they don't need insurance, as many of them don't own a car or a house.
"The aim isn't just to change working practices but to shift cultural perceptions about the industry so it can better address the needs of current generations. In other words it is about ending this perception of irrelevance."
Zurich's innovation team has indeed been catering to the younger generation. In the last two years it released Toggle, which offer renters insurance and gives discounts for things like paying the rent on time; and Klinc which offers protection for gadgets, laptops, scooters and photo devices.
Beyond the insurance offering, Zurich has also been working to relate to younger consumers through better communication. Bridging the relevance gap also comes down to using simpler, plainer language and presenting products which deal with close-to-heart issues.
Hence, like many others, Zurich launched a wellness app called LiveWell last year to help support customers' mental, physical and social wellbeing. Continuing in this vein and building a connection will be vital for an industry whose reputation has taken a hit this year.
"There is a need to rebuild trust," says Domingos. "This starts by us playing a bigger role in prevention so we are more relevant and top of mind. You have to find ways to get empathy with the consumer. Whether that is instigating things like a quiz or treasure hunt, or greater digital interaction."
The next step of insurance evolution may surprise some in its human-slant as much as the technological.