Co-author of iDisrupted Says Existing Business Model has No Future

By Peter Bernstein
Senior Editor

If you are an insurance industry C-level or an IT professional trying to support your company, the headline above likely caught your attention just like it caught mine.  And, while it is part of a promotion, for a book, iDisrupted, the point made by co-author Julien de Salaberry that, “Technology is set to disrupt the insurance business so much that it will be virtually unrecognizable within a few years,” is certainly food for thought.   

Mr. de Salaberry, the founder and chief innovations officer for Singapore based The Propell Group– a venture platform firm specializing in technology for the healthcare industries – bluntly says that not only will tech disrupt the insurance industry but that the existing incumbent’s current business model has no future.

A few words from Mr. de Salaberry may stir the juices although when it comes to at least the automobile insurance business this car actually has already left the garage in terms of industry recognition.  He says: “About two-thirds of new cars have multiple sensors that are creating a mass of data offering the potential for car makers to find out more about how drivers use their vehicles. This could also provide insurers with personal information about the drivers they insure. It is very likely that our premiums will be tailored to directly reflect our driving style, where we drive and park, etcetera. We are already seeing these policies in the UK and Italy amongst other countries.”

Where things get more interesting is in regards to Internet of Things (IoT) impacts.  He notes that: “Wearables and sensors in our mobile devices are rapidly creating the same situation for human bodies, which will not only allow us to have more informed discussions with our doctors but also to potentially provide insurers with valuable data on our lifestyle. This will enable them to tailor our health insurance premiums accordingly.”

Indeed this is where he sees the coming disruption impacts on incumbents.  He explains that health insurer’s main activities are product development, sales and marketing, underwriting and risk management, policy administration, claims management and other corporate functions, however, new technology, such as Artificial Intelligence (AI), advanced analytics, data science and genomics, will enable disruptors to do any or all of these in a faster, better and smarter way.

“We are already seeing early stages of the disruption underway with new players like Oscar and Zenefits in the US and ConnexionsAsia in Asia,” says Mr. de Salaberry. “It is not unrealistic to imagine a future where health insurance will be provided by new entrants able to access, manage, analyze and interpret the exponentially growing healthcare data to provide each one of us with a customized health insurance policy.”

There is an interesting point to be made here, which is that new entrants do not have a monopoly on disruption.  The case is always made that large incumbents for a host of reasons—corporate culture, bureaucracy, costs relating to transformations and training, etc. —are there for the taking. This is an over-simplification and there are examples of so-called “legacy” providers in numerous vertical markets, think Apple and Google (News - Alert) for example who are now “mature” companies, who remain extremely disruptive.  Just ask their competition. 

In short, assuming you agree with the author about the changes and speed at which they are going to alter the way insurance companies operate which I agree with, leaves companies with a choice.  The choice is to heed the warnings and become a disruptor yourself, or sit tight and hope for the best, which could be very ugly.