Opportunities and challenges in the insurance industry
2 July 2018
Marc Sordoni, Chief Executive Officer, UnipolRe
UnipolRe is offering a unique, advanced and fully integrated telematics solution as part of its reinsurance offering, which will enhance the customer experience and reduce the overall cost of claims. The correct use of this technology with the right value proposition will give the return on investment that everyone is seeking.
“This is not a start-up insuretech offering,” says Marco Sordoni, CEO of UnipolRe. “Our group currently has over 3.5 million customers driving with advanced black box technology, and has assimilated some of the most comprehensive data on driving in the world. This asymmetry of information has allowed us to develop the most effective, tried and tested algorithms in the industry that not only significantly reduce the cost of motor insurance claims but also lead to a better customer experience.”
“As an insurer, we have overcome the typical Big Brother stereotype and have developed an offering that appeals to the mass market and is taken up by all types of customers. This means that we do not just invest in young or bad drivers, which results in a much better return on investment. Over the years, we have been able to strike the right balance with the use of personal information, especially in trying to control driving habits, in a way that is enjoyed and appeals to the customer.”
The right technological offering as part of an insurance product is one that enhances the customer experience through the extension of ancillary services, such as one that can save a life by directing medical assistance within minutes of a crash. Furthermore, the correct asymmetry of information allows for the introduction of scientific evidence that will reward good driving, allowing the insurer to defend his customer and enhancing the overall customer/insurer relationship.
UnipolRe is a wholly owned reinsurance subsidiary of UnipolSai Assicurazioni, a leading Italian insurance company that has the largest geolocalised book of motor insurance business in the world.
In a world where insurance and technology is developing rapidly and where mistakes are costly, UnipolRe Dac can be your chosen and trusted partner in advising and implementing a first-class product in the field of geolocalised motor insurance.
Welcome to Business Reporter’s Future of Insurance Campaign. I’m Alastair Greener. Insurers need to embrace the methods and technologies that other industries have already mastered. They must offer their customers the same personalised, rapid service and make them feel valued. But lagging behind adoption and scalability means impediment, disappointed clients, and bad business. Insurers must catch up with the game and also be diligent about hedging against their risks.
Telematics, for example, is a field where technology doesn’t only give them a new toolkit but also changes their transactional liaison with their customers to trusted, nurtured relationships. We’ve invited Marco Sordoni from UnipolRe to discuss the opportunities and the challenges. Good morning.
Good. morning. Whenever we read about insurance these days, it’s always about technology and how technology is involved in pretty well every industry. So the changes that we’re seeing in insurance at the moment are they being triggered by technology or actually is society triggering those changes?
I agreed that technology is the driver. But we focusing on the customer experience because we expect such a driver to be an opportunity to involve the society evolution and to extend to larger services offered to the client having a different mindset of the usual insurance company to something much more close to the people into the society as it’s moving today.
And how is that change impacting the insurance sector?
For example, you have all that kind of behaviour and services, like you have a crash and, at that point, straight someone is phoning you. You’re not answering. They’re sending the ambulance. It will save your life. It was only a scratch. You are answering saying, no problem, I don’t need an ambulance. Do you want us to send you a claims handler?
Nobody will tell you that having a car crash accident is a nice experience. It’s a little bit stressing. So having someone aside you, it’s really something different than simply having a big institution paying for the claims and solving the monitory problem. It becomes more human. So we are back on the team of society rather than simply technology. And that’s what we are trying and aiming to do.
Now it’s interesting you talk about cars there because that’s the industry where we’ve seen the return of investment become really, really tight. And it’s becoming quite hard in that industry. Perhaps you could give us some numbers when it comes to the auto industry. What are we talking about?
The result of the car industry have been shrinking on the last 10 years. But one effect, which is quite amazing, concerning the BlackBox is that the symmetry of information, so the fact of being fast to the claim and having also reliable scientific evidence to pay the claims, has been showing in our cases that you consistently reduce the level of your claims. So to give an average, because it’s always very complicated to give figures, but a car crash with BlackBox would in average cost 10% less than the one without BlackBox, which is approximate. It’s always very difficult to go into valuable figures because the idea behind, of course, it’s always more segmenting and then going into deep detail of the information.
The other point is regarding also the arrival of new insurance. Imagine tomorrow the automated car and those kind of things. You will need not only the model [? third-party ?] [? liability, ?] but if you have an issue with the software, you will need an insurance [INAUDIBLE] about the [? liability ?] for the product. Or if a hacker is taking control of your car and you make a crash, you will need also an insurance for that.
So I think it’s opening doors. The real point is understanding the direction and the way things will be structured because in the case of motor, in most of the country worldwide, it’s a compulsory insurance. So it’s an evolution will have to go also with governments and legislation, while on the other side are the branches, like property [? et cetera, ?] it’s much more open.
When it comes to these structural changes that you’re talking about, how do you suggest that insurers counterbalance that to give more stability?
The insurer tend to have a much more stable relation with the company from the moment he decided to exchange the data. The reason for that is mostly because he’s keen to receive those extra services. He forget where we park the car. He take the [? HOPS, ?] and he find the car. He want to know if it’s driving more on the highway or [INAUDIBLE], he has a look, and he have answer. He want some advice in the way he’s driving, he can ask and have some comments.
It can be funny because we had also in the past some reaction where the client was not really happy about that. We were trying to give some advice, the way to drive, and this client was simply answering us. Listen, I already have my wife and a mother, which are constantly criticising my way of driving. So please, leave me alone because my insurer, I would appreciate not to do it. So we reverse the situation saying, if you are interested in having comments, you can go and have a look, but we don’t push them. So the question is finding the balance in between, sometime, very personal information and the way you can make them profitable, interesting to your client.
And it’s quite interesting you’re talking about the BlackBox because that brings us very neatly onto UnipolRe. Tell us a little bit more about what it is that you do.
The idea for UnipolRe concerning the telematics is the following one. The Unipol group is an Italian group, exclusively based in Italy. So we reach a dimension, which is quite huge, because having more than 4 million BlackBox, if I’m not wrong, is the largest geolocalized fleet on the planet. We also know that we cannot grow that more than the portfolio we have. So UnipolRe for us was an opportunity to say, let’s make a value proposal outside Italy. It can be Spain, can be UK, can be France, where some client insurance company can get an opportunity to have this technology already tested, already available for their own use as a [INAUDIBLE] product.
Of course, we don’t put the Unipol name on the product. I mean, if the company is called UK Company Insurance, they will have their own product, but they will benefit through UnipolRe of that quite unique experience and to pass through the kind of mistake we’ve been doing. It can be on the marketing, as I was talking for the exchange of information with the client. It can be on the pricing side. It can be on developing your own car crash algorithms and those kind of things.
You mentioned that you’ve got four million boxes now on the road. How are you turning those four million boxes into being an advantage for your customers?
Those boxes are a unique opportunity for us to give services which are not existing to new clients and also to defend the good risk against the bad one. So it’s the classical example of a car crash, in many cases, if you don’t have witnesses or enough information, it goes to paying 50/50. Your client, unfortunately, telling you the truth, and you feel disappointed to see that in a way this insurance company is paying. On the top of it, and the second part, he will have extra [INAUDIBLE] on his policy, which put him really in a very disappointing situation. And the relation is not good.
If you have scientific evidence, it will allow you to defend your client. You take it as a real relation. And so for them, it’s a double effect in a way. You can say because it’s a good driver, you want to have the BlackBox. But you also have the effect of because he has the BlackBox, he may tend also to be a better driver because if sometime they were passing at the red line, nobody knows me. Perhaps because he had the BlackBox, he won’t do it anymore. So that’s the kind of experience that the client now are living with us and seems to be happy with.
Let’s sum up all these aspects you’ve been talking about the technology, about the consumer being in the driving seat– excuse the pun– and the interaction between these boxes and the customer experience. If you could sum all of that up in three main takeaways the audience could use to their advantage, what would you say?
First one would definitively be to use Fintech as an opportunity and a leverage to take into consideration society evolution and offering a wider range of services to the client. The second point is working on the symmetry of the information and the scientific evidence recognised by the tribunal to improve the margin you may have, avoiding paying what you should not. And the third one also is to be ready that with the disruption of the society today on many fields, imagine a [INAUDIBLE], imagine all the things which are coming now, not to stay and to stick with an insurance model, which is already so old-fashioned that it’s like the dinosaur. It may disappear tomorrow.
Well, one thing is for sure. We know that the insurance industry is going to keep on evolving, keep on changing, and it’s been fascinating finding out how the technology side is working with the customer expectation to keep this change moving ahead. Marco Sordoni from UnipolRe. Thank you very much indeed.
Thank you. It was a pleasure.