A World of Ecosystems

This year, I have been speaking at several innovation and insurtech conferences. The meetings with insurance companies and insurtechs are usually inspiring and eye-opening, but this year, I also have some concerns. A few years back, we were all worried that insurtechs would disrupt the insurance industry, but lately, it appears that we have established a comfortable symbiosis where we are no longer challenging each other.

During one event aimed at the Nordic insurance companies, an important question was asked: Will there be a Nokia moment for insurance? To my big surprise, the answer was a unanimous “No”. Why? Because insurance companies and insurtechs now cooperate and work together and we all watch our competitors closely and will act if the others move. This seems like a high-risk strategy. For example, it is not likely that the disruption of motor insurance will come from the insurance companies, but rather as a result of new business models and changes to the value chain in the automotive industry.

My company Fremtind focuses on bankassurance, thus we need to be on top of everything that is going on in the world of banking. That includes understanding the consequences of new developments such as open banking and the recently implemented EU payments directive PSD2. Bank assurance has developed greatly in recent years, and in the Norwegian market, fully digital insurance is a great success when distributed through banks. Our job is to provide financial security and also peace of mind. We enhance banks’ value proposition in order for them to comprehensively support the needs of their customers.

Successful innovations

The important question we need to ask ourselves is how incumbents can stay ahead and not be disrupted by new players or business models in the market. The answer to this is simple: we must try and fail, and try again until we find sustainable solutions and business models in line with the expectations of our customers. We should invest in partnerships, innovate, and be part of the new ecosystems that are forming.

The innovations that succeed are the ones that provide a simple solution to the customers’ problems. At Fremtind, we focus on three areas—mobility, lifestyle, and connected homes. We must humbly say that Fremtind is well-positioned. Many of the solutions pitched to us by start-ups are similar to the initiatives we already are developing. In the area of connected homes, Fremtind has launched several initiatives aimed at preventing and reducing the consequences of fire, theft, and water damage. This is done in cooperation with national and international players from other industries. Some are start-ups while some are traditional players seeing the need for partnerships just as us.

"The innovations that succeed are the ones that provide a simple solution to the customers’ problems"

Mobility is also an area we focus on. The changes in this area are occurring fast and are driven by general trends such as climate change awareness, urbanization, and technology development. Electrification, digitalization, and machine learning are some of the keywords. Fremtind took a position in 2017 by launching a telematics-based motor insurance product. Focused on improving driver behaviour, Fremtind is able to collect large amounts of behavioural data. Using machine learning techniques, the data is used to understand the needs in different customer segments.

Three out of four trips are shorter than 10 kilometres. On average, the cars we insure are parked 96.8 per cent of the time. This may seem like fun facts, but it is valuable information when we are developing new products and services. Customers want solutions to their problems and care little about whether the solutions come from a bank, an insurance company, or someone else. Therefore, in order to provide financial security and peace of mind, it is important that we find the right partnerships within major ecosystems.

Our place in ecosystems

As a robust insurance company, we have a history of being a strong entity and in control of all development. Moving into the world of platforms and ecosystems, this is changing. Whether we should we do it ourselves or through someone else is a frequently asked question. Also, should we be the hub and owner of the platform or should we deliver services on platforms owned by others?

We believe that innovation, and not just continuous improvement, is important to survive and grow in the long run. We are arrogant if we think we are the best at solving everything ourselves. Innovation is not a matter of doing yourself or innovating through others—it is about finding out who and what can best solve the task.