As head of a disruptive insurer, he recognises brand trust and innovation are both necessary
New challenge: Michael Goemans, the first head of Investec Life, brings years of experience from Old Mutual.
As the first head of Investec Life, Michael Goemans was in a position to work off a clean sheet of paper. He is also privileged to have a pool of loyal clients who will follow the zebra, right or wrong.
And in many cases Investec can’t get it more wrong than the poor service and poor value for money offered by most life offices. So much as we tend to see Investec as a cuddly and familiar brand these days, in life insurance it is a disrupter.
After years at Old Mutual as head of finance at its excellent mass market business, Goemans has an ambivalent view of technology. He says it can be a threat to insurance firms or enable greater customer choice.
The insurance sector has not been spared the digital disruption affecting the rest of the economy, and "insurtech" is now a buzzword in the industry. There has been talk of "burning platforms" and the need for industry incumbents to embrace comprehensive digital change before they are burnt alive by new technologies.
But Goemans says the truth is a bit more nuanced. Investec Life, although it is a newcomer, is disrupting the status quo by providing technology-based solutions to clients based on listening to what they want and responding to their needs.
Believe it or not, that is something of a revolutionary concept in insurance. Traditionally, the industry has believed its products are "sold and not bought": products were sold by salesmen with the skills to sell ice to Eskimos, whether clients needed them or not.Goemans says the term insurtech is sometimes used somewhat broadly. Insurtechs are often concerned with improving narrow, highly specialised parts of businesses that do not always result in better customer experience.
Some are focused on new ways of accessing consumers, some on new ways of assessing risk, or interacting with intermediaries. There are comparison platforms built on insurtechs, and new ways of paying claims.
INNOVATIVE TECH START-UPS ARE INTERESTING, BUT THEY BRING WITH THEM A TRUST DEFICIT THAT SHOULD NOT BE UNDERESTIMATED.
Some insurtechs — such as peer-to-peer insurance — do employ a new business model. But the question remains what a more pervasive technical leap would do to the sector and what it would mean for clients.
This is the part that matters, and this is what insurers need to challenge as they adopt new technologies.
There is no doubt that times are indeed changing, Goemans says, but the essence of insurance remains unchanged.
If something bad happens, clients want the comfort of knowing their insurance company will cover them. The relationship is based on the clients’ trust in their insurer. That should never be taken for granted.
No matter how innovative, how catchy the brand name (or how cute its logo), a start-up will always struggle to convince potential clients to part with their insurance premiums without a reliable brand name to back it up. I agree with Goemans that innovative tech start-ups are interesting, but they bring with them a trust deficit that should not be underestimated.
It is really the trust relationship, more than the functionality of a technology, that will convince prospective clients to change insurers.
This does not lessen the need for the trusted established players to look to how technology meaningfully enhances the client experience and outcomes.
There are opportunities for insurtechs and incumbents to form partnerships to leverage the innovation equity of the former and the reliability of the latter. In a modern insurance environment the killer app is not complete digitisation but an element of choice in supporting customer engagement.
It’s understandable that clients appreciate being able to purchase insurance on their own terms. At the top end they often have more complex considerations that may require a mix of digital, online and personal interaction.
Investec Life uses an "omni" or multichannel approach that allows clients to personalise their insurance experience and needs as they require, in the time they prefer. Within the omni-channel environment, efficiencies can be driven by back-end insurtech innovations such as radically revised underwriting methods or the efficiencies created through the elimination of paperwork.
In such cases technology enables an improved client experience, without unnecessarily disrupting the business model for the sake of disruption itself. Technology makes the process easy, understandable and efficient, with clients doing things on their own terms in partnership with the insurer.
Technology in this case enhances the trust relationship and does not detract from it.
Balancing insurtech credibility with the trustworthiness of an established financial services brand becomes important. There could be a legacy brand underwriting the products of a new entrant, an insurtech incubator at an existing insurer or through acquisition of a start-up. The new Naked online short-term insurer underwritten by Hollard looks like a good combination.
Goemans says insurers will not have to adopt an exclusively digital strategy or turn their companies into an insurtech overnight, but it will require the right levels of innovation.
There are almost no barriers to entry in today’s tech-enabled insurance industry.
Be it start-ups using a cell-captive or reinsurance agreement with an incumbent, or a global consumer brand expanding into insurance, all can provide competition for the industry and more choice for the client.
Any company that doesn’t innovate, transform and provide client choice can’t survive.