InsurTech startups and influencers usually strive to innovate the insurance industry in a way to offer a better customer experience and improved profitability for the insurance organization. It could be considered as a branch of FinTech.
People outside the InsurTech scene often have a hard time to grasp what insurance technology disrupting innovators really have to deal with, so I was very happy when InsurTech professional and speaker Dennis Grönger agreed to do an interview with us.
Christopher Isak: Breaking the ice – InsurTech or UnsureTech?
Dennis Grönger: With InsurTech no customer will ever need to be unsure again about the relevance and usefulness of insurance contracts. Everything is completely customized and focused on the customer’s personal situation and needs. That’s the general potential and my goal with InsurTech. Something like this might be still a few years away, but I am sure that at this moment, somewhere out there, a couple of really talented InsurTech founders are working hard to make this dream come true.
CI: You have been involved in the insurance industry for more than twenty years now. How was it like when you started? Were there any early signs of InsurTech in sight?
DG: There was no sign that something like InsurTech would exist in the future and change an entire industry. Actually, it was the exact opposite. Everything seemed to stagnate for decades. I started my career in 1994 with an apprenticeship at ‘Volksfürsorge,’ which was then one of the largest insurance groups in Germany. At that time, it was still common to pay insurance premiums in cash.
One of my first jobs was to visit my employer’s customers in my neighborhood and collect the monthly premiums for their life insurance contracts. Today, one would likely call the police if the doorbell rang with someone claiming they had come to collect your premiums in cash right now. Overall, it is fair to say that a lot of things have changed since my first days in the insurance business.
CI: How does it shape an individual to be working in the insurance industry for that long? Do you feel that this area of work has shaped you in any way?
DG: Of course, it has, but above all, the people with whom I have had the privilege to work with have shaped me the most. An insurance company is considered to be a house of a hundred different jobs, and luckily, I have had the chance to try a few of those hundred different professions. This was only because there was always someone in my career who was convinced that I would fit very well in a new position and role, although I did not always have particular experience for the new job.
CI: Talking location strategy, you’re based in Hamburg, Germany. Do you think that’s a strategic location for InsurTech companies? What are possibly exciting places for startups other than Hamburg?
DG: To be honest, you probably would not think of Hamburg first when it comes to Insurtech locations; Berlin, Munich, and Cologne are the InsurTech-cities everyone is talking about right now. But every new InsurTech startup should consider founding its idea here in Hamburg. This city has the third largest number of insurance employees in Germany, and it has statistically the same concentration of software developers per thousand inhabitants as Berlin. These are excellent reasons to settle down in Hamburg and build great things. Besides that, there is a growing community of supporters here in Hamburg and in May of this year, we are going to have Hamburg’s first Insurance Innovation Day.
CI: Everybody is talking about Digital Transformation. Do you think that’s just a buzzword for marketing purposes or do you think that’s something more than that?
DG: The funny thing is that Digital Transformation will have an impact, particularly on the way we market for insurance. For decades, only the incumbents had direct access to customers. Because of that, each insurer has worked out an individual marketing strategy to make the best of its own customers. Most insurers still have a vast number of sales agents out there trying to acquire as many new customers as possible for their own company.
Nowadays, were seven of the ten largest companies worldwide being built as platforms and ecosystem, there is no reason to believe that traditional direct contact between insurers and customers is still necessary to sell insurance policies. I have noticed many InsurTechs startups are putting customers at the center of their activities in an awe-inspiring way. It remains to be seen what new customer approach concept will catch on, but the impact on sales and marketing will be huge for insurers. As for existing platform companies like Apple, Facebook, and Amazon, they are going to redefine the insurance business in their own way as well.
CI: What does Digital Transformation mean to you? And how does it impact insurance companies?
DG: I am concerned about how many people with professional insurance backgrounds still believe that Digital Transformation in the insurance industry is none of their business and will go away someday. The obvious question is why do they think so? There are various reasons, but a significant reason is that all daily tasks for an immense amount of insurance employees are only crucial for the company itself, not for anyone else.
As long as the time to market for new products takes two or sometimes even three years, there is a lot of administrative overhead necessary, which requires a lot of work to be done. Digital Transformation is reducing this time enormously and offering an entirely new way to consider insurance products. I am firmly convinced that we will see a shift from one-size-fits-all products to fine-grained components that will be combined individually for the customer, just as they are hitting the buy-button.
CI: How would you explain what InsurTech means? Is it just a stack of technologies that enable insurance businesses?
DG: Actually, it is a stack of technologies that enable insurance business, but I would drop the word ‘just’ in this description. InsurTech means to build insurance products for 2018 without any compromise due to legacy systems. For digital insurances there is more work necessary than paper-based policies than just to add something like PDF-files to an existing product. InsurTech is using these innovative technologies to rebuild the value chain of the insurance industry and to make it more efficient, and customer focused.
In my speeches and discussions about InsurTech, I love to ask the audience how they would invent insurance if such products didn’t already exist? Sometimes the answers are really amazing. With today’s technologies, there is the chance to make these fantastic ideas come true. For me, InsurTech is the chance to re-invent insurance.
CI: If you’re thinking about the future of InsurTech, could you name three trends that are going to be imperative for corporations, agencies, brokers, and consultants in the coming five years?
DG: Honestly, I can’t even predict the next two or three years in the case of InsurTech. 90% of world’s data volume has been created in the past two years. Who will predict what we are going to do with all this data in five years? But insurance services and products that add value by using customer’s data are going to be a big trend in the coming years.
I mentioned another trend before, the idea that the traditional way carriers and customers interact with each other will radically change. New business models, like marketplaces, platforms, and digital ecosystems, will interconnect customers, insurers, and other solution providers along the value chain in an entirely new way from today. Insurers need to realize that they cannot be the best performer at everything and that they need to be open to other market players for the sake of their customers. This is what marketplaces, platforms, and digital ecosystems are all about.
The last trend I would like to mention has already begun. It is a strategy switch of InsurTech from disrupting the insurance industry to cooperating with traditional insurers and reinsurers; it is a switch from pure B2C business models to B2B or B2B2C ones. For instance, InsurTechs that act as Managing General Agents are able to provide tailored insurance products to specific customer groups because of their wholly digitized processes. Usually, traditional insurers haven’t been able to offer anything to those small customer groups because of the low revenue volume.
CI: Is there anything else that you’d like to share about InsurTech and related subjects?
DG: There is something beyond all the new innovative technologies I don’t want to forget to mention! Germany’s InsurTech scene and the whole InsurTech community worldwide is impressively open-minded. In the past insurers have always seen each other as competitors, but InsurTechs want to learn from one another. Where there were aggressive fights about market shares before, there are now many helping hands to find in this movement. I am really honored to be part of this community.
Thanks a lot for your time, Dennis. I now have a much better picture of what this is all about. I’m curious to see more InsurTech innovation disrupting the traditional markets soon. You can visit Dennis on his website or say ‘hi’ to him on Twitter.
Photo credit: Dennis Grönger
Editorial notice: The interview has been edited and condensed for clarity.