One of my favorite examples of Digital Transformation is what has happened to music and entertainment in general. Back in the day, when my favorite band released a new album, I bought the album. Maybe the whole album would be good but in all likeliness there would be 2-3 songs I really liked. So I had this album, and really just wanted to listen to the 3 songs I really liked. When Apple launched iTunes, they did not make albums available for purchase or download, but allowed me to buy one song at a time. At first we could have thought that enabling me to spend $0.99 vs $19.99 was not going to be a good thing for the music industry, but the reality is that I spent more money on music when I could spend $0.99 at a time vs when I was forced to spend $19.99 on an album. And now wow! I have all the music I want for a few dollars a month, and I’m not locked into anything! On-demand!
As I look at what we have been doing in insurance technology over the past 10 to 15 years, the focus on digital has been primarily the digitization of existing processes, not really digital transformation. Sure we had to start somewhere. We have spent hundreds of millions of dollars removing paper or allowing the value chain to transact as they always have but over new devices and channels. The result might be really good stuff but incremental good stuff, not transformation. It reminds me of when I got my first iPhone and iTunes and started ripping my CD collection using my laptop. I liked having my music on my iPhone, it was really cool, but I had several songs labeled as track 1, track 2, and, the process of getting there was tedious and time consuming. Digitization of our business to some extent has made us more efficient, removed some costs, but those changes did not transform how we do things. We still have all of the forms and questionnaires to fill out, we still do handoffs as opposed to straight through processing for most lines except maybe Auto. When we can buy online we do not fully understand what we bought, and this is compounded when we receive the package in the mail.
Slice has opened my eyes to what a truly digital insurer is founded on. With today’s technology, and here at Slice, we are not focused on the digitization of the old way, but looking at the new way that insurance should be bought and giving our partners the right tooling for it. Like launching the Apple Music app and having instant access to millions of songs, playlists for my genre and recommendations for my liking based on fancy algorithms (Ok, Spotify did this really well!)
Like our CEO Tim Attia said when we launched ICS, “to get there, we had to challenge everything we knew about insurance.” link to blog:
How we do things at Slice and how we’ve designed Slice ICS is based on several new principles and key tenets that underpin how on-demand digital insurance needs to work. These new principles are very different from implementing a traditional core system, regardless of how modern it is.
- From the Customer experience in: Probably the first principle is this one. Today we build solutions that focus on the customer experience and not how legacy processes need to be supported. As a result we don’t focus on supporting a linear process that assumes hand offs like quote/bind/issue or my favourite: OOSE. It’s real time, just like that song you download. If you want it, you say yes or “Buy Now” and boom! You’re covered. That’s on-demand. The experience is no different from what we have become accustomed to in the other digital transactions we do regularly such as buying that book on Amazon, Transferring money, or booking a flight. The customer does not need to know what underwriting is, or the fact that the price might not be the price, they want to see the price and decide on their terms if there’s value to them.
- Don’t ask me what you can already know: With Big Data, APIs etc today I should be able to get all the data I need to offer you the appropriate rate, price, and one that matches my underwriting appetite easily. Here at Slice, we’ve made this one of our guiding principles. This goes as far as removing the application process. Tell us a few things, we’ll figure out the rest, and give you a really good offer.
- Let’s be flexible here. What I need today might not be what I need tomorrow: for example look at our Homeshare experience: It is summer, my house is being rented on AirBnb but next month I will slow it down because I’ve got family coming over. When I want the insurance it is there and when I don’t I’m not paying for something I don’t need. Same with Cyber: My business is growing and all of a sudden I stand up a new AWS instance with several new endpoints. An on-demand policy in a truly Digital world uses signals and events and can adjust as I go. We all win. I’m covered and my carrier is getting appropriate premium for the exposure. Using signals and events we can figure things out, and adapt, respond..etc this is not just about getting more premium but even giving you the good news that this month you will pay less premium.
- New Products for a Brave new world. If you are going to offer that great on-demand digital product for an on-demand planet you cannot go out there with the same analog products we are used to. It is a great opportunity to rethink from the ground up what protection people are looking for. We’ve done this already with our Homeshare and Rideshare products, Cyber and the few things we have in our backlog. These products look at how we are living today, what we care about and what protection is important to us when. They are creating a brand new awareness of insurance, but not an awareness based on the old way of doing things, but today.
- Let’s face it things are changing super fast these days. We built ICS with that in mind. As a result we are committed to a micro services strategy. This allows us to continuously look at how we have assembled ICS and continually update what powers it. By using micro services we can be very agile in the architecture of ICS. And since it’s all in the cloud, that is all transparent to you.
The good news is that we are marching towards an experience that really is customer driven and addresses some of the gaps we’ve had in the industry to be fully digital. We will be able to say we have reached this when we can agree that: 1)The process is intuitive and easy, to the point where buying insurance is likely just part of another experience altogether (let’s save that idea for the next time!) 2)What I’m buying is understandable and 3)I feel a deeper connection with my insurance provider. We have to hurry though, the oldest members of that truly Digital generation, iGen have now graduated, hopefully working, earning money and starting to accumulate assets, and going through life events for which they will need insurance.