The insurance industry in 2025: Who will be eating our lunch?
Rebecca Falk
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Clearspeed helps insurers make better and faster decisions at scale by analysing voice in a unique way. Their neuro-science-powered technology enables insurers to accurately identify the risk of fraud so that low-risk transactions can be expedited and high-risk cases flagged for expert follow-up.
We sat down with Manjit Rana, Executive VP for Clearspeed UK EMEA and APAC, to talk about disruptive innovation opportunities in the insurance industry by embracing new technologies and learning from developments in adjacent industries, laying out a path forward for insurers to lead the way.
While it’s never been a more fascinating time to work in insurance, the industry is at risk of disruption unless leaders start embracing innovative approaches to solving problems and staying ahead. That starts with looking outside insurance at how developments in adjacent industries may impact the industry as we know it, and how cross-industry leaders are solving similar challenges.
As an industry we are often taken in by the “shiny new toy” and we scrabble around looking for relevant applications of the technology. Blockchain has been a classic example over the last few years. Whilst it was a logical technology to incorporate, the pain points weren’t significantly high enough to drive investment from insurers. Something similar is happening now with generative AI. Whilst no one doubts that AI-based technology will disrupt many aspects of the insurance ecosystem in the future it’s not really addressing the things that are keeping industry leaders awake at night.
So, what is troubling the industry’s senior execs right now? Whilst not a comprehensive list it does include the cost-of-living crisis and a talent shortage of new blood coming into the industry. The impact the cost-of-living crisis is having on insurers’ profitability, due to the increased cost of labour, parts, and materials, is making it increasingly difficult for insurers to fulfil their promise of delivering the service that their customers bought within a cost envelope that they can afford without incurring substantial losses.
To stop the losses, most insurers have hiked up their renewal premiums, with some policyholders seeing increases of up to 70%! Some people will respond by taking the risk and not buying insurance coverage, others will bend the truth to get a cheaper quote (application fraud), or by exaggerating genuine claims or inventing claims (speculative fraud), or even deliberately target over-stretched claims operations with sophisticated, well-organised operations (organised crime).
Add to this changing consumer expectations where consumers expect a more instant resolution to their claim. They don’t understand why you can order something from Amazon and have it delivered the same day, yet it takes an insurer over two weeks to replace a lost mobile phone. This ties closely with the shortage of smart talent coming into the industry. It’s vital that we bring in the next generation to help us develop insurance-based products and services relevant to our next generation of clients.
Insurers have struggled with innovation because of legacy thinking. They think in a traditional way, the way they’ve always been taught. As a result, we’re not great at attracting fresh talent into the industry. Five years ago, I would have suggested insurtechs. But I think it’s highly unlikely to happen now because of the fact that funding is drying up in the marketplace. Insurtechs generally will not take traditional insurers out of the market, they are more likely to help insurers evolve their business rather than disrupt the industry. The third option is a brand-new player that no one has heard about. This is less likely in Europe as opposed to the US, as European consumers tend to have a lower adoption rate and avoid brand-new players. So, this only leaves a fourth option: adjacent industries. For example, car manufacturers and home security companies have access to data, existing customers, money and resources, and they have an existing brand already.
I would say you have four different options. First, a brand-new market or category creation. In insurance, you can think of cyber insurance or protection against deepfake videos.
The second type is tweaking around the edges, and fine-tuning, which is basically improving existing processes and products. I see this as ‘digitising yesterday’s pathways’ making existing processes more relevant for today’s communication channels but it doesn’t cater for next-generation products and services such as autonomous vehicles.
Thirdly, other industries can look at a marketplace and think: “Actually, we can do that better.” This generally happens when companies are looking for a larger market share. Car manufacturers, home security companies, telcos and retailers are looking at how they can take a greater share of their customers’ wallets by offering complementary products.
Finally, disruption can happen when something fundamentally changes in consumer behaviour. Covid, for example, changed consumer behaviour overnight, so even though we’ve been able to provide pay-per-use motor insurance for some time, it suddenly became way more interesting to consumers who felt they weren’t getting a fair deal paying annually when the majority of the time their car was stuck on their drive.
A car less than three years old is probably generating about four gigabytes worth of data a day. When we move to autonomous vehicles, that’s going to go up to about 20 gigabytes worth of data. For insurers, next to history and statistics, this data is really important. But who owns that data? Car manufacturers have access to an enormous amount of data. Why wouldn’t they take the opportunity to disrupt the traditional motor insurance market? In the future, motor manufacturers may have more control over the accident claim process than we have as insurers.
As I said, other industries have access to data that we can’t easily access. It’s not as straightforward as making a commercial deal. Car manufacturers may believe that in the future the majority of their revenue may not come from selling cars but from the data being generated by their cars.
Binah.ai have a solution that ensures that every time you make a video call, your smartphone checks your blood pressure, oxygen saturation and stress levels. This technology is now being combined with bathroom mirrors, so that every time you’re brushing your teeth, your mirror gives you a health check. Smart socks for the elderly can monitor ECG, dehydration, and fatigue levels real-time, as well as detect if someone has fallen or collapsed in their chair.
The pace at which technology is evolving is both scary and exciting. How long before we can genuinely start to create ‘guardian angel’ propositions where we can prevent nasty things from happening in advance and as a result completely change the way our customers view insurance? This gives insurers an opportunity to create more relevant products for, and engage with, our customers. If we do not do this, the companies that have access to this technology and the associated data will do it themselves. Disruption rarely comes from within the industry. It’s often someone who is typically frustrated with a problem and is looking at the problem from a different perspective. Someone with a different lens, different experiences and different customer relationships.
Most major industry disruptions come from outside the industry: Blockbuster being disrupted by Netflix, local taxis by Uber and Walmart by Amazon. Also, Tesla disrupted the car marketplace, knowing more about batteries than about cars. Now, every single car manufacturer has electric cars in their portfolio.
Clearspeed developed technology to address vetting challenges associated with military operations. How do you know if someone is your ally, and how do you assess this at speed and at scale? The Clearspeed technology, using between 2 and 4 simple, automated questions, requiring only a “yes/no” response can analyse risk at very high accuracy levels. Whilst our technology is in the field of voice analytics, we actually use voice in a very different way from all other technology providers in this space.
When you look from an insurance perspective, this technology can be used in multiple ways. Think of funeral policies – Was the person actually alive when the policy was sold? Has the phone the consumer is claiming for genuinely been lost? Is the underwriting data provided by the consumer when requesting a quote genuine? Whilst we can already as an industry validate these scenarios, doing so is very time-consuming and our policyholders don’t get a great experience when purchasing an insurance policy or making a claim. The Clearspeed technology addresses these challenges within seconds and at scale enabling insurers to provide a much better experience for genuine cases, whilst identifying potential fraud with a very high level of accuracy.
The Clearspeed solution is now attracting attention from across a wide spectrum of industries ranging from border control, government security, employee and new hire vetting, sports integrity, as well as policing and military operations.
We’re not good at attracting smart talent into the insurance industry – how many graduates go through university with an aspiration to work in the insurance industry once they graduate? In addition, how many middle managers from other industries look at taking their skills and experiences and migrating across to similar roles in insurance? If we’re not attracting talent, how are we going to innovate?
In addition, most insurance innovation teams are led by people who, until their new role, were in a traditional insurance role. If they weren’t challenging the status quo and trying to disrupt existing processes, then why do we believe that their DNA is going to change when we add ‘innovation’ into their job title?
We need to attract innovation leaders that are prepared to challenge existing propositions and processes and we need to look outside at other industries and how they are using innovative and disruptive technologies to address similar challenges that we are facing.
