Direct Line’s CTO reveals the evolution of insurance

The InsurTech industry might evolve to become more personalised to the individual consumer post-pandemic, according to Direct Line CTO Sarah Greasley.

This came from a conversation during the recent Insurance and Finance LIVE – UK Special, which was co-hosted by Digital Scouting founder Dr Robin Kiera and FinTech Global director Richard Sachar.

Greasley explained that consumption-based insurance better meets the needs of the customer and removes them wasting money on unneeded services. She said, “So, effectively, we mean that the insurance that you’re paying for reflects how you’re using something. If my car is sitting on my driveway for five days a week, do I pay a different price for than if it isn’t? Do I pay insurance on a per-mile basis?”

The pandemic has only increased the appetite for these pay for what you need insurance policies. For example, during the pandemic most people’s cars were left stationary on the drives, likely only used for a weekly shop. Despite offices opening back up, there is likely to be a large number of people that work remotely, either full-time or partially. As a result, a lot of vehicles will remain on drives, rather than used for commuting. The one-size-fits-all approach to car insurance will no longer suit those driving a lot less.

According to Greasley, this is part of ‘an evolution’ going on in the industry. She believes that the challenge for the InsurTech industry is to help give all customers what they need. However, there will be times and consumers that prefer or require a non-consumption-based policy and it is the job of the insurer to work out what is right for them.

Whether the InsurTech industry is evolving or not is the ‘million-dollar question’ to Greasley. She said that some companies will try to return to normal, but there will be some who use the changed circumstances as an opportunity to modify what they do and how they do it – something which Greasley believes will lead to further ‘blurring between products’.

For those looking to capitalise on the new challenge, data is an area of critical importance. This will help them understand the customer so they know what policies would be best for them. She said, “Engaging with our customers and using data in the right way to enable us to support them and in their changes in behaviour is important. Being able to analyse the data also allows us to measure whether it’s our customers’ attitude to risk of whether its regarding a life change. It also tells us how our customers get from point A to point or whether they drive. For example, we currently have a telematics offering that measures your mileage.

“I believe we’re going to see ecosystems growing over time and growing out. You can already see the linkages with things like the Fitbit, as they measure how much we move and where we move and link that to lifestyle and mobility.”

It is hard to explicitly know how the world will look post-pandemic. The past year has changed a lot of industries and supply chains, but it is unclear how much of this will stick and how much will revert back to pre-Covid ways. Data that has been collected by insurers over the years might also be impacted by the pandemic.

Greasley said, “We have years and years and years of data, and what we don’t know right now is how does the pandemic change this? What is the relevance of that data, the insight that we drive out of that data, how we apply it to our customers and the way we engage with our customers?”

Covid-19 InsurTech impact

Among many of the other results from the pandemic, Covid-19 has led to many people becoming more conscious of their health and staying clean. Subsequently, it may have led many people to re-evaluate risk more generally.

According to Greasley, people are starting to think not just about the cost of things, but also the risk of things as well – using the example of choosing to either work in the office or work from home. While working from home is relatively risk-free, going into a communal office can throw up a number of challenges in the age of Covid-19, with the chances higher that you could potentially get infected.

This, Greasley claims, plays into the whole debate around consumption-based insurance. Consumption-based insurance commonly mirrors the behaviours and choices that an individual makes, compared to a one-size-fits-all blanket idea of how people act and make choices found in some parts of the InsurTech industry.

Transformation offering

Direct Line is adapting its infrastructure to help it keep up with the evolution of the industry.  According to Greasley, Direct Line is currently moving to a more ecosystem-oriented approach away from a more monolithic style system as she believes that over time, the company is going to need to pivot and add new capabilities.

She said, “Technology is changing. I think that driving towards being data driven is really important, and we’ve got the volume of consumption and non-consumption based insurance. What is important is how do you manage that? How you drive insight out of that data is really important.

“Being API-driven and service-orientated will lead us towards being able to participate in other ecosystems, and one of the things that has come out of the pandemic is that we’re actually seeing more collaboration. So, APIs give us that better ability to collaborate.

The full discussion can be viewed here.

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