PRODUCED BY:
SPONSORED BY:
INTERVIEW WITH
Christopher Moore
Head of Apollo ibott 1971, Lloyd's
Innovating Insurance: Understanding Emerging Risks in an Uncertain World
Insurance companies have been guilty of trying to fit square pegs into round holes when trying to find solutions for these questions by attempting to adapt existing products. But in reality this just creates more problems than it solves."
How has insurance purchasing changed in recent years and what does this mean for insurance companies?
The insurance products that we sell today, both commercially and personally, are slowly becoming unfit for purpose. There has been a large shift recently as a result of generational change and the impact of the global pandemic, where societal obsession with ownership is being replaced with a focus on utilisation instead. For insurance companies, this presents a huge challenge as they are traditionally structured around the concept of ownership. A consumer owns their car or house, so they purchase insurance accordingly. Or as a business owner you have assets and staff to look after, so you purchase the appropriate insurance. As a result of working from home becoming more commonplace, a lot of people don’t need a car seven days of the week, so they’re looking to car sharing services instead - utilisation over ownership. But who arranges the insurance? How can insurance companies cater for multiple different drivers on a varying schedule?
Insurance companies have been guilty of trying to fit square pegs into round holes when trying to find solutions for these questions by attempting to adapt existing products. But in reality this just creates more problems than it solves. Instead, insurance companies need to embrace new technologies and create new products that have been built from the ground up to serve the new societal preferences. This process will require cultural change within insurance companies to break the fascination of legacy systems and instead embrace new technologies that can present insurance companies with new opportunities they haven’t even begun to consider yet.
What challenges and opportunities do the rise of electric vehicles present to insurance companies?
Electric vehicles are hugely exciting from a consumer point of view. The environmental benefits and the possibilities of easier driving experiences speak for themselves. But as insurers, they pose exciting new challenges for us to consider. With electric vehicles, there is a lack of historic data to predict risk and create products around. This means that electric vehicle insurance policies are often more expensive than their traditional internal combustion counterparts due to the greater uncertainty in risk modelling. For a consumer, this can be frustrating as they rightly believe by purchasing an electric vehicle they are supporting the environment - so why are they now being penalised by insurance companies? Electric vehicles include micro mobility solutions too, such as e-bikes and electric scooters. Electric scooters in particular receive a lot of bad press, but in reality they are a relatively safe way of getting around. Compared to ride-sharing in city centres, which is mostly where electric scooters are used, there is a 200% reduction in the loss ratio. As an industry, insurance has a responsibility to support electric scooters as a safe and environmental alternative to car travel by creating correct insurance products that support both economic and environmental objectives of customers.
As an industry, insurance has a responsibility to support electric scooters as a safe and environmental alternative to car travel by creating correct insurance products that support both economic and environmental objectives of customers."
This is extremely outdated in a world where quite rightly, the customer comes first. We’re able to collect data in real time now and have access to dashboards that change on a minute by minute basis."