In conversation with Dino Fedele, CEO, PrinceInsure
We spoke to Dino Fedele, CEO, PrinceInsure about the challenges of heighted competition and disruption for today’s insurers, the role of InsurTechs in progressing the industry.
Dino has been a thought leader in the insurance industry since 1999. Over the years, he has worked with global insurers such as Zurich and Allianz. Dino is highly experienced in claims, underwriting, business development and account management, which has given him a deep understanding of insurance principles and a strong focus on client relationship management. After working for insurers for the past 17 years, Dino decided to start his own InsurTech start-up, PrinceInsure. He believes that InsurTech can massively improve the insurance industry through all parts of the value chain.
Innovation & disruption
Q: Collated data from the report indicates that innovation is overwhelmingly the top business priority for insurers, with 90 per cent of companies indicating this. What do you think companies should be doing to leverage innovation to drive business growth?
A: I think initially it’s a challenge for large insurers to innovate from the inside to drive business growth. I have worked with large insurers and have 18 years’ experience, so I understand the issue. The main challenge is to identify where internal innovation comes from – is it from C-suite/CIOs or IT or sales?
Some organisations are setting up labs to innovate from the inside, which sit outside of the day-to-day running of the business and look at the business from an outside perspective. In Australia, the likes of IAG are doing that with Firemarks labs, an incubator hub in Singapore and here in Australia – but it’s very, very early days for that, so it will be interesting to see how it all goes.
My honest opinion is that the way to drive innovation is to partner with InsurTechs, who are already innovating from the outside and need support from a large insurer. It’s a risk for a large insurer to partner with an InsurTech because some InsurTechs will thrive, some will fail – but the biggest question is, if you don’t do that, where are you going to be in 5, 10 or 15 years?
Q: With new market players like yourself (InsurTechs) shaking up the industry, why do established players need to innovate to remain cutting-edge, relevant and competitive? And are partnerships with InsurTechs the answer?
A: I think insurers need to look at the whole technology landscape of what’s happening with the IoT, smart homes etc. Look at what’s happening on the tech front to then incorporate these trends into your business. Telematics is the low-hanging fruit, where you can get real-time data for a motor vehicle and then tailor a product/pricing to suit that.
Insurers need to have a wide lens on what’s happening in the tech front to then integrate that into their internal business. What InsurTechs are doing is putting the customer first: building the solution from the customer out and using technology as an enabler. That’s where I think InsurTechs can assist large insurers or incumbents.
Q: How can companies disrupt internally to drive business growth? I.e. Through customer-led products/services, collaboration, a strong innovation culture, etc?
A: I think large insurers are trying to disrupt internally. Some have paid a lot of money to outside consultants to achieve this, but usually, they have no intimate knowledge about insurance. Insurance is a highly regulated industry that’s difficult to disrupt,compared to say, what AirBnB has done to the hotel industry and Uber to the taxi industry.
If you look to an example of what reinsurers can do with InsurTechs, see what Munich Re – Digital Partners is doing. They’ve partnered with approximately eight InsurTech start-ups to provide expertise around products, compliance and distribution, placing small bets with InsurTechs.
The nature of start-ups is that some will flourish, some will die – but I think both parties can learn from each other in the process. The insurer can pick up some good innovation techniques from the InsurTechs and vice versa – the InsurTech can pick up good knowledge about regulation, compliance, distribution and product structure. They both have advantages of partnering up with each other.
Regulation & compliance
Q: In an environment of strict regulatory/compliance requirements, our report findings indicate that about half of companies are placing compliance at the forefront of their growth plans. How can companies drive innovation while also adhering to necessary regulatory/compliance standards?
A: It goes back to partnering with InsurTechs and partnering with insurers. Insurers already have the departments in place that look after compliance and regulation, where traditionally InsurTechs are small teams that don’t have that background necessarily – so they outsource that, which can be a lot of capital to put forward.
Partnering with an insurer can only help InsurTechs. One of the main reasons why InsurTechs are partnering with large insurers is for regulatory assistance and capital requirements. With insurance, you can’t put a product out there to test the market or get product market fit because of the compliance and regulation requirements. Before you launch a product out in the market, you’ve got to be compliant with all the legislations.
So one of the main issues with InsurTechs is that they can’t test the product as in other industries because of the strict regulation. That’s the way it should be, because a financial product that’s protecting people’s livelihoods and assets is something you can’t mess around with.
In saying that, there have been some sandboxes around the world that have worked well, mainly in Singapore, where start-ups can operate in a space that doesn’t have that heavy compliance and regulation. In Australia, a specific InsurTech sandbox where InsurTechs can get going without that heavy burden of compliance would be a great initiative.
Talent acquisition & offshoring
Q: Collated data from the report indicates an industry-wide push towards offshoringto reduce financial overheads. How do you think moving offshore will impact talent acquisition and retention for established insurers?
A: I’m not a huge fan of offshoring, but I can understand that for these large insurers, it’s a way of delivering ROI to shareholders and driving down costs to improve the bottom line. The question is, does offshoring put the customers first?
Q: Many companies are uneasy about offshoring, perceiving the loss of local talent as a loss of internal knowledge and capabilities. Do you feel that offshoring is taking the industry in the right direction, and why?
A: I think it will take the industry in a new direction. I got into insurance in a low-level claims position, which some companies would now offshore. I think offshoring can and may have an effect on talent, because no-one chooses insurance – it chooses you (old saying).
I think for people interested in getting into the industry, some of the opportunities to find entry-level underwriting or claims roles may not be there, if they’re going to be offshored. So where do they come in and learn the craft of insurance?
There are therefore two aspects to the technology talent question – there’s insurance knowledge and product knowledge, and we have great talent in those areas in Australia. We’ve seen Australian insurance executives run large insurance companies around the world. So, I think we’ve got a rich, rich range of talent.
Where we struggle in this country, is the engineers and software developers on the tech side, as this talent is predominantly overseas. It’s very, very hard to find someone who wants to work with InsurTechs from the ground up in building the software and platforms. InsurTechs tend to appeal to millennials, bringing them through with that tech aspect and also the insurance knowledge – but we still struggle with technical talent in Australia.
Technology, data & the customer
Q: With Telematics and Big Data disrupting traditional ways of doing business, insurers are investing in these platforms to better track customer metrics. How can new technology and Big Data help insurers be more customer-led?
A: Insurers can use technology to put the customer first and educate the customer about the way an insurance company operates – from an expense, profit and claims standpoint. I think whether its Big Data, the IoT or telematics, these technologies really can put the customer first and give them information, whether it’s their policy or premium, or about how their insurance is performing on a scheme level. I think we can provide more information to the customer that empowers them to not think about insurance as a grudge purchase, but as an asset that’s going to protect them.
So that’s where the paradigm shift will be, whether that comes sooner or later. That’s what technology can give to the policyholder: more knowledge to empower customers to understand their insurance, to understand why they have it, and understand why that’s going to protect them, rather than them thinking, “My renewal is coming up and I have to pay this, I don’t want to pay this.”
Insurance is a grudge purchase, it’s an intangible product, and what I think InsurTech can do is lessen the angst people have about paying insurance. Then you have the likes of Trov and Slice who provide on-demand insurance for when it’s needed, rather than paying on an annual basis. These platforms provide the ability to switch off the insurance when it’s not needed. I think that’s where the technology will go in the future.
Q: There is rising uncertainty across the industry regarding how the IoT will impact the assets insurers are protecting for their customers. What impact do you feel the IoT will have on insurers? What strategies should companies be using to get future-ready?
A: I think insurers should be looking at the IoT and assessing how they’ll incorporate smart and interconnected technologies into their business. They need to be thinking about it now, because, in 5 years’ time, the landscape is going to be very, very different and in any business, you don’t want to be left behind.