Disruptive Digital Trends Within Insurance in 2017

5 January 2017 | Mark Zawacki | About a 7 minute read
Tags: artificial intelligence, Big data, blockchain, C-level, CEO, CIO, Digital, disrupt, Finance, Innovation, insurance, Silicon Valley, Startup, uber

It is safe to say that Silicon Valley is no longer the ‘high tech capital of the world’ it once was; but has morphed into the arguably more influential ‘disruption capital of the world’. It is now competing against the very organisations it was once supplying tech for, through disrupting those industries with new angles on the same problems. The secret for the success of Silicon Valley lies not with tech nor money primarily, but organisational DNA. They are diabolically different from other organisations, mainly because they have started from scratch and created a whole new way of doing things.

There are many trends and areas of learning coming from Silicon Valley that Insurance Industries should be aware of when planning their big hairy audacious goals for staying competitive. These trends include:

1. Building Platforms

Rather than building digital products or applications, the organisations within The Valley are building platforms. These platforms all share characteristics of being exceptionally smart, and global in scale in order to deliver value and impact. They are not built with the scale one segment of one country’s population in mind (hundreds of thousands), rather the world’s population (several billion).

2. Open Innovation

A huge factor that sets organisations apart in the Silicon Valley (bar Apple) is their openness to share ideas and innovation. It is a traditional view to be secretive, and evidently this is unsupportive in accelerating progress in innovation. The idea from The Valley is to put the idea out into the public domain early on to gain the wisdom of the crowd, and in return gain an improved idea, faster. The advice on this is to have confidence in your idea and your talent to deliver it, to ensure you hit the target and deliver what you set out to. On the flip side, it can be highly effective a ‘fast follower’ when trends and ideas are released, to better or outsmart them. A great examples of open innovation is Google X Astro Teller.

3. Getting Customer Experience (CX) spot on

B2B is a dated idea, as everyone is now a ‘customer’. Organisations who nail CX are the ones winning out – whether an external product, platform, app or even an internal system. The Valley are known for being world class at design thinking for CX and it truly being central to everything not just paying lip service to it. Uber is a great example of CX done well.

4. Experiment, don’t pilot

Pilots traditionally have been the safest way to release new ideas, products or services – however the Silicon Valley argument is ‘why bother’. Pilots are expensive – both monetarily and on time, so cutting them out and replacing them with a more agile approach is the way forward. This approach is to break the problem into a series of tiny experiments, each of which enables you to get the most learning. The way to gain the most benefit is by learning from these experiments faster than your competitors. Through these experiments you are creeping closer to tackling your ‘big problem’ a bit at a time. Google Loon is a good example of this – the series of experiments started from a low budget weekend trip to gain a first batch of measurements, and has now gone vastly beyond this through small steps.

5. No to consensus-based decision making

A huge blocker to innovation is consensus-based decision making. They are time-consuming and do not support continuous progress for ideas. There needs to be confidence in making decisions in the right direction with 90% (or less) agreement. It is often the case that the best ideas are the ones people reject the most due to their ambiguity of ROI or success. The trend from Silicon Valley is that progress is not held back by minority votes.

6. Live in a grey world

It is rare that things are certain, or that they will go a certain way so Silicon Valley organisations live in a world of grey, rather than black and white – and they stay confident in this ambiguity. Ideas that might not be taking off right away are not killed and forgotten about, rather they are left to simmer until new ideas for their progression can be kicked off again. An example of this if Google Glass, which has not been killed – so the idea is left in grey until advances in technology can progress it again and then it comes back maybe in a slightly different but better form.

7. Pull innovation out of the core

Traditional companies lie within heavy layers of systems, constrained by governance and fundamentally risk adverse, all of which repel innovation. The way around this is to remove innovation out from the core and enable its own setup. Innovation hubs lets those within in it ‘colour outside the lines’ and build innovation without restraint. A good example of this in practice is the Aviva Garage, in opposition to RIM who kept innovation close to the core.

8. World class mathematics

Silicon Valley is exemplary in attracting top talent focused on subjects connected to mathematics. Traditional companies need to have the ambitions to attract this same pool of top talent to transform their organisations. In parallel, there needs to be the right accommodating factors to do this – whether it is space, atmosphere etc. If this is not achievable or hits the balance sheet to hard it is about partnering with the right organisations that offer this top talent.

9. Keep the Financial Director at bay

The question of ROI is a repellent to innovation, as there needs to be the space to fail if necessary. Often there may not be an ROI, which is hard for FD to digest and an excuse to pull the plug – meaning innovation cannot be attempted or play through to potential fruition. The other factor is in significant innovation which could cost tens of million and may not result in a ROI for three or four years, which again is another excuse to say stop before you even start.

10. Challenge conventional assumptions

We make hundreds of assumptions within organisations, however many are baked so fully into our op model that we do not reflect on them and they are more akin to actual behaviours. The trend from Silicon Valley is that nothing should be assumed and everything is questioned again. For example, Zip Car questioned whether we truly needed rental centres and designed a service without them.

11. 10x rather than 10%

Silicon Valley is known for being confident and bold with its goals. Having the mantra of 10x rather than 10% is vital for organisations wanting to transform and disrupt. It is even better to hit 5X that 10%

The insurance sector is beginning to respond to these trends and some are being successful in their disruption and change. Allianz and Allstate are being progressive with these changes and wider in the FS market are Square, Stripe, Rippl amongst others. The velocity of innovation, the organisational models, and methods to scale and growth within The Valley are all worth keeping close to in order to keep ahead of the curve. Some hot topics on the agenda for insurers are:

Big Data

It seems that organisations are doing it wrong. To take a spreadsheet analogy – those looking at Big Data in terms of multiple rows rather than of multiple columns are having a too narrow a sight. If we take Google vs Bing the competitive advantage is about the breadth, where Bing has 2K variables, Google has 12K. For this, it comes down to algorithms and the better and broader you can make them. A good example of this in practice is Uber Pool.

Start Ups

Although very ‘on trend’ to play around with start-ups, there hasn’t been a case for multinationals where the partnership has been highly transformative. Having hackathons and innovation events is positive, but a very small piece of the puzzle.

Flexible and ad hoc Insurance

There is missed opportunity around insurance market for flexible insurance, the new wave of millennial insurance needs (room by room insurance for flat share etc.) and the growth of a shared economy. It is also the case that new platforms are rising that enable automated triggers for travel insurance claims. The start- up community is beginning to crack into this, but the larger insurance firms less so.

Health Data

This is a comparatively untapped area for insurers, however with the advancing technologies (e.g the Human Genome project) this will soon become a powerful area, as the amount of data derived from our bodies will release unbelievable innovation in health.

Artificial Intelligence

There is a strong belief from Technology Futurists that the ‘technological singularity’ will happen in the next 30-50 years – with some predicting sooner. This is the point in time when machines will become smarter than humans. The key blocker for this currently is the ability to programme machines to reason – the step beyond intelligence and the one difference from man and machine. Again, the opportunities and threats this poses are immense for insurers.


This is said to be the most profound thing to surface in the last 20 years, since the internet. Where the internet delivered a network of information, Blockchain delivers a revolutionary network of value. This distributed database for financial services is one that cuts out intermediaries, thus changing the industry as we know it.

Overall the movement from a complete legacy organisation to a truly innovative one has not been done, however many are making strong steps in the right direction. Examples of these are GE, Swisscom, Toyota and Nestle.

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