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6. In conversation with Katherine Gobbi, Chief Executive Officer, EMLife

What influence do you think technology is having on the sector? And are you anticipating further disruption in a particular area of life insurance?

Technology is creating efficiencies and increased consistency and as a consequence is enhancing the customer experience. It’s also absorbing a huge proportion of strategy and innovation budgets, change capacity, and creating key talent distraction. As a result, it carries a significant obligation to deliver huge returns on investment to meet business case expectations; a pressure which is only going to escalate as technology continues to advance.

We have seen the merging of people and technology – with wearables and the creation of the experience economy – and now we're seeing emerging automation of task-based roles, which all create significant opportunities for insurers.

The challenge for executives is in how to ensure a three-way balance of investment between our people/strategy-led innovation, customer-driven innovation and the continual evolution of our tech environment.

 

What are some key industry global learnings that have happened in the last 2 years that you think Australia’s market should be taking notice of?

At a 2016 Actuaries Institute Conference, Angat Sandhu (Oliver Wyman) and Justin Ward (then AMP, now Guy Carpenter), spoke of the four trends that may drive change. Those messages are still just as relevant three years later.

Internationally, the insurance world has continued to move faster than we have in Australia, in particular around customer empowerment, use of data, technology enabled disruptive new entrants, and alternative business models.

Although mainly all self-explanatory, its important to note that partnering with expert providers of individual segments of the activity value chain; like claims, underwriting, reinsurance, IT, HR, actuarial and reporting, helps procure excellence instead of carrying the burden of building excellence in everything.

The role of the insurer then becomes quite clearly defined and differentiated, retaining core components of the unique offer, and coordinating partnerships over the rest.

 

How much of a step forward from the current Life Code is the Consultation Draft of the next iteration? Will the changes be enough to improve consumer perceptions about the industry?

The Life Code implementation has been a positive start in raising the consistent minimum standards across the board. What we see in the latest draft is an increase in insurer transparency and overall customer empowerment.

Notably through banning medical-disclosure checking without reasonable grounds, ensuring customers are no better or worse off at claim time, excluding fraud and, the banning of pressure sales tactics and broadening the view of who is covered under the code to include distribution.

It’s positive to see the Code is raising the awareness of mental health by taking individual circumstances of mental health conditions (including history and severity) into account in underwriting, including people with a mental health condition as “vulnerable” and greater protection for customers during claims interviews who have a mental health condition.

Whilst the Code is a positive step forward for the industry’s commitment to interacting with customers, I expect more iterations of the Code to come off the back of the PJC enquiry and Royal Commission.

As it is currently implemented, and with more proposed changes ahead, the Code allows a good balance with enhanced minimum standards with plenty of room for insurers to innovate and differentiate in customer experience. This remains critical for the evolution of our industry in meeting the emerging consumer-driven economy.

 

What is the one key thing that you think the industry needs to do over the next 3-5 years?

Fully understand and appreciate the consumer-driven economy of millennials and re-position to capitalise on it. The millennial consumer is increasingly in charge of dictating the terms of purchasing with chosen insurers.

Supported by developments in technology and social media, the consumer is now empowered to research and purchase in new ways, where they have significantly more control that in the past.  This puts pressure on the purchasing channels, the value intermediaries provide, product design, personalisation and innovation to ensure insurers can influence buying behaviour based on aspiration and lifestyle, rather than grudge.

 

Katherine is appearing as a speaker at the March 21 FSC Life Insurance Conference. See more about the conference here.