Rethinking Insurance: Gerry Hassett on Navigating Change and Cultivating Innovation

Gerry Hassett, with over 30 years in the insurance industry, has extensive experience in life and health insurance at prominent companies such as Irish Life in Ireland and Great-West Life in Canada. He has also served as the Chair of Insurance Ireland and founded Insurtech.ie, a non-profit aimed at enhancing collaboration between Irish insurers and startups to drive innovation and digitization.

Gerry, can you describe the current landscape of the insurance industry and how it has evolved over the years?

Gerry: The insurance industry is facing a crucial transformation. Traditionally, the sector has lagged in adapting to digital innovations compared to other industries. This lag poses a risk as consumers no longer just compare different insurers but expect an experience on par with what they receive from other service providers  or even e-commerce platforms. The internal view from within insurance companies is often high barriers to change from rigid legacy platforms and  heavy regulatory burdens, which complicates making even minor changes. Thus, insurers find themselves grappling with the dual challenges of rising consumer expectations and significant regulatory pressures, which stifles much-needed innovation and digital transformation.

Beyond regulatory challenges, what other hurdles are insurers facing today?

Gerry: Another major challenge is profitability. The market is saturated, with supply exceeding demand. This issue is exacerbated in the UK, for example, where 92% of motor insurance and 70% of home insurance are purchased through price comparison websites, intensifying price competition and thinning profit margins. Consequently, insurers are trapped in a cycle where they must demonstrate returns on substantial capital while being unable to pursue agile innovations that could enhance profitability and consumer satisfaction.

Has this environment contributed to the trend of market consolidation we're seeing?

Gerry: Absolutely. Many insurers are turning to consolidation as a strategy to manage costs and improve operational efficiency. After multiple internal cost-cutting measures, merging with or acquiring another company often appears as one of the few remaining levers to pull to reduce expenses further and potentially gain market power, although the latter often turns out to be a perception rather than reality.

Are there notable differences in the insurance markets across the US, UK, Ireland, and Europe?

Gerry: Interestingly, despite initial impressions that the US might be ahead in innovation, it faces the same pressures as Europe. The UK market is probably the most competitive due to the extensive use of price comparison websites, pushing insurers to aggressively find efficiencies. However, overall, the challenges of pricing pressure, regulatory burdens, and consumer demands are quite consistent across these markets.

How about the growth prospects in emerging markets like Asia and Africa?

Gerry: Emerging markets offer a stark contrast because they are in a growth phase rather than maturity. This growth allows for more flexibility and innovation, unlike mature markets where competition primarily involves taking market share directly from existing players. Rapid growth in regions like the Middle East and parts of Asia fosters an environment more conducive to adopting new technologies and business models.

With the rise of AI and data science, how do you see these technologies impacting the industry?

Gerry: AI and data science are crucial for the future of insurance. While insurers have a strong foundation in data analytics thanks to the historical significance of actuaries and risk professionals, the industry lacks the internal capabilities to develop cutting-edge technological solutions. Hence, collaborating with startups and tech innovators who can bring agility and fresh ideas is essential. This approach is increasingly recognized and embraced among insurance CEOs who understand that their legacy systems are not equipped for rapid innovation.

What do you predict will be the most disruptive trends in insurance over the next decade?

Gerry: Embedded insurance is poised to revolutionize the industry. It currently represents a small portion of the market but is expected to grow significantly, integrating insurance seamlessly into products and services. This trend will likely disrupt traditional distribution channels and enable new value chains, making insurance more intuitive and aligned with customer needs, especially in sectors like automotive where insurance can be bundled directly at the point of sale.

Gerry, any final thoughts you'd like to share with our readers?

Gerry: The insurance industry must embrace innovation and adapt to changing consumer expectations and technological advancements or else face gradual decline from new competitors. Collaboration with tech companies and startups is not just beneficial; it's imperative for survival in this rapidly evolving landscape.