Large insurers could end up forging partnerships with "digital giants" like Google, Facebook Inc. and Apple Inc. as they plot their futures, according to AXA SA CEO Thomas Buberl.
Speaking on a panel about the future of the insurance and pensions industries at the European Insurance and Occupational Pensions Authority annual conference, Buberl predicted that the two sides would seek each other out because each had something the other did not. As the technological powerhouses expand into new industries, the insurance companies offer expertise in the industry, regulation and claims handling. The digital companies bring good customer interfaces and "a lot of trust" to the table, he said.
"I think the two could work well together," Buberl said.
The comments come amid continued speculation that large, consumer-focused technology groups want to enter the insurance sector. Buberl said the digital giants have "started certain tests in our field," but have yet to establish themselves firmly in the industry. That said, he sees it as a "matter of time" before they make that leap.
Meanwhile, traditional insurers are struggling to change, in part because their aging technology systems are holding them back, but also because employees are afraid of change, according to the Axa CEO.
"Going somewhere you have never been before is always a little bit scary," he said.
Speaking on the same panel, Allianz Group CEO Oliver Bäte questioned whether the technological heavy hitters would want to enter the insurance market, given the regulatory scrutiny and "enormous amount of capital" that is needed.
"If I was a Google today, the last thing I would want to do is get into insurance," he said.
Bäte sees the need for the insurance industry to improve its relationship and reputation with customers, and technology could play a role in that effort.
"We don't really understand what consumers want and what they are ready to pay for," he said.
He said the main driver of negative net promoter scores, a measure of customer satisfaction based on how likely a customer is to recommend a company, in the insurance space is that "consumers don't understand what they actually buy and therefore don't trust the industry."
Consumer understanding of insurance products is likely to become the focus of "a lot of regulatory and political attention" in the near future, Bäte added.
Not there yet
The comfort level among insurance CEOs is "much lower than 20 years ago," according to Christian Mumenthaler, CEO of Swiss Re AG, which is making some more willing to consider changes. Insurers are testing out different business models as they prepare themselves for the future, with some looking to play in different parts of the insurance value chain and others expanding into related services.
Mumenthaler said the most interesting aspect of the industry's effort to change was the focus on trying to reduce customers' risks, as well as pay them when something bad happens, which he argued would be good for the industry's image.
However, there's no new "winning model" that is apparent yet, he said.