The challenge we face is to create relevance
The insurance sector has evolved during the last years, as the world and the needs of people have been changing. “We need to create open innovation systems that allow us to import innovation from the insurtech ecosystem in order to be competitive. Being proficient at that is a new key success factor. We will compete on adopting innovation”, says Josep Celaya, the Global Head of Transformation at MAPFRE Group.
As Global Head of Transformation at MAPFRE Group, Josep Celaya is responsible for the definition and implementation of the innovation strategy and the promotion of an innovation culture in the company. He leads teams that work on product development in eight different countries and coordinates approximately 200 employees involved in innovation across the globe. He is also in charge of corporate venture capital at MAPFRE, as well as the relationships with universities.
MAPFRE Group is a Spanish insurance company based in Madrid. It’s the third largest insurance group in Latin America, the eleventh biggest insurer in Europe and MAPFRE ranks among the top 20 insurers in auto insurance in the United States. Josep Celaya was one of the thought leaders who shared his vision at the 2018 edition of DIA Munich. Expect a similar level of keynote speakers at the upcoming DIA edition. Just click on the banner below to find out more.
There is the notion that insurers are moving from products to services, and, most probably, those services require a broader view than providing coverage. It is about taking the right customer’s perspective and really becoming a part of their lives.
Josep: “I totally agree. I am relatively new to the insurance industry, as I have been working in the industry for eight years now. One of my first impressions is that people in insurance overestimate the relevance of the product for the end customer. I would say it’s not about the relevance of the product, but the awareness of the customer during the day of the product. The customers tend to forget that we exist, the same way they tend to forget whose credit card they are paying with, and so on and so on.”
Essentially, that’s a new challenge.
Josep: “Yes, the challenge we face is to create relevance based on being there in the right moment and solving the right problems in that precise moment but without being seamless with the rest of the life of the customer. The old paradigm of brand awareness, pushing my brand, doing advertising and so on, is totally at odds this new reality. In order to embrace the new reality, we have to be integrated in all the moments in life of the customer. All the moments where we can provide services. This requires being integrated with third party ecosystems.”
So, in your view, ‘ecosystem thinking’ is really here to stay.
Josep: “Ecosystems are a fundamental change in the way the economic structure is going to be organised compared to the traditional vision of value chains or the traditional industry definition of vertical sectors. We are moving to a new reality where the relationship with the end customer is going to happen through certain companies – very few companies actually. It is transcending the world of technology. We see this happening with car manufacturers and it will happen in other industries as well. It is not a hype. It is a total revolution. We are facing times of change. The novelty is that they go beyond technology and involve new areas of activity.”
Many of those moments in life are served by the big tech platforms. When you read about ecosystems in insurance, the ones that are always mentioned are mobility, home, work. In your view, what will be the most important platforms or ecosystems for the next decade?
Josep: “In general, most B2C services will be mediated by technology platforms like Google, Amazon, Apple, Alibaba and so on. They are winning the battle for relevance in front of the consumer. I do not see tech platforms substituting insurers but rather becoming distributors. For instance, at MAPFRE, we have partnered with Amazon in order to distribute insurance.
In mobility, I think the question is ‘who is going to run the show?’, ‘who is going to be the main player of that ecosystem?’ There is an interesting struggle between the manufacturers, the technology platforms, and even new platform players like Uber, to name one. Many interesting things are happening there. It is very likely that manufacturers, either the ones that are already dominating the market or new ones, are at the centre of that ecosystem.
There are other ecosystems where the reality is still being configured, so it is less obvious who is going to be in the centre. Connected home and health are still environments that are very open. This is a threat as well as an opportunity, it really depends on what you plan to do. I think most of the platforms aim to capture value from traditional industries. But if you learn how to play this new game, you can be relevant.”
Do you envision a leading role for insurance carriers in these platforms or ecosystems?
Josep: “In most of the cases we will be nodes. It will be difficult to create our own ecosystems. Those who have succeeded at that are the exception rather than the rule. We tend to focus on the ones that have had success. Not on the ones that have failed in the process. So, my answer would be that I don’t think so – which is good news for our shareholders.”
So, you’re saying they should not, but it’s not a tragedy.
Josep: “Indeed. You can be very profitable, and not orchestrate any ecosystem. So, let’s leave ego apart, try to make rational decisions. I think we can be very profitable to be among the relevant players in third party ecosystems. That is what we are aiming to become. I think it is actually impossible to stay away, at least if you don’t want to renounce to a substantial part of the market.”
Now, looking at insurtech. How important is insurtech when looking at all the new ideas and plans and concepts that you have in mind?
Josep: “I think traditional players need a new set of skills to play digitally. But it is also pushed by the new market dynamics. I am convinced that the most sensible way to gain those skills is to partner with the insurtech ecosystem. We need to create open innovation systems that allow us to import innovation from the insurtech ecosystem in order to be competitive. Being proficient at that is a new key success factor. We will compete in adopting innovation.”
So, creating future relevance is about digital skills and about a new skill; creating and nurturing partnerships.
Josep: “Definitely. Being able to create win-win models and to cooperate. It is not easy. Everybody that has an insurtech, or is on the corporate side, knows that there is a lot of friction in that interaction. But I am convinced that the ones that solve that friction, and are able to create win-win partnerships, are the ones that are going to stay there.”
What are the success factors of making that cooperation between insurtechs and incumbents happen? How do you do that in practice?
Josep: “At MAPFRE, we have created and launched insur_space; an open innovation platform to facilitate cooperation between insurtechs and established corporations. The main purpose of the platform is to decrease that friction. On the one hand to make it more viable for the startup to bring unique value propositions and integrate them within the corporation. And on the other hand to facilitate the person working on business processes in the established corporation. insur_space is all about the ability to innovate, by bringing innovation from outside the company.“
That’s a great initiative. Too many times we’ve been in meetings with insurtechs and, on the other side of the table, fifteen people from an insurance firm. Contracts that were as thick as a phone book, and that did not allow insurtechs to work for anyone else anymore. Decision making processes that took ages. Guess we can all relate to that. You also created a pivot that makes sure that the cooperation between the insurtech and the divisions of MAPFRE go much smoother. Can you tell a bit more about that?
Josep: “I’ve seen that as well, two guys from the startup and 20 from the corporation. The lawyer, the compliance person, the claims guys, and so on, and so on. Evidently, the discussion just becomes impossible, the decision-making process is eternal, and at the end of the day you cannot get anywhere. The startup expects that you give an answer in one week. On the corporation side one week is like one minute.
An entrepreneur who has been creating successful businesses for thirty years, with 25 successful exits, told me: “The real problem is that one side of the table speaks Chinese and the other speaks English, but they don’t even realise that they are speaking a different language.” Therefore, you need to introduce translators, who smooth the process, who translate one reality to the other. We need to create circumstances in order to make this work. The first step is to recognize those different priorities on both sides of the table and make them evident for everybody.”