Insurers urged to innovate amid tech boom

The winds of technological change blowing through the insurance sector will not alter what life insurers do - but it will change how they do it.

That was a key message of Winfried Heinen (pictured) of Germany's General Reinsurance.

Heinen, chairman of the firm's board, made the comment during a talk on the future of the life insurance sector during the LIMRA-LOMA Latin American conference.

Insurers, he said in a presentation, citing a 2015 article from Harvard Business Review, must adapt and be alert but not overreact: "Incumbent companies do need to respond to disruption if it's occurring, but they should not overreact by dismantling a still-profitable business. Instead, they should continue to strengthen relationships with core customers by investing in sustaining innovations."

Heinen spoke about the risks the industry faces from new players in the form of agile tech companies, such as peer-to-peer premium pooling platforms, seeking to enter the fray.

He also discussed the main reasons why insurers today are under threat: a large amount of capital available for investment, speed of innovation and technological change, and changing consumer habits and expectations.

"The size of the wave of development that we are observing at the moment has a lot to do with the availability of capital in the market," Heinen said.

On the issue of changing habits and expectations, he said key goals are making life easier for today's tech-savvy consumers, who place much value on ease of access, transparency and trust, and tailor-made or personalized services.

Heinen cited the example of China's first fully digital insurance company, Zhongan Online. Launched in 2013, the P&C insurer offers 50 insurance products and turned a profit in its first year of operation.

He also cited UK's Vitality, an online P&C and life insurer which offers policyholders rewards for adopting healthy lifestyles.

Both LIMRA and LOMA are US-based global insurance industry associations.

The conference was held September 10-12 in Santiago, Chile.