The lessons of history
Henry Ford observed that “history is bunk”, which may be correct – who are we to argue with dead American billionaires? – but it nevertheless throws up lessons that are as true today as they were long ago.
Looking back at 2017 through the weekly reports of insuranceNEWS.com.au – more than 2300 articles over 45 weeks – confirms the industry is following a well-trodden path even as it sidles cautiously into 2018.
As with any history lesson, there are trends that stand out – trends that have been with us for as long as business has existed. Here are a few to ponder:
1 – Governments don’t govern so much as lurch from one crisis to another:
There is no better 2017 example of this than the NSW Government of Premier Gladys Berejiklian, which in June – having decided to get into line with the rest of the mainland by funding its emergency services via a levy on all property owners rather than just those who insure – had a bad case of last-minute stage fright and performed a remarkably contorted backflip.
The insurance industry, having spent millions reconfiguring its systems, has been left with the backwash, and expects home premiums to rise by up to 24% and commercial premiums by up to 40%.
And while NSW says it’s searching for a more refined answer to the inefficiency and unfairness of its insurance levy quandary, don’t expect to see that answer emerge any time this century.
New Zealand – whose politicians we have become accustomed to regarding as more progressive than our own – has cooked up an even greater disaster.
Having amalgamated all the country’s fire services, the Government now expects people who insure to pay for the lot. So the premiums on property (and a confusingly large array of other insurance classes no one understands) are rising by 40%. Clever.
2 – Progress isn’t gradual, it’s more like a tsunami:
We’ve been dealing with computer technology for 40 years or more, but in the past year we’ve reached the top of the opportunity wave. From here on in, the ride is going to be very fast and even a bit violent.
In 2017 fintechs (under which the so-called insurtechs are grouped) attracted investment of more than $855 million, KPMG said last month.
Every insurer is trying to reach the holy grail of greater efficiency, more simplicity and customer retention, and next year we will (or should) see things happening to meet that ideal.
Over the past year Australia’s largest insurers, IAG and Suncorp, have undergone massive restructures to tie their operations into the opportunities presented by aligning customer data with responsive and innovative systems. Every other company is following suit, and 2018 is when the changes will start to be really felt.
Just as the industrial revolution of the mid-1800s changed the lives of millions as they moved from farms to cities, we’re going to see big changes in the way people work.
Insurers will be opening new channels to reach customers, and we’ve published plenty of reports in the past year that say brokers will feel the first competitive draught from the winds of change. It will be up to intermediaries to see such change as an opportunity or a threat.
3 – Evidence beats ignorance every time:
Let’s lay aside the debate on what’s causing the planet to heat up and accept that it is. Because it is.
insuranceNEWS.com.au has published dozens of expert reports through the year pointing out that temperature records are being broken month on month, and the hazards associated with that should be obvious to anyone. More intense bushfires, floods and cyclones, for example.
The implications for insurance are equally obvious, and insurers in Australia and around the world are taking a more prominent role in pointing these out to politicians and the public.
In Australia it’s not an easy task, especially with a cash-strapped government that’s resisting industry calls to spend more on strengthening infrastructure so it can withstand the nasty inevitables to come.
4 – The squeaky wheel gets the grease:
A clamorous and complaining consumer voice, a Liberal Party pursuing a remarkably un-Liberal populist line, inquiries galore and now a royal commission into everything…
The point is, we live in a very connected world, and in an age of political uncertainty governments react most to the loudest noises. As we’ve tracked throughout the year, general insurance is always in danger of being sucked into the vortex formed by life insurance issues and banking rorts.
Regulators are also being encouraged to be tougher, more transparent and interventionist, which is a global trend that unsettles local insurers who are already tightly controlled.
As our reports over the past year have shown, the general insurance industry’s peak bodies have started to push back against the less clever ideas of politicians and regulators.
We just have to get used to the fact that in a swiftly changing world, outside pressures will become more common and will have to be countered where they limit the insurance industry’s ability to operate effectively.
Insurers and brokers and their peak bodies will therefore have to develop a more meaningful profile if they hope to aggressively defend industry values.
5 – Change is challenging, but the future is exciting:
Industries come and go, and during 2017 the insurance industry geared up to ensure it’s a survivor. As insuranceNEWS.com.au has reported throughout the year, insurance is increasingly being recognised as the best remedy to a wide range of ills that plague the world.
The past year has been a time of great change for so many people in the general insurance industry. As the brave new business world sets an even faster pace over the next 12 months, the challenge for everyone will be keeping up with what’s happening.
We’ll do our best to help you meet that challenge.