ITC DIA Europe

“IoB, Internet of Beings, is a more important development than IoT, Internet of Things.”

Written by Roger Peverelli and Reggy de Feniks - Founders The DIA Community on Nov 27, 2019

How insurtech can really advance digital transformation, operational excellence and customer engagement. That’s the challenge established insurers are now overcoming. There are still plenty of areas where incumbents outperform insurtechs. So, what constitutes a successful business model interesting to insurers and what distinguishes the winning challengers from other start-ups? We sat down with Theo Bouts, CEO of Zurich Insurance Mobile Solutions (ZIMS), to discuss what Zurich does to serve their customers better and how better results can be achieved through working with insurtechs. In other words, how to create new customer approaches in a fast-changing environment; moving to higher levels of digital value creation.

Theo Bouts is the CEO of Zurich Insurance Mobile Solutions (ZIMS), and consequently responsible for developing state-of-the-art mobile-enabled services and deploying those capabilities through Zurich’s businesses around the world. In this capacity he is driving conversion from traditional insurance to new business models and customer propositions.
ZIMS was created in 2018 and combines digital, physical and insurance service components such as intelligent mobility, smart homes and connected people, to develop mobile-enabled solutions to meet the evolving needs of customers.
In our view Theo is one of the most creative and entrepreneurial top executives in the industry and a real visionary. He has a 30-year track record in the insurance industry and re-joined Zurich in 2018. Between 2005 and 2011, he served Zurich in a number of leadership roles, including COO Global Life and COO for the former European General Insurance division. Theo was also Head of Global Life & Health at Allianz. Furthermore, he worked for AEGON, where he was CEO of a multitude of entities and member of the Dutch board.

Theo, you wanted to speak about ‘creating new customer approaches in a fast-changing environment’. Why is this theme important to you, to Zurich Insurance?
Theo: “All kind of developments have put the customer definitely in the driver seat. Whether you call it the 4th or 5th industrial revolution or power to the customer – it all indicates the same.
The customer calls the shots and that is going to stay that way. That customer still needs to be protected in some areas and that is where companies like Zurich come in.”


Many insurance carriers speak about putting customers at centre stage. But too often it seems just lip service. Why is customer centric thinking that important, and how does it reflect in a new paradigm?
Theo: “Customers nowadays drive propositions. In the past, financial companies drove products, designed and made them in long duration projects, and then sold them. Now, customers want service propositions with our product and service elements embedded in them, and then, certainly if they are millennials, use them. It’s a completely different way of delivering value to customers. New impulses, for example from start-ups, are welcome.”


Quite a few insurance carriers just want to serve their customers better and make money in the process. Why should they have to think about new and different ways of delivering value?
Theo: “It is all about experience and relevance now. In our existing operating model, we have products we price for a duration. For instance, your car insurance is against a year’s premium.
New propositions let you use and pay your insurance for when you use your car, so per minute or per kilometre. That changes everything. If you own a car that is not used for 90-95% of the time versus using somebody else’s car and paying only for the 5% of the time that you use the car; this opens up a huge amount of possibilities.”

So, the new factor in new propositions is time. But is that sufficient to compete and to win?Theo: “No, that’s not sufficient. That’s why we try to bring together three elements around the customer. We focus on data; data on subject, object and location, i.e. you, your car, where you are and where you live. Data around those three elements tells us already a lot to optimize your propositions and services.
I see a future where those three data elements are going to interact together to win. For instance, look at how your smartphone interacts with the data produced by your personal IoT devices like your smartphone, car and house. I see a chip in your body, including DNA or gene driven data, steering a lot of those devices, either prompted or unprompted. In that sense, for me, IoB, Internet of Beings, is a more important development than IoT, Internet of Things.
Bringing data together in that world, on request of the customer, gives, again, huge opportunities.”

Data? Are you one of the companies that is going to steal my data?
Theo: “No, we do not take data without receiving consent. We have been working on and are implementing arrangements in which the customer actively decides what data we can and cannot use.
Moreover, earlier this year we published our global data pledge. Since we’ve been protecting our customers and their possessions for more than 150 years, we’ve extended that protection to data. We take care of that data and will not sell it to other parties. We only ask to use your data to create more relevance with our propositions for you and that is it. To do this, we started working with Personal Online Datastores, PODs. These are controlled by our customers. Personal data, including health and DNA data, is written into those PODs and may be released by customers when relevant in their opinion.”

Indeed, consumer’s perceptions will flip if insurers would use the data to put customers in control and to offer something meaningful in return; reciprocity. Surprising insights and applications that are based on their data, which the customer cannot create themselves or would never think of. Again, it’s really about new propositions and services. But how does that work in practice? How do you create those new customer approaches?
Theo: “We have been offering protection for more than 1.5 centuries. Until recently we mainly focused on monetary protection. We pay if something goes wrong. Now, we started shifting that in the sense that we added services to our propositions to prevent incidents from happening or repair them quicker and better after an incident happened. Think about fire-detection sensors in buildings and tow-trucks that come to get you and your car after an accident. That is taken deeper and broader with our ‘prevent, maintain, repair and insure’ framework. 

All four elements, three around service and one on insurance, interact together and give more relevance to the customer. Let’s look at a critical illness like cancer and take your data as a starting point. By using data from your living conditions, behaviour and genomics, we can work together with you on preventing a critical illness, maintain your condition or, even better, repair the condition. We also protect you against the possibly negative financial consequences of a critical illness.”

A completely different role for an insurer.
Theo: “We are testing propositions that go in the direction of delivering five extra years to your life. That builds out the already important role that insurance has in society. We also include sustainability elements in our square propositions. Think for instance about our ‘one policy, one tree’ proposition we launched a couple of months ago. Here, we plant a tree in the name of a customer that bought a policy. This way, we do something together for a more sustainable world.”

That sounds like a possible way to burn all the oceans on the globe. How do you focus? 
Theo: “First, it is about thinking big, but you need to make sure that you have at least three concrete ideas about how to sell more soap tomorrow. So, keep in mind how you make money and take your ideas into concrete execution. Secondly, we decided to focus in the markets. We do business in practically all countries on the globe. And we focus on six ecosystems. Ecosystems is just a new term for working closely together with different partners to deliver more value to your joint customers. Huge value generation for customers together and thus also for the individual companies involved. Of these six ecosystems, three are more centred around our experience in insurance: Mobility, Smart Property and Life. The other three are centred around more established service areas: Travel, Cyber and WellCare. 

The last three ecosystems are prime areas for the ‘square approach’ and are huge in potential volume. The last ecosystem, WellCare, a combination of Healthcare and Wellbeing, is a USD 12 trillion per year market for services and insurance. With WellCare we go beyond Vitality approaches. Your health is driven in broad terms by three sets of factors: behaviour, DNA or genomics, and the place of living and social circumstances, i.e. epigenomics. When addressing those three sets of factors in a sustainable structured way, people can add extra years to their lives in good quality. Not many people have an issue with that.”

What does all of that mean for the insurtech community?
Theo: “I see two areas where start-ups seem to focus on. One part, and I think that is the majority, focuses on the existing value chain or existing operating model and customers. They try to come up with new ways to optimize. They focus mainly on processes such as sales, underwriting or claims.
Then you have another category, by far the minority, that tries to come up with new ways to service new customers segments and to be disruptive to the value chain. Every start-up calls itself or thinks of itself as being disruptive. Although, I must say that when it comes to real disruptiveness, I have not seen too much yet. Still looking for those!”

Definitely can confirm that. Among the 2,500 insurtechs in our database roughly 80% are enablers, which support the traditional carriers. Among the 20% challengers and disruptors, too many focus on frictions in the customer experience. Many of these frictions are being tackled by incumbents in all sorts of digital transformation programs. Focussing on solving frictions is in our view therefore not sustainable. So, winning challengers should have a distinctive new business model and provide new relevancy and added value to customers.
Theo: “Totally agree.”

So, I hear you’re actively scouting enablers, and wishing for more disruptors … Are you now becoming a slave of start-ups?
Theo: “I would love to be enslaved for a bit by a disrupter. If someone in the DIA community has those ideas, they should not hesitate to contact me. We focus on new operating models to do that and endorse that in different ways. For instance, we facilitate start-up teams coming in and do their thing by using our balance sheet and with appropriate earning arrangements. So, in that sense, ‘yes to enslavement’.”

Before insurtechs become too confident; obviously there must be areas in which the established firms outperform start-ups … 
Theo: “Our experience in the area of the existing operating models is that we can do a better job than lots of start-ups. If the attitude and mindset is right, teams with our knowledge, money and other resources can generate more value faster than buying or working with a start-up.
One part is that we do not need to pay for learning experiences in the existing model and we do not need to pay for the venture capitalists and others that finance the first phases of start-ups and want to have a maximum return for their capital committed. The risk in those areas is higher for them than for us.”

Theo: “We compare successful start-ups with our own new ventures like Klinc, an on demand platform started in Spain, Doppo, a new way of digital car insurance also started in Spain, or Toggle, a new venture focusing on renters of the Farmers group in the US. This leads to a factor wise better value if we compare it to the financing of well received start-ups that are doing the same.
For our stakeholders it’s a better deal if we do that ourselves. Risks are lower and rewards are higher. I am thus more interested in the higher risk, real disruptive start-ups that bring real new propositions. Our units of course work nonetheless with start-ups that can bring more efficiency as well. Money is money.”

What kind of learnings can you share about those new ventures within Zurich?
Theo: “I cannot share too much of course. But let me say that it is a lot about excellent execution. We see that execution works better with dedicated, ring fenced or separate teams focusing on a new digital execution triangle around three key capabilities:
1. Business development in distribution and procurement.
2. Leading-edge digital marketing capabilities.
3. Data analytics capabilities.
When those three work closely together on a daily basis, focusing on new customer segments, changing propositions, delivery processes and IT, they are key for success and growing to scale.”

You explicitly mention ‘dedicated, ring fenced, separate team’ – which basically implies outside the current organisation. At some point it may be interesting to leverage the scale of the current organisation …
Theo: “Not mutually exclusive at all. So, yes.”

Any consequences for start-ups of all of this Theo?
Theo: “I think that in both areas, Existing Operating Model or New Operating Model, you could still make money. Although, I think that in the existing value chain prices of start-ups are far too high and you can speak about a bubble that will burst, already. Of course, the best way to make money is to create more relevance for the customers. Traditional risk-reward equations then come into play. If high risk works out very well, the possible rewards are also high.”

Final advice for the DIA Community?
Theo: “Find relevance for customers and adapt to results whilst executing. If convinced of your idea be relentless in execution. If you think you can help me or we can help you, and that is not about money, that can be part of it, strategic relevance is what counts.”

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