Google Cloud and Tesla will they torpedo the insurance industry?
This brief remark should scare all executives in the insurance industry: “Who knows more about your vehicle than the people who made it? Said Andrew Rose, president of GM’s newly formed OnStar Insurance Services.
This quote is from a Wall Street Journal article late last year exploring GM’s return to auto insurance, powered by OnStar’s ability to suck data directly from the vehicles people have purchased and drive.
Now, I don’t imagine too many people seeing GM as a fast-paced innovator or disruptive threat in the auto industry it has lived in for 113 years, let alone a sudden and transformational agent of change in industries. adjacent. But that’s kind of what I mean: if even a big GM can see opportunity driven by data enter into — or in its case, back in the insurance business, so what kind of major disruption plans do lightning-fast digital innovators have up their sleeves?
And, more importantly, what do these transformative forays say about the risks of threats outside your industry that all business is facing today?
Let me give two examples to fuel your thinking: Tesla and its nascent auto insurance business, and Google Cloud and its cybersecurity insurance business.
Since everything Tesla does or doesn’t do is distorted in the media, you’ve probably heard that Tesla offers insurance to owners of its vehicles who live in California, and more recently started offering it in Texas also.
Undoubtedly, part of the threat to traditional insurers is that Tesla expects to cut typical rates by around 20% or even in some cases 30%. But for me the most dangerous card Tesla can play is not so much being the low-cost leader but rather the champion of customer experience.
Many Tesla drivers are borderline fanatic because of the superior experiences they regularly have with their highly intelligent vehicles and Tesla itself: from showrooms to customer engagements to the digital buying process. and the increasing levels of knowledge and intimacy with the vehicle that drivers experience over time.
If Tesla chooses to position superior customer experience as the centerpiece of its auto insurance strategy, it will be very difficult and perhaps almost impossible for traditional insurers to compete with it. And central to this ability to differentiate through superior customer experiences will be Tesla’s unique advantage: the real-time data it has about its vehicles and the people who drive them.
Several months ago, slightly obscured by an announcement about his new Risk protection programGoogle Cloud revealed that in partnership with established insurers, it is entering the insurance industry.
As we explored how we can help organizations more confidently move critical workloads to the cloud, we saw an opportunity to provide more reassurance and further drive digital transformation through deeper integration. close with their overall risk management program. That’s why today, we’re excited to present a one-of-a-kind partnership between a leading cloud provider and leading cyber insurance companies called the Risk Protection Program.
As is the case with Tesla, Google Cloud’s foray into insurance is fueled by its ability to deliver unparalleled levels of data and data-driven insights into its customers’ IT environments.
From the press release on the new risk protection program, here is a comment from one of Google Cloud’s insurance partners on the role data will play in the new initiative.
“We have partnered with our industry counterpart, Munich Re, to design this policy specifically for cloud technology users, from the ground up,” said Jody Yee, Managing Director of Allianz Global Corporate & Specialty.
“We recognized that by working with Google Cloud, we are able to better understand customer risk through more relevant data. This additional information not only allows us to reward Google Cloud customers with more insurance purchases. efficient and better insurance terms, but also allow us to help clients take a proactive safety stance, by tying premium pricing to the actual safe stance.
Ah yes, specifically targeted financial incentives – they have a way of focusing the mind, don’t they?
So, my friends, here we have a few more examples of the very different business world we find ourselves in today compared to just 2 years ago. Increasingly, we see traditional industry boundaries as outdated artifacts that describe an old world and have little or no relevance to today’s new business realities.
We’re also seeing forward-looking companies throwing overboard the awkward ballast of the past: old business models, old notions of “channel conflict”, old executives such as B2B versus B2C, and limited prospects that arise from the vision of the world as it is. was rather than as it is in the process of becoming.