(Mónica García Cristóbal of MAPFRE on stage at ITC DIA Europe 2023.)
Mónica García Cristóbal, Director of Transformation, MAPFRE (Madrid) led with a question about whether disruption is happening in insurance during her keynote address, “Disruption as a Purpose” at ITC DIA Europe 2023 in Barcelona. “Recently someone told me that insurance sector is like a bicycle—once you have an optimal design, there is little reason to change, and insurance hasn’t changed much in the last 100 years.”
García Cristóbal asked whether people shared this view or saw insurance as changing significantly, if in barely perceptible ways. Thinking that insurance has not been—or is not being—disrupted, suffered a flaw, she suggested. It failed to take into account very significant technological changes that are reshaping society, from the emergence of e-commerce to rapidly evolving artificial intelligence applications.
There have been three distinct waves of change in insurance, according to García Cristóbal. The first involved the beginnings of digital insurance with the emergence of a customer-focused buying experience exemplified by the control given consumers by comparison sites. In the next wave, technology startups brough innovative applications of technology to disrupt business models, including the adaptation of advanced analytics to automate sophisticated back-office processes and provide a more personalized approach. The third wave included innovation in response to new risks and technological developments, such as cyber and climate change risk, and new patterns of mobility for individuals.
None of these waves have replaced the way we do insurance, García Cristóbal commented. “And even if we agree that the waves haven’t entirely passed, none have had significant impact in terms of business volume,” she added. “Digital business is not yet the primary sales channel, and new insurers have only a tiny piece of the market.”
The first wave of insurance disruption addressed functional aspects of insurance, applying technology to lower costs while remaining competitive, according to García Cristóbal. “This is digital transformation,” she said. “Many of you have stories…MAPFRE’s big bet was to launch a digital insurer Verti.”
Seeking the ‘Netflix of Insurance’
“In the second wave, we put our innovation teams into play, trying to adapt to new players and risks,” García Cristóbal continued. “We found ourselves in the position of investing quite a lot of money to find the ‘Netflix of insurance.’”
In this period, characterized by the emergence of incubators and accelerators, MAPFRE became the principal investor in Spanish venture capital fund Mundi Ventures. “We all agree that there have been very few success stories have happened from this wave—meaning success at scale that really impacts the sector—but we keep trying.”
The third wave of disruption is ongoing and has, at least for now, a more aspirational character, García Cristóbal said. In this round of innovation, the changing needs of customers requires not only a continued focus on profitability but also the goal of having a positive impact on society, García Cristóbal insisted. “Our goal is to help people have a better future—their needs are changing and so we have to change,” she said. “For example, three days ago we launched a first for us, a personal mobility product centered on the person, regardless of the mode of transportation they are using.”
In the third wave, “purpose” involves value delivered to customers and shareholders becoming the same thing as value brought to society. “Purpose is not something you can capture in a committee meeting,” García Cristóbal said. “It is a compass, [whereas] strategy is a map, and maps are for known territories.”
“In order to face the changes we face as an industry, we have to put the purpose in the center,” García Cristóbal continued. “That means that we have to put the purpose at center and make disruption in the first part of the agenda—not because it gives us a competitive advantage, but because it is our duty to fulfill our purpose as insurers.”
Monica Garcia Cristobal, Director of Transformation , MAPFRE, discusses three principles guiding transformation at the company. (Click to enlarge.)
Three Principles for Transformation
García Cristóbal articulated three principles that guide transformation at MAPFRE. The first is to aim at transformation at scale. “This means going for core processes, and large markets—‘Don’t be afraid to touch the sun,’” she commented. “To fulfill your duty as insurers, you have to fulfill your responsibility to the P&L; you cannot wait for everything to be certain, and have to go for the big game.”
The second principle is to embrace new risks as a kind of “new normal,” García Cristóbal said. “We have to evolve our techniques—that’s what customers need, and so that’s how we fulfill our purpose.”
The third principle is to consider service and prevention as a new core competency. Services have always been a routine part of insurance operations and prevention has been a tool for diminishing losses, but that has to change, according to García Cristóbal. “Right now, if you fulfill your current duty and a customer gets hacked, they may not be able to continue operating their business,” she explained. “Having a service to stop the hack from happening in the first place will keep them operating. That’s what prevention looks like.”