“Now we must hurry up”, said Prime Minister Giuseppe Conte immediately after expressing his satisfaction with the agreement reached on the Recovery Fund, 750 billion euros in support of the European economy stressed by the coronavirus pandemic.
The Prime Minister’s invitation should be repeated in the institutional, associative and corporate headquarters of the Financial Services Industry. It should become a leading principle in insurance companies and throughout the insurance industry. A flood of opportunities has opened up, even dramatically pushed by the health emergency. At the country system level, it should be seized with foresight, planning skills and pragmatism. Likewise in companies, especially those operating in sectors where business is based on services that by definition are intangible and more suited to digitalisation.
In all opportunities there is a rate of risk and it’s what insurance companies must and can avoid. The Covid-19 and the lockdown have forced a digital stress test on all markets, creating new behaviours and new consumer habits: from work to shopping, from training to entertainment, technologies have become close to target groups that previously attended them little or nothing. No longer will we revert to pre-pandemic conditions, even when we resume attending offices, schools and stadiums. The experience of a possible digital relationship with companies will still survive, especially when the exchange of objects or physical presence is not necessary (for the moment a plumber or an electrician still has to enter the house to make a repair, but only for the moment…).
In fintech, innovation is a key element underpinning the stability of the credit system, says Marco Giorgino, scientific director of Osservatorio Fintech & Insurtech at Politecnico di Milano. “The Covid-19 was a need, a given contingency, but speeding up is essential to swiftly turn credit companies and keep them competitive against new and aggressive competitors”, which are digital and global tech companies. Not by chance has the attention and moral suasion of the Bank of Italy on fintech increased.
There is an awareness of a risk that is a danger to the whole credit system which, traditionally, has an important social stability function. What would be the impact of a loss of effectiveness and efficiency compared to operators arriving on the market with a higher level of maturity and digital offer? Once the season of resistance to fintech is over, now it’s time for alliances, although the issue of the role and weight of the companies that, even if renowned, will not be able to keep up with demand and, above all, supply, is still the main concern.
Just think that banks are ahead of insurance companies, points out Simone Ranucci, president of the Italian Insurtech Association. They started the confrontation with technologies earlier, they have opened online agencies a long time ago and are working to innovate processes and products. So, how much is the Italian insurance industry risking? A lot. The space for digitalization is enormous (only 1% of policies are sold through digital channels) and the fact that Italy is always at the bottom of the DESI, the index of digitalization of European countries, cannot be an excuse not or wait to do. That space will soon be taken up by someone else.
At the beginning of July, Lemonade, the startup known as the insurance Facebook, was listed on the NYSE: it raised over $300 million with a valuation exceeding one and a half billion. Lemonade is already working in Germany. How long will it take before Italy gets it? How will companies rich in tradition, expertise and clients respond when faced with a competitor who settles a claim in seconds? And after Lemonade, how long will it take before Amazon or Google enter the insurance coverage market? The opportunities, and the risks, are just around the corner. That’s why we have to take them now.
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