One of Slovenia’s largest insurance companies, Zavarovalnica Sava, is returning to Podim this year as a long-standing partner.
We spoke to Miha Pahulje, a member of the Management Board of Zavarovalnica Sava responsible for innovation, about expectations for Podim, the upcoming challenges, innovation in insurance, the future of the insurance industry, and what kind of collaboration with startups they are interested in.
You can read the full interview below.
1. You take innovation very seriously at Zavarovalnica Sava. This is evident in practically every element of your business. What are your innovation-related objectives for the next strategic period?
Zavarovalnica Sava’s innovation objectives always revolve around creating added value for the customer that best meets the needs of the changing market, not only today but also in the future. It’s also important for the company to be successful – in other words, to generate new revenue through innovation. Typically, these are user segments that we would not otherwise be able to address successfully.
2. As a member of the Management Board responsible for innovation, you have a challenging task. On the one hand, challenges from the environment in the form of new technologies and business models, changing customers’ expectations that together call for innovation and speed, and on the other hand, expectations of good business results that call for stability. How do these two objectives fit together? Do you see them as diametrically opposed or on different sides of the same coin?
The two objectives are interdependent and complementary. Responding to changes in the business environment in a timely manner usually has a positive impact on good business results, especially in the long term. Responding to change in a timely manner enables us to respond more quickly to the changing expectations of our users and, in turn, our owners. We align our goals through our business strategy and through innovation activities that follow this strategy at a more operational level. In other words, through innovation, we also achieve long-term business stability – both in terms of results and in terms of the acquired knowledge of our employees, who innovate in line with today’s needs and those of the future.
3. If you had to pick just one ambitious innovation goal (one change) that you were particularly excited about/expected to happen in the next five years, which would that be?
To change the culture through innovation activities or approaches to the point where most of our colleagues have a passion for innovation and use innovation skills. We already have an innovation culture permeating our insurance company. In five years’ time, I would like to see us living it and automatically looking for better solutions rather than looking for obstacles. This will create value for all our stakeholders: our customers, our business partners and our owners.
4. Do you systematically monitor trends in the environment and adjust your innovation activities accordingly? Which trend/technology is currently most influencing the direction and dynamics of your innovation activities?
Systematic monitoring of trends and best practices, especially from abroad, not only in the financial market, i.e. the insurance market, is an important part of our innovation activities. At the forefront at the moment are so-called Customer-Centric Data-Driven (CC-DD) innovations – innovations that address the modern needs of users/customers on the basis of various data sources (internal and external). We start with the needs and pain points of a selected target group, which we then try to address with a variety of solutions, including technology and data-driven solutions. Properly identified customer needs and associated pain points remain paramount. It may be simplifying the underwriting process, but it may also be an assistance or claims case that is subject to a very negative emotional state that we also want to mitigate as much as possible through innovation, especially when it comes to some of the more process-oriented innovations. Technology and the various types of data that can help us do that are a close second. More advanced technologies are on the rise, such as AI, which allows us to process the mass of data we leave behind as users through various social networks, the use of wearable devices (IoT), so these are data-driven advanced technologies. It is Artificial Intelligence and the progress it has made in recent months that is keeping us most busy in terms of innovation at the moment.
5. How far into the future can you see and what kind of insurance do you see there?
The insurance industry will certainly retain its core mission – to provide people with financial security in the event of the unexpected. I would emphasize the word mission because that is how I see the insurance industry. Changing circumstances, both economic and climatic, as well as changes in consumer behaviour, will only make the insurance industry more important because the risks will only increase as a result of these changes. Completely new risks are created, while at the same time some risks are reduced or eliminated. Therefore, the insurance industry is constantly adapting to new needs and new generations, Generation Z and Generation Alpha, who have different needs and values. The insurance industry has also been strongly influenced in recent years by some other more advanced industries that offer different user experiences in a more user-friendly way. Our industry is still seen as quite complex and less understandable to people.
It is difficult to say where the insurance industry will go in the coming years and decades. There are certain trends that are emerging, but they are not necessarily always confirmed in practice. In general, I would say that in the future I see insurance more as one of the elements in the purchase of a particular service or product and not necessarily as a stand-alone service. More insurance will be purchased at the same time as a product or service, as is the case today, for example, when we buy a holiday package, where we usually buy travel and/or cancellation insurance together with the package. This is known as embedded insurance.
6. One criticism of the insurance industry is its slow introduction of novelties, innovating, and implementing new technologies. How do you respond to this criticism and what measures is your company taking to stay ahead of the curve?
Unfortunately, this is true, because in many places we are already being slowed down by legislation. We are doing our best to find solutions that align with the legislation and prepare ourselves in good time for the trends and challenges to come. We expect that insurance legislation will at least follow banking legislation, which has been “softening” or adapting to market trends in recent years, thus favouring the direction of “open insurance”. Of course, it will be up to us to decide how much we give in to new business opportunities, but it will also be up to our customers to decide how much they actually want to use new technologies in an industry where they themselves are used to the most classic sales approaches. The vast majority of business is still preferably placed through an insurance agent, where new technology is not necessarily one of the key factors in the buying process, but rather it is about a good relationship, established trust and knowing the needs on an individual basis, so we are talking about personalized approaches “in the right place at the right time”.
7. What about younger generations? Gen Z is a very tough nut for many organisations to crack. How do you reach them?
We noticed some time ago, through innovation activities and trends, that young people are alienated from the insurance industry because our solutions are too far away from them, they are not engaged. That is why we started to systematically get to know the target group of young people. The innovation project “Maš to!” (You’ve got this) was born out of innovation insights and testing. It addresses the pressing issue of young people’s mental health and the difficulties they often face. During the innovation project, they confirmed our hypothesis that they also want solutions from the insurance company to help them with this problem. We can be a relevant voice for them in the mental health field, which is what we want to be, and in doing so we are creating a dialogue that goes beyond what is usually an insurance-related issue.
In general, relevance is even more important to younger generations, both in terms of service and in terms of communicating with them. They see the added value of insurance differently than perhaps older generations. This is partly because of different values but also because of different lifestyles, which are heavily influenced by modern technology. If you don’t own a house or a car, you don’t need to insure them (yet). At the same time, many young people have dogs and other small animals that need adequate protection, they drive scooters and other forms of micro-mobility, they travel a lot, etc., where adequate protection is also needed, but they are not yet aware of this. And that is something that we as insurance companies, need to work on in the future.
8. Where do startups fit when it comes to collaboration? Where do you see potential areas of cooperation and how could you engage them or invite them to a conversation in the Podim Deal Room?
We are ready to cooperate with more experienced startups that can complement our insurance expertise with their advanced technical knowledge and have a stable team of experts. We look forward to initiatives from startups that have a clearly defined business model and a more clearly defined and identified added value for key stakeholders. Such companies come from Slovenia and abroad, and the Podim conference is an excellent platform for startups to meet with representatives of companies where such new collaborations can be established. Therefore, all those who are looking for partners for their projects are welcome to attend Podim and reach out to us.
9. In recent years, we have seen a number of startups enter the insurance space, such as Lemonade, Root and WeFox. How do you see these companies impacting the industry and what steps is your company taking to compete with them?
These companies also surprised us, at least to some extent, when they were founded, and there was a lot of media coverage of their launches. What surprised us most was the way they walked on the fine line of the law. We could only guess what they were trying to achieve in the long term. As we systematically monitor the market, we are of course also monitoring them. We can already see that they, too, are continuously adapting their original business model and closing the gap with our way of doing business. The main difference remains in the corporate culture, the attitude: they are mainly new companies with a lot of technological know-how, which sooner or later will be equally accessible to all, without an insurance history and without a long-term commitment to the market. We are companies with a long tradition and a lot of insurance know-how. Because of this difference, we naturally look to them for inspiration on how to be better.
10. Climate change is a major issue facing the world today and is likely to have a significant impact on the insurance industry. How is your company addressing this issue and what is it doing to mitigate the risks associated with climate change?
That is certainly true. Major natural disasters and other natural phenomena are increasing in number and intensity. This is a reality that has a significant impact on our industry. In the next strategic period, one of the important areas will be sustainability, which we are starting to address in the different segments of our business, including product segments. We also want to contribute to sustainability through our innovation activities, so we will certainly be more active in looking for opportunities to further contribute to sustainability in an environmental context and preventive solutions.
11. Thank you for your active participation in the Podim Conference over the years. Does your team have any special expectations for this year’s event? What would be your ideal takeaway from the conference?
We are happy to support the local startup community as it is our way of giving back to the community in which we operate. We hope to make new connections at this year’s conference, network with startups and speakers, and get a motivational boost for our next development activities. If, along the way, we find a partnership that can be the start of a new service that the market needs, the success will be even greater.