With technology playing a greater part in all our lives, it is fair to argue that increasingly the expectations of our customers are being changed by its impact.
Several years ago, we all accepted that to withdraw our money from the bank we had to queue. Most consumers now use cashpoints and many never enter a bank, choosing to deal via the phone or the internet.
But while inroads have been made mainly in terms of new business processing, the uptake of e-commerce has had comparatively little impact on the life industry. It is apparently a proven fact that most people underestimate the impact that technological advances will have.
Well, a certain Alexander Graham Bell suggested that each town would have a phone within 50 years of its invention and, with this in mind, the question has been posed to me as to whether life offices could find themselves redundant as technology replaces what we do.
The nub of this question is in the “what we do”. The traditional view of the life insurer is fast becoming history. We understand well our role as being to help people accumulate assets, which can later be accessed, and this involves many products and service – pensions, bonds, collectives and many more.
Perhaps the label of the “life insurance industry” is itself outdated as we form part of a much bigger savings industry.
History bears witness to many instances of industries seemingly being superseded by advances in technology. This may give the business schools a good supply of case study material but, to my mind, a quite straightforward question arises: Do industries actually become extinct or is it a case of existing players failing to find ways to adapt or harness new developments to compete with new entrants?
In my view, the answer is that businesses do not become extinct, they simply fail to adapt effectively or fail to see change coming until it is too late.
To give you an example of one business school case study, if you define the industry by product, the glass industry lost out to the plastics industry as the milk bottle became a rarity. The packaging industry defined itself by what it delivered to the customer and identified a shift from glass to plastic and exploited it.
So what about our industry? In many ways, the depolarisation changes are a stimulus for life companies to go back to basics. Who are our customers, what products and services do they want and how do they want to do business with us?
If life companies are to make sure they stay part of the distribution chain, then they will have to add value and deliver what consumers want. Ultimately, that is what will win through in any marketplace. In doing so, it is important to remember that consumers do not all want the same thing.
Some life companies may decide to reinvent their distribution strategy. For example, they may decide that they do not want to be a manufacturer of products at all but instead want to distribute the products of others.
Others may embrace e-commerce initiatives. Wraps for example, have the potential to improve the efficiency of the way in which business is currently conducted. This could benefit manufacturers, distributors and consumers.
Others may look for innovative ways to help distribution flourish by investing in it.
Essentially, if you look at the life insurance industry today, what we do is to help provide financial security, both now and into the future. In doing so, insurance is fundamentally all about managing risk. Technology can't do that for us. It is merely an enabler.
And, of course, a strong brand underpins everything. The life industry needs to continue to work hard at building trust among consumers and IFAs. More than ever, we now see consumers who are concerned with what a brand stands for when choosing financial service companies to do business with.
Peter Hales is life & pensions sales & marketing director at Norwich Union Life & Pensions