Taylor Swift is a lesson for us all

In an industry that suffered from technological disruption more than any other – it was refreshing to see Taylor fighting the record industry giants on such an old fashion argument as wanting to be paid for her work.

Disruption in the music industry is nothing new. Gone are the good old days when a musician wrote a song, recorded it, pressed a record and shipped it off to shop where a fan paid cash and carried it home to play on his record player.

Today, an artist might write a song, or they might sample bits of someone else’s. They might record music in a studio – but they might also create a hit song in their bedroom, in a hotel room, or on a fishing trip to Iceland.

They might have a record company and they might sell that song on a disk in a shop – but they might be independent and the shop might be nothing more than a plug in to an app on a mobile phone. In fact, they might not even sell their music at all–their fan might just rent the song until the mood passes her by.

30 years ago, you would never have imagined that the company who made your telephone would be the biggest threat to your local record store. Now, in retrospect, it is completely logical that smart phones are a great way to deliver block-rocking beats to mobile millennials.

Insurance is not immune to the threat of disruption. Today, there is the real threat that non-insurance conglomerates, armed to the teeth with big-data, IT expertise and brand trust beyond anything any current provider enjoys,could waltz into the market and start serving customers better than established insurers do.

What will the current providers have to counter the threat? The current product and delivery models that reach back to the days of vinyl records and roller disco will definitely not be a solid defence.

As with the music industry, technology is the major driver of change for insurers. As with music, it is easy to imagine a world where the companies with the best technology will have control of insurance. Better data and smarter infrastructure are not just enabling better risk underwriting, more importantly, they are enabling much better customer relationships.

While it is the major threat to our comfortable business model, technology is not the only force driving change. Disruptors, companies whose business model is dependent on upsetting the apple cart, will introduce new, non-traditional business models.

These new entrants may come in from areas we did not imagine. A tweak in the regulatory regime or a move in financial markets may suddenly open insurance up to players who suddenly find it more interesting to deploy capital in insurance than wherever they have it now. .

The incentive to disrupt, innovate and crack the market is there. Global mortality underinsurance runs to around $21,000bn (£13,500bn) - that is a lot of new business waiting for the right company that finds the right way to crack the market.

As insurers, we cannot close the massive protection gap with the same old products and services we are running now. If we could have done, we would have. So what has to change?

I am convinced that the type of innovation we need to see will best be generated in established life insurers can develop a new business in parallel to their existing business. It makes sense to separate what we have now and free it from onerous red tape and cultural inertia. It would allow insurers to explore new products, new propositions, new distribution channels and a new mind-set.

Consumers are being fed the same old products through the same old channels from the same old brands

In the current market, I do not believe we are doing enough of this. As a result, consumers are being fed the same old products through the same old channels from the same old brands. It makes our industry ripe for a revolution that we risk watching from the sidelines.

One reason it is not happening is that innovation is risky. There needs to be a way to de-risk innovation for life insurers. Although reinsurers can offer standard capacity to transfer normal life risks from established products, we have only recently become good at applying the knowledge and thought leadership we have to take advantage of the market trends, threats and opportunities to develop a clear overview and guidance.

This ability to extend beyond simple capacity will make alleviate a lot of the risk for insurers to bring alternative solutions in parallel to their main business.

There is one fundamental difference to the music industry and insurance: we still have the control over the way we do our business. We still have the room to lead the change.

Unlike Taylor Swift and all those other musicians out there, we still have the power over our product and the chance to control our own destinies. If we do not, we might just realise too late that everything has changed.

Paul Hately is global head of Swiss Re Protection Partners and board member of iptiQ.