Data and Automation
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Macroeconomic, social and regulatory trends continue to be key challenges for all insurers, whilst digital transformation and innovation are fast becoming immediate action items on most insurer’ strategic agendas. The future of insurance depends on innovative business models that leverage technology to meet changing consumer demands for insurance products or services. A few notable trends in the market are summarised below:
Life and Health Insurance
Motor Insurance
Home Insurance
Insurers always focused on driving up sales and reducing costs. Historically, they achieved significant performance differentiation through linking scale of exposures and underwriting expertise. However, most insurers are locked into IT investments they have made in the past.
The bottleneck for change can be a combination of governance, data, and underlying IT or technology investments. Oftentimes the following challenges occur when attempting to enact change:
In the UK, the share of customers who use only digital channels, such as e-commerce, websites, apps, email, social media, live chat and text, is around 23%. It is safe to say that traditional channels will be relevant and prevalent for the foreseeable future, despite the insurance customer shifting quickly towards a ‘Digital Mindset’.
Their mindset is characterised by demands for greater engagement (across multiple parallel channels, an “omnichannel” experience) like those from the e-commerce and retail industry. There will be a higher price to value sensitivity, greater expectation from tailored products, and agile service. It is also influenced by the wider InsurTech and Digital ecosystem, which results in an increase of overall customer expectations of insurers.
Maintaining existing customers and attracting new ones will require insurers to become more customer centric. This demands a flexible, transparent, engaging, and personalised customer journey and product portfolio. Changes in customer preferences will also guide insurers when providing additional support and services through insurance ecosystem, including within their product features. Most often existing IT investments should be refined, redesigned and realigned to meet the ‘Digital Mindset’ of customers.
The digital mindset of customers is raising key questions for insurers:
Another common question in Board Room discussions is “We acknowledge challenges, but how can they be addressed?” There are essential ingredients for success that every insurer should consider, evaluate, and adopt based on their needs and objectives.
Insurers should critically assess their current state and define the future state, with a digital mindset at their core. The assessment can provide lot of valuable insights, improvement of areas and will determine the extent of transformation required to embed this mindset. The efforts and time to cover the distance of the change journey will differ between organisations.
The five key considerations insurers should make on their digital journey are:
[1] Association of British Insurers, UK Insurance and Long-Term Savings: The state of the market 2019
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