Great customer expectations call for an insurance evolution
Deloitte ‘A demanding future’ report predicts that four trends will define insurance in 2020: the customer, ‘a new roadmap’, partnerships and digital disruption. This research found that 45% of 200 high-ranking executive respondents believed rapidly evolving customer needs and expectations would be the top challenge this period. To continue to grow profitability, insurers need to acknowledge that traditional principles no longer apply as they used to. A new approach is necessary to drive the disruption required to stay relevant to a consumer who expects seamlessness at every touch point.
Insurance alone is no longer the solution. It’s imperative to broaden business ecosystems to deliver more than insurance, while improving on core capabilities. This is the new entry into the game. It relies on continuous creative collaborations that deliver sustained value-adding propositions to consumers. Insurers will need to work with intermediaries to innovatively re-engineer business models in order to monetise value in a world where the consumer expects new levels of service and interaction.
What the digital-age customer wants
As a starting point, we must understand the changing behaviours of the customer. They seek integrated, channel-agnostic experiences that are accessible anytime, anywhere. The Santam Risk Barometer Report showed that 82% of surveyed consumers are calling for greater use of technology (artificial intelligence, devices, applications, self-servicing interactive websites and value-added services) from insurance providers. This is a call we must heed.
To achieve this, insurers and intermediaries must collaborate closely. The Risk Barometer showed that consumers value the role of the intermediary in making their insurance decisions – 82% of commercial businesses and 71% of consumers said they rely on intermediaries for advice. So, we need solutions that facilitate a convenient digital experience and intermediary interaction. Insurers are making significant investments to build their products, digital assets and analytics capabilities, while intermediaries have always had depth in customer data. Bringing these competencies together is a great opportunity to drive the requisite change around service-based strategies and innovative product solutions.
Developing a new roadmap that focuses on prevention
The strategic use of data, analytics and digital tools will help us to develop more sophisticated products, service models and proactive risk prevention models. Then, we need to tap into artificial intelligence to seamlessly deliver solutions across every consumer touchpoint. In doing so, we start to develop what Deloitte termed ‘the new roadmap’.
The convergence of these technologies with the Internet of Things means we can handle vast amounts of data dynamically in order to provide relevant feedback and deliver value beyond just insurance. It means we can actively help people mitigate their risk of future losses. Think of a geyser that warns you of a fault before it turns into a major leak. This a significant shift to a preventative approach. The value of insurance moves away from paying a claim to preventing the need to claim.
Technologies like analytics, block chain and the cloud also give us an opportunity to enhance customer centricity by increasing our ability to process, protect and store customer information. They allow us to personalise flexible solutions, while removing friction around data sharing, because clients are secure in the knowledge their data is safe.
More partnership opportunities
As well as partnering with intermediaries, the industry will leverage tech-led mergers and acquisitions (M&As), equity partnerships and alliances to advance growth. We are already seeing insurers investing in InsurTech start-up solutions through equity partnerships to achieve new business models that reach new and emerging markets. The opportunity lies in how fast these investments can be integrated with existing legacy systems to make incremental improvements, remove outdated processes and enhance products and experiences for existing clients.
Strategic alliances will also become increasingly important in insurers’ overall value propositions. These pose opportunities to deliver insurance via non-traditional digital platforms in order to capture new markets. Partnerships that bring trusted brands together – with a loyal customer base, insurance expertise and value-added services – will be a pivotal way to advance growth against a backdrop of increased competition from non-traditional players.
Going forward the industry must evolve to keep pace with its customers. It can’t do this alone. It’ll take sustained investment in innovation, creative collaborations, actionable data insights, and a constant will to keep reinventing to remain relevant.