Is your firm adopting digital strategies or still contemplating how to stay competitive? As we’ve heard over and over, in the past couple of years the Insurance industry has gone through a drastic change. What has changed? The products? Not so much. It is rather the means of communication used to facilitate and strengthen the interaction and purchasing power between insurance firms and its current and prospective clients. In other words, digital technology helps facilitate the relationship between clients and the end-users. New alliances are being forged; new players are arriving on the scene, leaving the existing ones with no choice but to change their strategies in order to stay relevant in a fast-paced environment.
1) Changes in Selling Insurance
Life insurance or car insurance products, which were traditionally sold by agents, can now be purchased online and often at a lower price. To attract new customers, insurance companies are utilizing data analytics and web portals to showcase price quotes and price comparisons.
There’s also been a substantial decline in brick and mortar agencies. According to Forrester Research they have been shrinking by 25% year over year. As of early 2015, only 40,000 agencies remained.
2) New Partnerships Forming
New players who were not in the insurance business before are trying to gain a foothold in the industry.
Following trend similar to the banking industry, insurance and non-insurance companies are forming partnerships to increase awareness and generate leads. For instance, Google, the giant in technology and internet services, has recently partnered with Comparenow to gain access to the car insurance comparison network’s site and audience.
3) Innovation Centers to Test Insurance Products
In 2014 Accenture launched a Digital Insurance Solution Center in the UK as an innovation hub to showcase software applications, Internet of Things devices, and to enable insurance customers to test digital products. Last week they launched their second center in Chicago. Is this the way of crossing markets with global strategies or, even more interesting, is there a bigger demand for more innovation in insurance products?
4) Enhancing Mobile Applications
Insurance companies who are able to cross-sell effectively will increase their subscriber base. Tomorrow you’ll be able to use a mobile application to check the balance of a fund, and then with just a few clicks you can get a preapproved pre-underwritten insurance product. How will this be done? The company will use your historical information for this preapproval.
Mobile apps can be used to submit claims and review detailed information to enhance the claim management experience. Mobile apps also allow customers to check, claim status and upload photos when submitting claims. This is becoming the norm rather than the exception.
5) New roles are emerging
Increasingly companies are creating a new role called the Chief Digital Officer (CDO) to drive digitization. Companies like Cisco and UnderArmour just announced their CDOs this summer. The CDO office can be responsible for:
1) Analyzing how customer communication is happening and understanding the customer interaction points
2) Social media marketing and branding
3) Mobile product development
The main objectives will be product innovation and development through data analytics, customer insights and risk management.
And I believe it should include a digital governance business strategy. What do you think?
6) Use of Cloud to reduce fixed costs - What is the role of Cloud in insurance?
Many insurance companies have opted for Software as a Service (SaaS) cloud solutions to be used in non-core functions like financial management, HR systems and CRM. SaaS usage for core functions like claims underwriting remains low despite its huge potential. Cloud-based platforms can also increase the speed at which data is exchanged and processed between hospitals and insurance companies.
7) Big Data analytics & predictive modeling for efficient risk pricing as well as detecting fraud.
The seven changes mentioned above will become more relevant as more companies adopt them, but what about consumers? Why should consumers cheer for a more digital approach within Insurance?
A robust digital strategy for insurance companies should include these trends in the ever-changing world to remain competitive. What do you think?