For many, the pace of change in insurance has become disorienting. Disruptive change is taking place almost continuously across so many aspects of the industry that it has become difficult to keep track, let alone to find ways to leverage these developments to create competitive advantage.
In this article, I aim to bring some clarity to this whirlwind of change by nominating five key trends that insurance professionals should act on in the years ahead.
1. THE DIGITAL CUSTOMER JOURNEY
The insurance market is beyond due for a better digital customer journey. The industry’s biggest players have generally offered a poor experience in the way they build digital tools for clients. For me, a better customer journey involves two elements:
- Serving the customer digitally by providing them with better information.
- Providing advanced self-service tools that can make their jobs easier.
Customers, in my experience, no longer expect their insurance providers to behave as the gatekeepers of information. They expect data to be shared rather than hoarded, and to gain visibility into the valuable data collected by their insurers.
In practice, this could mean the provision of customisable dashboards featuring real-time information on loss prevention and more.
Everybody loves a good dashboard, but it must be highly relevant to their needs. This is the feedback I received from shipowners recently when I gave a presentation on this topic at a marine brokers customers event. One of the participants even told his broker he wanted a dashboard ASAP.
Providing customers with risk advice is currently a face-to-face business in B2B insurance, but this could be done by giving clients an analytics tool via a basic dashboard that shows how their insurance risk benchmarks with the rest of the world. The insurer can add value by making the dashboard easy to interpret providing advice based on those benchmarks and dashboard information.
Keep in mind, however, that a digital offering should complement rather than replace the human touch. Any tool developed by insurance providers should include a digital help tool that facilitates easy access to advice or to chat online with a human expert. Chatbots are not yet advanced enough to provide this sort of B2B advice, but will improve year-on-year through machine learning.
Self-service tools should be at least as good as the seamless tools people use for their personal banking. They should be highly intuitive, require no training, and a pleasure to use.
In insurance, a self-service portal may include providing clients with certificates, policy, billing, and claim capabilities, with access to simplified admin forms, communication with the insurer, analytics capabilities, and the ability to maintain their insured portfolio without having to pick up the phone; changing the insured objects value or adding or removing assets.
A well-designed self-service portal not only improves the customer journey but provides vast efficiency gains for the insurer.
Increasingly, insurers are expected to provide their stakeholders – customers, underwriters and claims handlers – with 24/7 access to useful information that helps them make better decisions. This doesn’t mean simply giving access to spreadsheets full of incomprehensible numbers; it means the provision of valuable and actionable information based on advanced analytics of live data. Again, a self-service approach is best: customers should be able to log on to a dashboard to access this information rather than arranging a meeting with the insurer.
Data analytics enables insurers to access better information about an expected claim that will help them provide a more exact price. Perhaps more importantly, analytics is about leveraging data to help prevent future claims. This is done by analysing historic claims, understanding the risks of each client, then providing them with advice on how to minimize or avoid future claims. This may involve advice around fire prevention, or using sensor data to let shipowners know that their captains are sailing too fast in harbour and need to slow down, otherwise a price increase will be necessary to cover the increased risk. This isn’t just about providing customers with a better service. A McKinsey report into harnessing the potential of data in insurance revealed that insurers are monetizing data through new “data as a business” models.
3. EFFICIENCY AND AUTOMATION
After decades of talking about it, the insurance industry is not even close to where we should be in terms of work process efficiencies and automation. With productivity barely moving over the past decade, there are huge amounts of process efficiencies that need to improve. My advice is to enable your organisation’s most competent people by giving them a yearly budget earmarked for efficiency improvements and to start with lowest-hanging fruit.
Create a shortlist and make improvements as an evolution instead of a big bang. This way, you have low risk on your investments and after a few years (depending on your situation), you might be a front-runner when it comes to efficiency within the insurance industry.
4. CONNECTED INSURANCE
Connected insurance means leveraging sensor data (the Internet of Things or IoT) to move away from static insurance policies to become responsive and adaptive to changing risks and exposure through access to real-time data.
By 2030 there will be 50 billion connected IoT devices in the world, up from an estimated 22 billion in 2018. Insurers will increasingly seize the opportunity to leverage these devices to gain information from sensor data about the insured, with impacts on risk profiles, product pricing, and claims prevention.
For example, an insurer may have access to corporate vehicle telematics data and be alerted that an airbag was deployed. They can then be proactive, call the client and say, “We’ve detected this; how can we help you?” Other sensor data may include speed data, maintenance data, engine data, alerts about harsh acceleration, and so on. There’s an extreme amount of data available through connected insurance, which is why the leading organisations will be those who can successfully make sense of this data to provide better insurance.
Connected insurance is about responding to change through IoT/sensor-based intelligence. One of the trends we see is dynamic pricing based on positioning info and risk information. Sensor intelligence will help marine insurers with live tracking on how often ships go into different harbours and which high-risk areas they are travelling. This is a technology already tried and tested within auto insurance and will become increasingly relevant for marine.
5. INSURANCE ECOSYSTEMS
The term “ecosystems” has several layers in insurance.
Firstly, an ecosystem may refer to selling, or distributing insurance in other industries. This involves embedding an insurance offer as part of the selling process, for example when you book a plane ticket and you are asked if you want to purchase travel insurance, or when you buy a television in an electronics store and are asked if you want to insure your new purchase. The key to creating an ecosystem like this lies in the creation of relevant partnerships.
Secondly, an ecosystem in insurance may refer to different partners joining forces to insure large policies. In marine insurance, this may involve a club of 30 or 40 different insurers sharing the risk by taking 4% to 5% each so they do not have to cover the $500 million if a ship goes down. An example of this sort of ecosystem is the International Group, where several insurers are mutually responsibility for risks that run into the hundreds of billions: oil spills, environmental disasters, and more.
Lastly, an ecosystem may refer to InsureTech providers cooperating in the market to share and save costs. If some elements of insurance technology can be cooperated on rather than everyone creating their own version, this can be good for the industry.
BRINGING IT ALL TOGETHER
True value comes from finding ways to put these trends together. Connected insurance provides data, which drives analytics, which in turn drives efficiency and automation, helping inform decision-making in terms of building a better customer journey. It’s important, therefore, to view these trends in context of each other rather than as isolated challenges.