Concerns about the rise of digital disruption are of course valid. The fact remains, however, that advancements in technology can make business processes more efficient, lead to the creation of quality products and help companies build a brand that cannot be dismissed. This applies across multiple sectors, but few more so than insurance, in which we envisage a digital avalanche, bringing three vital outcomes - scaled growth, reduced costs and satisfied customers.
Scaled growth through smoother process and innovation
Intermediaries and middlemen seldom enhance business reputation, as the insurance sector knows only too well. In fact, the industry has suffered somewhat through association with this form of working, since some customers can feel it indicates a lack of genuine engagement. Others believe it is unnecessary and only creates hassle. Whatever the case, tech-enabled disruption is set to change the scene, with products becoming readily available across multiple platforms, meaning insurers can engage directly to meet customer need and, of course, resolve grievances. In other words, it makes the process refreshingly smooth and straightforward.
Among the advancements to equip companies with the power to design innovative and more customised products are big data and sophisticated analysis. Data generated from wearables, for example, can provide useful information on fitness levels, helping insurers understand their customers and lure in those in good health with reduced premiums, cash back and other similar incentives. Data analysis also assists the renewal process and provides companies with an easy way to track when policies are to be renewed. Such an approach could likewise help with identifying fraudulent claims.
On top of such benefits, the disruption could lead to new product developments in an economy based on social networks and digital platforms. Of course, such networks come with risks, such as cyber threats and data leaks. However, both businesses and households could opt for services that protect them against these dangers, helping spark the development of new and innovative insurance offerings.
The service industry has always leveraged technology to communicate and raise quality standards. First came print; then came the web; and now we have apps, making information available at just the click of a button. The future will be even more competitive with CUIs (conversational user interfaces) assisting people by making real time information available everywhere. Consumers would also demand more precise information and would likely have sky high expectations in terms of speedy delivery, flexible payments after-sales services. So how should the insurance industry deal with such changes? We suggest three simple action steps:-
Make detailed comparative information available on multiple platforms
Put robust processes in place for issuing policies and reducing turnaround time
Ensure smooth and non-complicated procedures for making claims
Digitisation can result in savings and insurers can benefit in the following ways:
Customers will have access to multiple platforms through which to buy policies, reducing the role of intermediaries
The removal of middlemen and agents from the equation means nothing need be paid in commission or brokerage fees
The insurance industry has faced its challenges for a long while - and still emerged as a winner. Digital disruption in Insuretech, however, could take the sector to a different level through boosting product delivery, service offerings and customer satisfaction significantly. The key, then, is early adoption - those who move first are likely to gain the most competitive advantage. Laggards, by contrast, could face a loss of revenue and process efficiency, ultimately making it difficult to survive in the longer term.