The foundations of finance are shifting, and insurance isn’t immune to that. Changing expectations and behaviours are overturning long-held assumptions about how to deliver value to customers in what was perceived as a 'low engagement sector’. New technologies are changing the way customers can choose and interact with products, creating whole new use cases. At the same time, technology is changing how insurers can create value, comply with regulation and work with partners.
In this blog, we explore what the insurer of the future looks like. From the proposition it sells, to the customer experiences it creates and the underlying operational infrastructure it requires to deliver them…
Life guardian bundles
As comparison sites drive customers to see insurance as something bought on price alone, insurers will continue to counter with broader composite offers or bundles to drive customer value and brand loyalty. Digital providers like Wrisk offer great experiences to help cross-sell and manage a range of policies. These will become accessible through a range of interfaces, and offer new forms of value - serving as an access point for other benefits, partner rewards, and surfacing value-add information and recommendations to the customer.
Embedded or micro-insurance
‘Micro’ insurance coverage or pay-as-you-go insurance will be integrated or bundled with products, services or features, rather than sold as an add on or post-purchase. Early examples include Alexa’s ‘Guard Mode’ for home security, or Revolut’s pay-per-day geolocation-based travel insurance. Ultimately, this enables customers to protect themselves in a wider variety of use cases, like short term home rentals (e.g. Airbnb), and flexible commercial driving (e.g. Uber, Lyft).
Specialist niches and bespoke insurance
Insurers will serve more of the ‘long tail’, offering bespoke cover for very specific customer groups. Examples include health insurance for fitness fanatics, car insurance for off-roaders, and coverage for camera drone businesses. Sold on a self-service basis and personalised to suit specific customer contexts and requirements, technology will enable these more complex products to be easily distributed to where they’re needed.
The Customer Experience
Low friction sales, application and onboarding
Advancements in data openness, ‘regtech’ services behind the scenes, and investment in the user experience make seamless application processes and journeys commonplace. Authentication via services like Facebook or Google enables digital data exchange that makes providing on-boarding information simple. That means higher conversion rates on new customers, and easier routes for those who are ready to extend their relationship with an existing provider. For covering short term insurance needs, on-demand on-boarding is a key enabler.
Interface agnostic service
Leading insurers will maintain ‘one view’ of the customer - a single, secure data repository that monitors customer details, products held, and interactions over time as well as relevant data from other sensors, services and partners that customers choose to integrate. In turn, this supports a seamless, multi-interface customer journey. For customers, that means beginning applications or claims in one place, and completing them wherever is convenient - such as uploading photos of a damaged vehicle at the scene, and reviewing the adjusters report at home. For sales, customer support, and claims handling teams, easy access to customer details means they always have relevant information at hand to deliver value. Simpler journeys will make routine tasks easier to automate and monitor, reducing the risk of errors, making life easier for staff and improving morale.
Broad, customer-focused partner networks
Insurance propositions will increasingly connect customers to a broad network of partners. This allows insurers to combine offerings and provide bundles of specialist products and services beyond simply paying out claims. For example, on-demand platforms can supplement the support and prevention offering of an insurer. These services might mitigate negative outcomes and adversity e.g providing customers with access to on-demand lodging near their home in case of home damage, or more complementary preventative services - e.g. asset security and monitoring to prevent damage in the first place.
Sensor powered protection and claims
With the proliferation of connected sensors, a broader range of data delivery mechanisms, and the ability to use machine learning to efficiently draw inferences, insurers will be able to better protect and serve customers. For example, camera-equipped drones could facilitate the remote assessment of property conditions for pricing, maintenance, and claims assessment purposes. For car insurance, the purchase, renewal, and claims management journeys can all be sped up by using smartphone cameras and machine vision to ID and assess vehicle damage.
Reg-tech & granular risk monitoring
Behind the scenes, machine learning around customer interactions will enable a transition from descriptive analytics to predictive and prescriptive analytics for fraud and risk management, enabling better outcomes, lower fraud costs and stronger risk management. Back office teams will be able to focus on high-value tasks, step-change improvements and innovation, as automation streamlines day-to-day processes like KYC and fraud prevention reducing errors that introduce cost and waste.
Simpler processes make life easier for staff, improving morale, reducing turnover and reducing the risk that things might go wrong.
Responsive technology teams and infrastructure
Leaders will pursue an infrastructure that delivers technological openness. Rather than inflexible processes based on business silos, the insurer of the future’s approach will be based on APIs and SDKs that facilitate flexible workflows and services, combining and re-combining them as needed to deliver business value. This has a large number of cascading benefits at scale - particularly as shared services models reduce duplication across channels and organisational divisions.
An agile delivery approach
As “every company becomes a software company”, the insurer of the future will be made up of teams focused on agile product delivery supplemented by practices such as Test-Driven Development, Behaviour-Driven Development, Code Review, and Continuous Integration. Empowered development teams with the tools to deliver innovations to market rapidly can own the delivery of products end-to-end, improve customer responsiveness, and reduce time to market.
At TAB, we’re excited about the future of insurance, and what that means for customers and businesses. And the most exciting thing? Despite so many of the building blocks out there, despite the customer need and the business imperative, the insurer of the future is yet to be built. Which leaves us asking, how should we build an insurer ready for the future?
We set out to explore this and more in our follow up white paper ‘The Insurer of the Future’ launching May 2019. Register here to receive a copy.