The insurance industry has been with us, in the present form, for centuries and can be traced back thousands of years. However, with the rise of ‘insurtech’ and the coronavirus pandemic, modern insurers are facing a tsunami of disruption. How best can they steer a path through the uncertainty?
The first step is to acknowledge the challenges faced by the industry and even individual insurance companies today. Staffing levels have been reduced significantly, there is an overload of customer enquiries and different channels that customers want to use, along with a rise in customer complaints and fraud related cases. Insurers have also had to hastily embrace a work-from-home operating model overnight – it’s a difficult time.
So, what specific steps can insurers take to improve the situation? Below are three important areas all insurers need to examine within their existing strategy:
Data analytics is a real game changer for insurance in multiple ways. Insurance has always been driven by data, even from when the earliest actuarial analysts examined the risk of a sea journey by traders. As our ability to analyse big data in real-time has increased there are several opportunities, such as:
Fraud prevention: data analytics can explore past claims and compare to new claims to determine the chances that any are fraudulent with a high degree of accuracy.
Risk assessment: it’s possible to undertake a far more detailed risk assessment when a customer asks for a quote. For instance with car insurance, it should be possible to look at live crime figures in the area where the customer lives, and review reports from the car manufacturer about problems with that vehicle – in addition to all the normal checks.
Efficiency and productivity: improving management information and making it easier to see which products are working and which require attention can drive a wave of efficiency through the entire company.
Personalisation: having more insight into customer behaviour allows insurers to price risk more accurately, rather than basing it on solely postcode or age. Telematics offering the ability to pay for insurance as a car is used, rather than with an annual policy, is a great example.
Explore onshore and work from home solutions:
Onshore and work from home customer service agents help to build great business resilience and agility. Most customer service teams have plans in place to manage disasters, but the recent pandemic challenged the entire world as nobody anticipated a situation where employees couldn’t travel in to work. By bringing some of the team closer to the customers, splitting the service team across more than one location, and handling some customers with work from home agents, a company really can build a strong and robust customer care environment.
Ramp up digital transformation:
Digital transformation will ensure that many companies utilise apps and other tools to their advantage and make it easier to engage and stay connected with customers. Most insurers are behind it comes to innovation and digital services, but with new competition constantly entering the market, traditional players will need to be innovative to stay in the game.
There are three important areas insurers need to be exploring when it comes to digital transformation projects:
Time to market: it should be possible to test and launch new products quickly. Traditionally it can take insurers 12-18 months to launch a product because they heavily rely on their internal IT team. Insurers need to explore how they can work with partners to explore cloud based services and automation – which are now essential to survive and grow in a highly disruptive, competitive environment.
Rely on your subject matter experts: Insurers should use the 80/20 rule when it comes to digitisation – trust your product experts to identify where the smallest changes can have the biggest benefits.
Get ready for change: insurance is no longer a business where you can launch a product and then forget it. This is now an innovative fast-moving environment that is constantly changing.
The insurance industry in 2020 faces many challenges, but these three steps help to ensure a stronger focus on customer-centricity. It’s time to build a more resilient insurance industry that is delivering a personalised and easier to access service.
By Mike Sloman, SVP of business development at Teleperformance