The insurance industry, as a whole, lags behind many other industry sectors in its digital adaptation, but the advent of customer-centric technology providers is forcing the industry to change its thinking.
To date, insurers have been protected by customers’ tendencies to stay with providers and the advantage of having years of experience and proprietary data. Both were barriers to start-up challenges that included the need for large capital reserves, according to McKinsey.
But challenges to insurers’ profitability are arising. Those include premiums that will decrease as risk decreases – especially in the auto industry, where smart technologies are making driving more safe.
In addition, data analytics will help assess risk more accurately than current models. “With so much data at our fingertips — how fast someone drives and how much they (sic) indulge in risky behavior as revealed on social media. Savvy competitors could cherry-pick low risk clients,” says Property Casualty 360.
To compete, insurers will need to distinguish themselves with better and more unique services, says Forbes.
They may have some success by copying (successful) retailers – who have had to get engagement right or simply cede their business to those, such as Amazon, that do. Now insurance companies are facing the same challenge. The same demand from consumers for frictionless personalized experiences in retail and other industries has now hit insurers head on. This movement is being fueled by billions of dollars in investments in InsurTechs gunning for their businesses.
The old model of going to see “Bob the insurance agent,” who you also saw at your kid’s soccer game Saturday, is dead. A Bain and Co. survey found that most insurance clients have had no contact with their insurers in the past 12 months.
That may need to change for insurance companies to acquire and retain customers. In the age of Amazon, insurers need to create a buying experience and personalized relationship that will make sourcing, buying and maintaining insurance easy. In this highly competitive marketplace, how can insurers keep pace with consumer demands and keep InsurTechs at bay? They build preference and loyalty by adopting a consumer-centric business model.
The digital age has created fierce competition in retail. To continuously provide value and build loyalty one consumer at a time, retailers slice and dice staggering volumes of data to derive real-time insights. In turn they develop 1:1 marketing to give consumers what they want and build 360-degree views of their suppliers to maximize efficiency, all to provide a better consumer experience.
Developing a truly consumer-centric insurance experience starts with the basic notion that insureds are consumers first. Let’s look at what your insurance consumers want:
Those objectives aren’t as difficult to meet as you might think. One advantage to a late-onset digital maturity is that there are tools out there to help achieve them – even with data spread across the organization and in different formats.
The Enterprise NoSQL multi-model database handles wide varieties of data with relative ease. More importantly, you can manage data after it is in the multi-model database – letting you have a 360-view of your customer while allowing adaptability as your understanding of your customers and their needs evolves.
Insurers don’t need to become Amazon to be successful, but it is almost a guarantee that the insurers who create a retail-like digital platform will have distinct market advantage.
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