Insurance model requires digital innovation
Insurers must be willing to approach partners outside the sector and incorporate value-added features they would not normally consider, says Stuart Blyth, director at SilverBridge.
Insurers must adapt to the new digital environment and provide customers with the same degree of customisation they receive in other industries. This requires the traditional insurance model to make way for strategies that incorporate a lifestyle-centric approach, says Stuart Blyth, director at SilverBridge.
With pressure coming from more agile insurtechs, insurers are faced with a quickly evolving market that sees customers increasingly fickle about the products they purchase. Brand loyalty, in insurance and other sectors, is getting more difficult to achieve in a world where insurance is becoming a commodity.
According to an Accenture report, embracing a digitised distribution model promises significant new growth opportunities. This results in the provisioning of more fluid solutions that offer customers new ways of making insurance purchases. From mobile apps to virtual advisors, a connected user base has different needs and expectations than just the phone calls, letters, and e-mails of previous approaches.
"Of course, this does not necessarily mean an insurer has to blindly enter into a technology-rich environment and implement all the latest trends to be successful. Instead, they should consider how even minor efficiency improvements in the way products are designed and developed could result in a more streamlined customer journey," he says.
One of the reasons behind the success of insurtechs is they can provide products and services in faster, more nuanced ways of traditional insurers. Sure, it is nice to use a chat bot to get a customised quote, but it is in the purchasing experience where customers are won or lost.
"People today require fast turnaround time on the platforms they prefer. Those insurers that can achieve this will be the ones in prime position to differentiate themselves among each other and insurtechs.
Return to lifestyle
However, the immediate focus is on becoming a digital lifestyle insurer that delivers on a range of additional service offerings for customers. From wearable fitness trackers to home monitoring, people are getting familiar with a more personal way of impacting on their insurance premiums.
"This puts a renewed focus on effective customer profiling and creating more niche segments where individualised products can be developed and sold. It also sees a more natural positioning for a newer generation of insurance buyers, who are invested in social media, mobile technologies, and other digital innovations. Some even suggest insurers will evolve into 'preventers' capable of moving beyond being reactive into one of proactivity."
While this requires a significant investment in everything from human resources and infrastructure to technology, it is argued that prevention services could be charged on a subscription basis and be a new source of margin for insurers.
For this to work, insurers must be willing to approach partners outside the sector and incorporate value-added features they would not normally consider. A cross-collaborative environment brings with it more opportunities for product differentiation, delivery mechanisms, and effectiveness.
"These are exciting times for insurers. However, their willingness to adapt to and embrace the digital changes needed for business in the future will determine how relevant they are in the hearts and minds of their customers," he concludes.