In an industry faced with juggling regulation, compliance and complexity with customer demand and IT megatrends, insurers are under increasing pressure. Let’s not also forget the fiercely competitive market in which insurers are operating in, adapting to keep up is no mean feat.
Historically insurers have been relatively slow to act when it comes to enforcing any major changes in their business or service offering, but that’s not to say improvements and additions aren’t a key priority for the industry. The challenge, in many cases, that is preventing insurers from being agile and responsive to trends and customer expectations is the legacy infrastructure. An industry where systems have existed for 30 years or so, it’s no surprise that there are old processes that don’t translate well in today’s consumer-led society. However, insurers can – and are – gradually adapting their infrastructure to become more agile and able to adapt to changing consumer behaviour.
More so, it’s not just about the systems but also the market itself. Three decades ago, when many of these organisations first formed, competition was limited. Today’s picture of the insurance landscape however is very different. Insurance suppliers are everywhere, across all areas, competing with each other on cost and service, adding even more emphasis to the need to be agile and adaptable to market conditions – after all, it’s no longer viable to take days, or even hours, to make decisions.
So, whilst facing this increasing pressure, what exactly can, and should, insurers do? Where should their focus be in order to obtain competitive advantage and deliver on customer expectations? Jane Tweddle, financial services industry principal at SAP UKI shares her recommendations.
Up in the clouds
With the insurance industry dealing with sensitive data on a daily basis – combining both deliverance of the best service to customers whilst meeting regulatory requirements – it’s important that the process can be managed and maintained securely and cost-effectively. Cloud-based services compliment the insurance industry well; providing a secure haven in which this information can be stored, accessible when required and scalable to suit requirements. Not only do cloud environments free up valuable storage space but hosting all data in one environment makes analysis a much simpler task.
Even small changes to business functions have a huge impact upon operations. Cloud, inherently agile in its nature thanks to its pay-as-you-go model, is proving valuable in addressing this; allowing the industry to make changes without down time or disruption. Moreover, this agility has allowed businesses to compete better, providing the infrastructure and platforms to be more innovative and deliver new products to customers more quickly.
Of course, with customers demanding a speedier, more personalised service without volunteering personal information so freely, every piece of information insurers can gather is important. But it’s how this information is used which is what sets the competition apart. As an industry which has been gathering data for several decades, making sure it’s being put to good use is not necessarily possible thanks to the various legacy systems used to house different data sets. The huge volume of data, structured and unstructured, now available on customers requires fast and efficient analysis in order to draw valuable insights and deliver an improved service. Thanks to in-memory computing and its ability to analyse large volumes of data in real-time we are now in a position to maximise this information to make instant decisions and recommendations to customers. I’ve already highlighted the power of the customer in today’s economy with demands for an improved experience being a key driver for competition and change. Having the infrastructure in place to make the most of this information and paint a comprehensive picture of your customers is vital in order to better market your products and services and to understand how your channels and products are performing in real-time.
Whilst delivering a good customer service once meant being at the end of the phone, it’s now a much more immediate and ongoing demand. Social media has completely altered the customer service model, providing a platform on which customers can publicly air their grievances and an opportunity for businesses to directly respond in real-time. Insurers, governed by regulation and compliance, are still relatively apprehensive about embracing social media and the benefits it can bring in enhancing the customer experience. But it doesn’t have to be about discussing personal or sensitive information. Rather it’s an opportunity to engage with customers more effectively and understand the sentiment behind the remarks that are being made across each social media channel. There are examples of insurers who are already benefitting from having a social media strategy – differentiating them from others who are still nervous about the exposure they may face. The benefits are far-felt, from more engaged and loyal customers to an enhanced customer service which can be easily shared amongst others.
The consumer-driven changes effected in the economy today have undoubtedly resulted in the insurance industry being forced to respond. Yet, the speed at which change takes place will always bring with it various pressures to remain compliant with the necessary regulatory constraints. The legacy IT systems and explosion in the volume and type of data insurers must process, isn’t something that the industry can regard as a barrier to change. It’s clear that those who are considering alternative ways in which to manage IT investment will have the competitive advantage to deliver a more personalised service.