Finance
Five key principles of insurance success in 2020
By Chris McLaughlin, chief product and marketing officer at Nuxeo,
Few observers would dispute that insurance is an industry at a major tipping point. Traditional insurance companies have seen the sector disrupted like never before, as a range of agile, digital-native competitors have emerged to encroach on market share and deliver a smoother and more engaging customer experience.
These challenger brands have succeeded in part by looking beyond the Financial Services (FS) industry to look at the products and services offered by other sectors that resonate with today’s digital consumer. Next-generation insurers have learned the importance of customer experience and speed of service, and they understand that the proper application of technology and information can define success or failure in today’s digital world.
Traditional insurers are therefore at a crossroads. If they do not adapt to this new market reality, then the writing will be on the wall for many of them. But what is the best way of approaching this reinvention and what are the five main principles for insurance success in 2020?
Offer products that are fresh to today’s market – many insurers have been content to keep offering slightly updated versions of the same products, solutions and services as the industry has always done. While they might be tweaked or updated regularly, in reality they are old-fashioned and not necessarily right for today’s market.
Insurers need to forget what approaches have worked in the past and instead try and address the question ‘what business challenge are we trying to solve?’ Such ‘first principles thinking’ reworks the problem from the ground up and is central to the development of new products and solutions unencumbered by what has been built in the past.
Address the needs of the hyper-connected customer – insurance customers are hyper-connected, always online via their mobile phones, social networks, cars, laptops, other devices and more. Because they are constantly connected, they expect immediate responsiveness and gratification.
Many insurers have attempted to address this via a mobile app but delivering this without a modern infrastructure and information systems to support it, is counter-productive and is simply
iterating on a business model that was not meeting the needs of the customer to begin with. Modernising the infrastructure is hugely important and allows an insurer to far better meet the demands of the modern insurance customer.
Expand the value proposition – customers are no longer satisfied with the organic products and services delivered by insurance companies. They want more value, and more diverse offerings, some of which will not be core competencies for insurers.
These could include guidance and access to products that enhance their overall financial wellbeing, or services that more deeply entwine insurers in customers’ day-to-day lives, such as travel and leisure services, discounted buying services, and money tracking. An insurer would not have to start providing these services themselves but could look to partner with organisations that do. In many cases now, established insurers are partnering with born-digital FinTech offerings.
This would entail modernising their infrastructure with platforms that quickly integrate with third-party programming interfaces. But smart insurers will understand the value of integrating enhanced product offerings from other providers, and that the value chain need not be developed in-house.
Look to BigTech for CX inspiration – customer experience (CX) is a key battleground in most sectors in 2020 and insurance is no different. It’s the single most important way of differentiating versus the competition and it’s an area in which BigTech firms such as Amazon and Google have done brilliantly.
Insurers who distinguish themselves along the customer journey will not only increase their retention and profitability, but more importantly, ensure their long-term viability. Doing so requires a change of culture, from a transactional approach to business to one that focuses on the customer relationship and for an insurer to do this, it needs a comprehensive 360-degree view of a customer’s journey, not just siloed views through disparate business functions.
Work smarter, not harder – for insurers in 2020, the focus must not only be on speed but efficiency as well. But scaling cost-effectively is not a question of throwing more bodies at outdated business processes, but utilising technologies to work smarter.
Not only are there fewer individuals entering the insurance workforce – meaning the quality of the underwriting decisions and the ability to control claims leakage are suffering – but the amount of information that must be evaluated by both underwriters and adjusters has increased significantly too. This increases the time to underwrite policies and process claims.
Looking to process automation to capture decades of intuitive knowledge held in the minds of an ageing workforce can be highly effective. Then augment those automated business processes with machine learning and artificial intelligence in order to reduce or eliminate low-value and mundane manual tasks.
The combination of automated business processes and AI creates a greater value proposition by supporting initiatives like straight-through-processing and helps move other innovations to the forefront of insurance operations. Smart insurers will use technology to augment human interactions where they provide the most efficiencies.
Traditional insurance companies face a stark choice against the threat posed by more agile and customer-focused market entrants – adapt or fade away. Adapting means changing those legacy systems that are slow, inefficient and make access to data difficult, and also by changing culture and mind-set. The next few years will be a period of great flux in the industry and insurers must choose the right path or face the consequences.
-
Business3 days ago
Mike Bahun and Fundraising University Make a Lasting Impact on Sports Programs Nationwide
-
Top Stories3 days ago
After VW plant victory, UAW sets its sights on Mercedes in Alabama
-
Investing3 days ago
Forex Market Trends to Watch Out For in 2024
-
Top Stories3 days ago
Hedge fund borrowing hits five-year peak, Goldman Sachs says