The insurance industry, one familiar with handling risk, is at the beginning stages of its most vital digital transformation in nearly twenty decades. Insurance companies and banks alike are taking on the identity of IT driven organisations and with the assistance of IoT (Internet of Things), blockchain, artificial intelligence, machine learning and data analytics, many traditional names in the sector are having to adapt or allow start-ups to take to the floor. No matter the amount of industry knowledge and regulatory expertise, it now is not a case of who has the biggest cash flow; but simply that insurance companies can no longer afford to sit still.
The change in consumer behaviour
The main focuses for the modern-day consumers are speed, flexibility and a high-quality service. This development in consumer behaviour is being witnessed across multiple industries. Amazon ‘the online retailer’ for example, is an excellent advocate for creating such an offering to its customer base.
Living in the digital world that we do, consumers want everything five times faster and real-time results when making a purchase for a service online. Digital transformation starts with people, and in the case of the insurance industry, it starts with the pain points those people experience when engaging with providers.
The growth of insurance comparison sites has completely diminished consumer loyalty, which means the providers are able to present their product with ease and clarity. Despite these differences, one thing is clear: both insurance products and providers need to respond effectively to digital change to create competitive advantage and drive long-term growth.
The influence of Insurtech
While it is not unheard of for companies to develop their own specific technology, many are utilising the specialised minds from Insurtechs to support their (much needed) digital transformation. If we are looking across the entire insurance sector, the areas that need to be developed are vast. It may be a complex mind-boggling field but many insurers are now creating their own trials of the applications.
Whether it be insurers purchasing Insurtech start-ups to join forces and limit competition, or building their own teams of tech-savvy professionals that can provide thought-leadership and innovation to their legacy technology state, one thing is for sure digital transformation is high on the agenda just about everywhere within the insurance sector currently.
Contrary to what has been expressed so far, it is not only the insurers that are now pushing for change but policyholders themselves who see technology as a differentiator between a company that can produce time reducing, efficient results and those stuck in their ways. Claims processing for example, which has been huge on the agenda in recent years, once digitalised provides a timely resolution for claims and reduces the need for policyholder interaction.
Insurtechs are a viable approach to closing that innovation gap, a gap that will only grow if companies do not match the pace of change in technology and keep up with customer demands and market trends.
What is next?
For the rest of 2019 and beyond; disruptive technology is inevitable. Whether the changes are created by insurers themselves or in partnership with Insurtech companies, the driving force behind this change is what customers expect.
It is essential that insurers place the customer at the centre of their agenda moving forward and listen to what customers want for technology and moving quickly to invest in the right areas – wasting time will undoubtedly result in customers going elsewhere.
It is a balance of innovating and transforming company foundations, while staying alert to the rate of disruption and security risks that can come with big changes. What will happen to those insurance companies that do not jump on this high-tech train into the future? Who will lead the way in making the switch from traditional legacy systems to innovative, modern day insurance firm?