New connected service offers aside, digitalisation is pushing Property and Liability insurance companies to take up their position in the new emerging ecosystem to become key players. But which pathways will lead them there?
Property and Liability insurances are developing within a commodities market which has been highly saturated for the last 30 years. Ever-changing regulations are permanently increasing market restrictions, and the economic climate is gradually worsening. Lastly, the competition is growing more and more intense with new players entering the market such as bank insurers and price comparison sites.
Companies in the sector are already positioned on the connected objects scene (IoT), rising up to the challenges of digital, namely maintaining client relationships, service quality, and winning new markets. However, this is still not enough. We must go further and go straight to the core of a new insurance digital ecosystem if we wish to become a key player. With digitalisation blowing a strong wind, insurers are sailing towards new horizons.
There are three pathways to take to take here, namely: digitalisation, technology, and solutions. Insurers are seizing tech opportunities to continue moving their activity forward, but they must focus their efforts in all three of these ways.
Firstly, with high demand and a connected objects market showing high growth, everything seems to be in favour of the expansion of connected insurances, as well as these companies’ vast digitalisation programmes. Secondly, digital interactions, smart machines, connected objects and other data sciences are coming to revolutionise several insurance applications, so as to satisfy new consumer expectations. Lastly, new applications allow insurers to find new ways to lift productivity and profitability, by undertaking R&D for their products and services, until they have refounded their management and service processes.
1 – DIGITALISATION: insurers at the heart of customer experience
Customers first. With consumer expectations constantly changing, digitalisation is helping insurers to satisfy new needs, but by taking time to focus on the customer experience. This is because customers are, now, more and more demanding and expect efficient and quick services (claims processing, differentiated services, etc.), which they will use to justify the renewal of their existing contracts. And they expect all of this as well as having being able to change communication channels at any given moment. To be able to offer this customer experience, insurers will have to reinvent themselves.
Logically, and given the success of connected objects being used on the home and car market, insurers are taking their position on the data science scene. IoT and smart devices are enabling them to collect new customer data and to exploit large volumes of data so as to improve what they know about their customer base.
As it is linked to IoT via the insurer’s own smartphone applications, the data taken from the connected home or car can be centralised and will enable insurers to inform their customers in real time if they are at risk of an event. As a result, the company has more regular contact with the customer, the relationship being oriented towards the service and the predictive maintenance of their insured assets (plumbing, car engine, etc.)
Insurance companies are, then, progressively moving on towards an entirely new horizon, by implementing programmes which encourage customers to put into place preventive tools, and checking they use them correctly thanks to the data collected.
2 – TECHNOLOGY – transforming activity by using digital
Insurers next. They have started to implement vast digital transformation programmes into their activities. Yet this still is not quite sufficient, as 4 areas must be reinforced, namely: the front-office, service management, how to approach risks and compliance, and the digitalisation programme.
For the front-office, a truly digital interface, Big Data and data science used altogether will modernize the networks and distribution processes. As we have seen already, this is the result of better knowledge of customers. The distribution networks’ work station is, now, undergoing important changes, both in terms of function as ergonomics. It is even changing with regard to end-user services, as a result of the integration of digital tools for sales personnel. To explore just one of these changes, let us discuss the development of direct interactions (eg., the insurer’s website and social media), via the Internet and other mobile apps which aim to increase traffic coming from prospects and to win over new clients.
The first impression that an insurer gives to their customers is most certainly how their service is managed, particularly regarding the claims process. Really at the heart of one of the profession’s major preoccupations is its on-going improvement which is focused on 2 different approaches: firstly, processes optimization and, secondly, making interactions smoother for customers. Some remarkable innovations are coming out, such as optimised reports using augmented reality (AR) and sent by drones; data science which allows for the detection of potential fraudulent activities; and the blockchain which makes interactions between claimants, third parties, and insurers secure and simple.
As for the approach to risks and compliance, today the implementation of predictive analysis tools are making for better claims management processes. Not only is this is generating a large amount of market data but also consumer linked data. In light of this, insurers have to be, and must show themselves to be, extremely vigilant with regard to data storage and security with regard to threats of cyberattacks.
Finally, the company’s digitalisation programme should be adapted to the maturity of its activity. To do so, service offers will have to be created in “agile mode”, linked to a connected object. This is the ideal link in order to satisfy client and prospect needs more efficiently, and thus by proxy, increasing revenues by gaining new customers and maintaining customer loyalty. Alongside this, the company’s activity will be paired with initiatives linked to fraud detection and updated regulatory standards. This is truly an area where new technology can bring a strong and influential solution.
3 – SOLUTIONS: Fewer products, more services – the keys to the new digital ecosystem
Last but not least, the digital ecosystem. This is where insurers can seize opportunities to sell innovative or additional services. Since customers are more or less favourable to the expansion of home automation and smart cars, why not develop win-win partnerships with large influential companies or those coming from the InsurTech industry? On the one hand, connected objects can be sold and linked to an insurance policy, giving a competitive advantage for winning over new clients. On the other, these intelligent objects are paving the way to over-personalisation.
Not only are companies focusing on services or add-ons in exchange for personal data, but these services are influencing consumer behavior, and thus the customers generate fewer risks. Insurers are simplifying the risk selection process and are managing to achieve higher customer retention rates and more loyalty from existing customers. These loyal customers are receiving benefits such as real time alerts and complete cover, but also more personalised cover, as it will be linked to their lifestyle and consumption. Early adopters have included these services in bespoke offers, with the intention of improving the way they assist customers in their lifestyle habits and, therefore, reducing associated risks.
Insurers are, then, trying to implement a type of iterative customer process, so they can better define their customers and adapt offers and services. In this way they can obtain more information, leading to more personalisation. We then enter into the virtuous circle of innovation.
As we have seen, customers, insurers and the surrounding ecosystem are all intimately linked. Digitalisation, by pushing these players together, is also bringing an element of flexibility, agility and speed to the market, thus phasing out older key players on the property and liability insurance scene.
Deborah Osada & Emmanuel Gambart de Lignières
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