InsurTech

Summertime and the living is easy – less so for insurers

Share this post:

“Summertime and the living is easy,” as the great George Gerschwin song goes

Well, maybe less so than in decades past for the insurance industry. A mature industry, like many, insurance is facing absolutely new market-shaping dynamics these days. So says the new global Institute for Business Value report, “Winning strategies for insurers.” The results of this study extend and confirm much of the thinking about the insurance industry which we have explored in prior posts, including the integration of customer-focused digital strategies. Insurance has often not been as fast as other segments of the Financial Services sector in innovation or digital transitions, and that may be because companies are the most innovative when, “their back is against the wall.” Compared to other segments of financial services where switching is easy, insurance tends to have more loyal customers, so innovation may not have been an imperative in the past, as much as today. Luckily, the underlying theme in this new study is really innovation that is critical to insurance, and now is the time.

Most notably, I found some points in the study particularly striking on that theme. For instance, the study findings broadly agree with the increasing impact of social business in the insurance industry and that the “listening” aspect is becoming critical to linking better to customers and their needs. The study indicates 72% of industry leaders were using social media to communicate with customers. This builds further on data from another January 2013 report that showed ‘digital and social media channels influenced 40 percent of consumer decisions made in the insurance consideration phase with some types of insurance. [1] Yet many of the 10,000 global insurance companies enumerated in the report are still, evidently, trying to grasp the value of these technologies. In fact, the study also shares that even ‘underperformers across all industries who collaborated with their customers were still a few percentage points more than the insurance industry’s 33% average.’ Yikes.

Still, there are increasingly opportunities for insurance to take advantage of social channels and technologies to add value and potentially even reduce risk. There are good examples that counterbalance the average. In fact, the study mentions a great case for social business in Security First Insurance which ‘recognized the challenges created by the widespread use of social media in a disaster’ using analytics with social media to bring aid faster. This reminded me of the work I’d seen at the City of Fort Worth to augment their public safety using social business software. These two stories got me thinking of the possibility of future private and public partnerships that insurance could explore using social channels during times of crises in coordination with governments to help its customers and first responders. This takes the value proposition of insurance companies, like Security First Insurance into relevance and importance before and during the crises, potentially lowering total risks.

The work that Swiss Re has already conducted is a view of how those innovative partnerships can add value, but I think it can get much more innovative in the future. I’m encouraged by the focus on insurance industry in the partnership with Apple, that can supercharge more innovation.

Beyond this point of focus, the IBV study points out the importance of customer-centricity and provides a great example of this in insurance, with that of Nationwide Insurance, which had innovated to improve its overall customer satisfaction, as well as reporting and compliance, using an innovative approach to providing a unified view of its customers.

Besides being detailed in the study, both these cases have a similarity in analytics and the gathering and use of data, both internally and externally, to help customers. These are topics I’ve seen as top of mind in insurance, and that are sure to be further explored at the Insight2014 Conference in October. I’ll hope to see you there, too, as the value is evident in the expected 13,000 attendees that attain more than a $7000 value from it.

 

[1] “Beyond price: The rise of customer-centric marketing in insurance,” McKinsey. January 2013.

Program Director, Cross-Portfolio Services Strategy

More InsurTech stories

To energize innovation in financial services, take it outside

Financial companies have always been innovators. But in this age of digital transformation, innovation in financial services is more important than ever to stay competitive. Innovation processes, traditionally limited to product development, are now spreading throughout the entire organization. Many companies, however, are not yet well-positioned to reap the benefits. When researchers from the IESE […]

Continue reading

Four ways to stem the growth of financial crime in insurance

Insurers have long understood that the ability to quickly detect fraudulent claims not only stems losses, but also minimizes the impact to legitimate customers as well. But as more complex financial crimes like money laundering, employee fraud, and corruption have gravitated toward insurers more recently, many don’t have the programs in place to combat these […]

Continue reading

How can insurers stay relevant when insurance ceases to be mandatory?

Insurance and insurers have been around for millennia, with modern insurance starting in the U.K. more than 300 years ago. For much of this time, incumbent insurers have been protected from competition by four big barriers: regulation, the law of large numbers, the trust nature of insurance, and, last but not least, the inertia of […]

Continue reading