Average car insurance premiums have gone up by 11 percent in the past year, according to recent data from the Association of British Insurers (ABI). Insurance has always been a grudge purchase, but with prices soaring, consumers are questioning the value for money they’re getting with their policies.
Fujitsu’s own New Pace of Change report found 74 percent of UK consumers regard price as the most important factor in choosing which insurance package to buy, above features and online or mobile capabilities. This pressure is compounded by the industry’s reputation and customer’s view that they are difficult organisations to deal with particularly at the time of a claim.
However, technologies such as artificial intelligence and automation are transforming the face of insurance as we know it.
There is no doubt the insurance industry needs to evolve and we’re already seeing an interplay with new technologies across three key areas; customer experience, better assessments and adding value by mitigating risk.
Take life insurance for example. This is an area that has traditionally involved an in-depth assessment of the customer by a qualified underwriter using a well-worn set of actuarial models. However, this has often led to one-size-fits-all policies, and the process itself is distanced from the consumer, not reflecting the way they make purchases.
Whether it is buying a new pair of shoes, setting up a bank account or booking a doctor’s appointment; we expect all these to be done online and – to an extent – to have full control over the process.
The insurance industry has responded to the clamour for convenience by automating typically slow processes, creating mobile apps and even investing in chatbots. Perhaps the biggest advantage of exploring these technologies is that insurers now have more touch points with a broader demographic of customers; giving them the data needed to create bespoke packages that justify the cost of service.
Then comes the value add. In such a competitive market, it is the ability to offer personalised services that will set insurance companies apart from their competitors, and giving them the opportunity to regain their customer base from the aggregators. Data analytics is not necessarily new, but its current level of sophistication is enabling ‘traditional’ insurers to tease out what is relevant and convert that into real intelligence.
The challenge is around clearly explaining the data being collected, how it will be used, getting permission to hold it then – critically – protecting it. Any move towards technology that relies on data needs to have security closely integrated throughout.
A change of mind-set
Our ‘Fit for Digital’ survey found 98 percent of insurers believed their organisation had been affected by digital. A further 72 percent said their sector would fundamentally change in the next four years. What these perspectives from inside the industry itself tell us is that the tide is changing and we need to keep moving forward – from the inside out.
What we often see in the wider financial services industry are two tribes. The first is agile, digitally savvy and focused on innovation. The second hasn’t yet bought into digital disruption, and the focus is on making sure the core set of services is working for the customer.
Getting these two groups to communicate is the biggest challenge. Artificial intelligence, automation, and even the internet of things have potential to add significant value to insurers and customers alike. However if employees aren’t on board and ready to make a significant change in the way they work, will the investment be worth it?
To be able to respond to the concerns being voiced by consumers, and to harness the business agility needed to respond to market trends, insurance businesses from the c-suite down need to make a culture shift. Driving change from the top is the only way to future proof the business in a digital world that has already changed the state of play for good. We simply cannot afford to rely on the same rules.
A final word
Rising prices for insurance is prompting calls for insurers to justify the value they offer, and while automation of processes and artificial intelligence will go some way to delivering on that promise, insurers need to take an inside out approach to bringing these new services to market. By mirroring this innovation with new internal processes, and by aligning innovation teams with those looking after the core business offerings, the face of insurance will change as we know it.