InsurTech is in the eye of the beholder?
What does InsurTech mean to you? Should be a fairly straightforward question to answer, right? But, as usual with anything involved in Insurance, it’s maybe not as simple as you think.
To some, it will be the use of technology to either improve the insurance customer experience or enhance the insurance company’s capabilities. Or both. It’s a pretty broad-brush stroke but it’s pretty close.
To others, says the Head of Innovation at a large insurer, it could be any technology solution that delivers double figures sales growth. At a small insurer, it could be something as simple as giving their customers a digital purchase journey.
On the other hand, Investopedia defines it as “the use of technology innovations designed to squeeze out savings and efficiency from the current insurance industry model”. Perhaps that’s a little cold and to the point but you couldn’t really deny its accuracy for a lot of people, particularly in large insurance companies.
Whatever your definition might be, one thing isn’t up for debate – the insurance industry is changing at pace and most of today’s customer experiences are going to look positively medieval in 10 years’ time (if even that long).
So, what can insurance companies do about it? Innovation and digitally focused departments have sprung up in record time over the past 5 years, but the big players still seem to lag considerably behind the smaller, more agile challengers. To understand this a bit better, it’s worth looking at Insurance’s big cousin, the banking sector.
Traditional banks have been under pressure from challenger “direct” banks for at least a decade. These newcomers were able to compete without the noose of branch networks, IT legacy systems or large banking operations, combining a vast advantage in speed to market with a much lower operating budget. It was a head to head battle for the attention (and the wallet) of the end consumer.
This narrative, however, is changing. Traditional banks have risen to the challenge, investing heavily in developing their technology solutions and enhancing their products and services through innovation in digital capabilities.
Partnerships make Perfect
So, to today, where more and more incumbents are embracing fintech companies as partners – as someone to work alongside to differentiate their offering in the market while allowing them to keep control of the relationship with the end consumer.
And, surprise surprise, the same thing is happening in the Insurance sector. Incumbents are beginning to embrace the disruption rather than either fighting it or running from it. According to a recent Capgemini survey, “World InsurTech Report 2018”, Almost 96% of insurers said they are looking to collaborate with InsurTech firms, in order to improve their services and keep up with consumer demand for digital capabilities and better customer service. Since 2011, investment in InsurTech has grown from $140m to $3.2bn in 2018.
When you bring this together to look at the Insurance customer of the future – the tech savvy, brand agnostic, time-poor millennial – there’s only one way it can go. And today’s large insurers are going to struggle to meet the demands of these customers without fully embracing InsurTech and all the benefits that it brings – to them and their customers.
But, and here’s the kicker, they can’t forget what made them large in the first place – well designed products that met the needs of their customers, direct lines of communication and focus on customer service, competitive pricing and a feeling of a personal relationship.
Delivering only transactional elements isn’t enough – customers need a reason to keep interacting with your brand on a regular basis.
Delivering great products isn’t enough – customers want to feel a personal touch, especially when something goes wrong.
Delivering great customer service isn’t enough – customers want to know that they’re getting great value.
Delivering a digital channel isn’t enough – customers want to be able to pick and choose which channel to use and when. And expect the continuation of their journeys to be seamless however they choose to interact.
Survival of the Fittest
There are very few, if any, household name insurance companies that can claim they deliver everything their customers, current and future, expect from them.
On the other side of the table, there aren’t many InsurTech companies that have the experience, financial backing and customer reach to mount a truly serious challenge as major insurance players.
Sounds like a match made in heaven. In fact, the survival of both may depend on it.
Get in touch with ManageMy to see how we can make tomorrow’s insurance world a reality today.