Insurers are facing a number of challenges. There are tough new business, investment and regulatory environments, a rise in power of the emerging markets and rapidly customer behaviours.
All these shape the sector’s longer-term future. And much of this change is fuelled by technology.
Customers (consumers and businesses) are increasingly demanding simplicity, transparency, mobility and speed in their transactions with businesses. This applies equally to their relationships with [insurance] agents, advisers and carriers.
More and more insurance is ‘bought’ by customers as opposed to being ‘sold’ by agents. Understandably insurers are now being forced to re-examine their roles and relevancy.
The expectation for brands to engage at a 1:1 level is greater than ever before but the terms of engagement are often dynamic and unbalanced; exceptional brand experience and utility are baseline consumer expectations.
Insurers need to get better at targeting customers and creating product and services to meet their specific needs. Catching up with what’s happening today is no longer top priority – things will already have changed.
Programmes of sustainable innovation no longer guaranty growth and longevity. Disruptive innovation has to be managed alongside continuous innovation.
Insurers need to scan for disruption (inside and outside of the insurance market) and evolve strategies, planning and budgeting to consider a range of economic and market scenarios. Anticipation to change is critical, as is having the processes in place to source and experiment with open-innovation.
Technological advances have enabled insurers to optimise processes and operations. All leading to gains – some marginal, some significant. But a business based on continuous optimisation in today’s world is simply not sustainable.
There’s an uncalculated cost of insufficient, or even absent innovation.
Entire industries are being disrupted by new, often well-funded product and services that are able to quickly scale and displace long-established competitors.
Since 2002, 52% of the Fortune 500 companies are no longer around; most are now expected to last no more than another 15-20 years.
Rethinking models, shifting away from the poor consumer experience deeply entrenched within the insurance market and embracing new technologies is a must for any insurer. And, as with many other industries, has already given rise to a number of notable disruptors – from Google Compare to Oscar.
The investment market (both venture and corporate) is pouring money into new, emergent and often disruptive businesses across the entire insurance ecosystem. This gives rise to what appears as overnight scale, market authority and social influence.
Three areas experiencing particularly high-levels of external funding are:
- Collation, analysis and use of large amounts of data
- Active sensors and devices connected to the internet
- Omnichannel insurance
Whilst customers benefit from the new array of personalised solutions and insurers drive further efficiencies, it’s the rethinking of the marketplace that will give brands a commercial future.
This is an extract from our Disruption Report 2016 | Insurance. The report focusses on the globals startups driving change across the market and provides a platform for inspiration and recommendations on how best to avoid disruption.