By Ian Betley, Vice President - Head of FS Sales EMEA and Asia, DST Systems
Established insurance firms, saddled with complex and inflexible legacy systems are hindered by their traditional models. Inevitably this means they are less agile and unable to respond to market demands appropriately, creating the opportunity for nimble challenger brands with a technology-first philosophy to generate bespoke solutions and niche products for various customer segments.
However, the data itself is only half of the story, it has limited value without the means to accurately interpret it, effectively analyse it and then generate, execute and monitor sales related actions from it.
To put this into context, imagine you have booked a family skiing holiday online, a single decision that invokes a number of potential insurance implications. Firstly, it would make sense to take out family travel insurance if you don’t have it already. You may also want to consider some more specific family income protection or accident cover just in case you suffer an injury that impacts your ability to work. Similarly, you may want to ensure you have sufficient cover on your home insurance policy given that your property will be vacant whilst you are away.
These are incremental insurances designed to provide specific (if perhaps temporary) cover against potential events and would clearly attract additional premiums.
However, by the same token it should not be unreasonable to expect a reduction in your car insurance premium (and your breakdown cover) if your car is safely locked in your garage for the duration. In the World of the ‘Connected Home / Internet of Things (IoT)’ it is feasible to expect some relief should you have an IP camera (to monitor internally and externally), smart lights (to mimic your presence at home), thermostats and smoke detectors (to warn of fire).
Complex it may be (though IoT integration (‘workswith’) is advancing by the day) but imagine if a brand you trust provides you with the opportunity to adapt your insurance around your needs after detecting and following your journey; this would deliver tangible value in using a single provider who can facilitate a real relevance of the products to your needs. Similar principles can be applied when you consider other family events (birth of a child, house move, car purchase etc.) and combining the financial liabilities these may generate, with the need to protect your family’s future financial security.
The current advisor model does that at a point in time, but often its value diminishes over time as the products may lose relevance as your circumstances evolve.
Challenger brands could offer this intuitive service and in doing so steal a march on the more established and less agile players. To retain and attract customers it is essential to apply a customer-centric ideology and traditional insurers need to reassess their attitude towards data driven digital technologies and modernise their processes and the relevance of their offer to customers. In fact it is conceivable that the leading data driven ’lifestyle’ insurance company of the next generation does not yet exist.
So what are the steps to protecting against this threat, or even taking advantage of the opportunity?
Step 1 - create the vision you want to achieve: enhancing customer loyalty to deliver greater customer value, lower aggregated costs and enhanced profitability.
Step 2 - create an environment that operates with a ‘customer first’ approach: how you design your business, how you target your markets and how you engage with your customers. ‘Digital by Design’ should be the core principle and within the business DNA to deliver a complete omni-channel environment, abandoning the traditional front, middle and back office mentality.
Step 3 – create a fresh perspective on the traditional view of insurance: hire talent from outside the insurance industry to bring in new ideas, ensure the right people lead the transformation, giving them the freedom to execute technologically and data driven plans aimed at the consumer. Be prepared to occasionally fail, test and learn is a strategy, hope is not.
Small changes will not guarantee success; what is likely to be needed is a vision to transform the current operating model to meet the future needs of your customers.
Many organisations have failed at transformation as the definition has been simply to ‘fix the problems’. Transformation needs to align to delivering the vision in the new World and may mean a combination of buy, build, partner and adapt, and even more likely a two-speed technology approach, where the old technology (not customers!) is segregated from the new.
Businesses should focus on developing technology and customer engagement strategies that embrace the effective use of both internal and external data. GDPR may well be a catalyst for bringing together a more cohesive data strategy, where the compulsion of regulation adherence creates a real opportunity for better data utilisation – building the right data enrichment strategy now will position the business to thrive in the post GDPR World.
Ultimately the winners will be those that meet customer demand. Customer service is a given, customer experience is the differentiation. That experience is not just about timeliness, it’s about ease, trust, relevance, accessibility and perceived value across all channels – it’s about me; the customer. Only then will you achieve loyalty.
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