HOW WILL KEY TECHNOLOGY AND MARKETING STRATEGIES SHAPE THE INSURANCE INDUSTRY IN 2021?

By René Schoenauer, Director, Product Marketing, EMEA, Guidewire Software

 

In 2020, when those affected by the pandemic looked to the insurance industry for protection against an uncertain year ahead, the need for wide-ranging and comprehensive insurance solutions was clear. Learning from the industry’s most recent challenges, insurers are also waking up to the benefits of being agile, innovative, and accessible. While customers expect more from their insurers, rebuilding and maintaining their trust will be an ongoing challenge. Happily, insurers have all the technological tools they could wish for in responding to these challenges. The key theme of 2021 will be how insurers make use of these tools, and how effectively they integrate them into their business.

 

The customer knows best

Adopting a ‘digital everywhere’ approach which can adjust to an individual customer’s preferences is non-negotiable for insurers in 2021. Digital transformation journeys, such as digitising first notice of loss (FNOL), have progressed but customer experience can be improved as a whole. Digital FNOL is the bare minimum an insurer can do for their policyholders and insurers need to embrace true omnichannel experiences with investments in smart technology.

Customers have become accustomed to using a variety of channels to facilitate their daily lives. It is now the job of businesses to meet them through the channels they trust and use the most, not the other way around. This year, insurers will have to make good on aspirations to deliver truly omnichannel experiences that customers value. Making sure that communications are meaningful, that those lines of communication are optimised, and customers’ needs are met on their own terms will require digital systems that are up to the task at scale. If successful, insurers will find that greater transparency will bring them closer to their customers and facilitate deeper trust.

 

René Schoenauer

Enter the innovation machine

Legacy technology has no place in 2021. Insurers need to let go of traditional methods of implementing and maintaining systems and focus on providing the best service and most innovative products. This is how they will achieve the innovation this industry has been talking about for years.

Data and analytics, for example, allow insurers to personalise products to build and maintain more meaningful customer relationships. Other automation and cloud services streamline efficiencies, while APIs can enhance core systems by allowing the integration of innovative insurtech solutions.

Most importantly, insurers have access to more data than ever before and have better ways of handling it. Effective use of AI, machine learning, and data analytics will transform the insurance market over the next few years. It is not a luxury, either. New and highly changeable risks like cyber and as well as climate change, where historic data may not be relevant, require a modern, innovative approach. Analytics techniques leveraging AI can accurately measure emerging risk and inform appropriate coverage.

Many insurers are entering the innovation machine with the help of an insurer ecosystem using an outside-in approach. This approach often involves testing new models with less critical systems in the cloud first before deploying more widely. The paradigm is shifting, however, and insurers are now transforming core systems instead of playing at the edges. As insurers ditch legacy systems, they gain greater agility and are more able to meet their policyholders’ needs. In doing so, they can solve real world challenges and provide the societal value the insurance industry underpins for years to come.

 

Who takes ownership?

The rise of non-insurance providers like Ikea and Tesla entering the market threatens the insurer’s ownership of the customer relationship. There are those who predict that insurers will be disintermediated from their customers and relegated to the role of obscure, white label product providers. As ecosystem economy structures develop further, previously delineated services are bundled together. For some insurers, becoming a partner in a services-driven business model may appeal to their long-term success, but not all would agree.

The ecosystem economy may soon experience a further wave of growth. Consumer finances are under significant pressure due to lost, reduced or stagnant wages, increased household bills, and higher living costs. At the same time, many still want access to the latest goods and services. With the ecosystem economy having matured over the past decade, and everything from mobile phones to bicycles accessible on the consumers’ terms, the market conditions are ripe for this model to grow.

Insurers need to address their role in the ecosystem economy or risk losing the battle for the customer relationship for years to come, if not indefinitely. In order to do so, they have to design the overall service, from products to user experience, to be flexible, dynamic and customer centric. Customers who lease rather than own do not need cover all the time, but when they do, they want the process of buying a policy to be as fast, if not faster, than booking a taxi. Policy wording also needs to be clear, so that terms are easily understandable. Demand for simplicity and immediacy in insurance processes will only grow, including those that can be complex – like filing a claim.

Despite being a bit battered and bruised by the events of 2020, now is a time for insurers to be more outward looking and embrace the challenges facing them and society. Ditching legacy systems has been needed, but in doing so insurers are positioned better to move towards innovations that go further and faster still. Customer-centric, seamless processes show that insurer support is available to customers when they most need it, at the most convenient time, and through the channels they trust day-to-day. Meanwhile, use of data, analytics and automation within core systems deliver services and products faster at scale without compromise to the overall customer experience. Insurers need to review their options, implement solutions appropriately and collaborate with new entrants to the market to confirm and reinforce the industry’s position moving forward.

 

spot_img

Explore more