Insurers get personal to address the changing industry and customer landscape

Udi Ziv, CEO, Earnix

 

While the insurance market has historically been very stable, with a tolerance for only gradual change, this is no longer the case. Changes in technology, consumer behavior, and claims cost demand faster evolution. It’s clear that the insurance industry is at a crucial inflection point.

Even though widespread adoption of Usage Based-Insurance (UBI) was not quickly realized soon after its introduction decades ago in the 1990s, it was the first big shift in the industry. When a mature and famously conservative market starts to undergo change, the instinct is to hold tight, not march toward new technologies or processes.

After many months of remote working and quarantining, consumers started questioning the need to pay the same amount for car insurance when they were not driving nearly as often. When insurers started seeking ways to satisfy the changing demands of consumers, it resulted in an ineffective and incremental re-engineering of how the insurance sector already does business.

With that now in place, 2022 is the year for carriers to address the connection between business processes and the technology. It doesn’t matter how smart, hardworking, and innovative a team of actuaries, underwriters, or data scientists is if they are challenged with poor processes or legacy technology that can’t keep up with market changes and customer demands. Deployment of dynamic pricing and personalized solutions is the key.

Right time, right place, right policy

A hyper-personalized, ready-when-you-are Netflix type experience has become the standard expectation for everything – even insurance.

To address this, carriers must find a way to marry the strength of their deep knowledge and expertise with today’s technology to ensure they provide fully personalized dynamic offerings that customers require. A key step forward will be deploying advanced analytical tools, business processes and technological infrastructure to respond swiftly to market changes. This will provide improved understanding of customers’ goals and offer the capability to quickly and efficiently develop the right insurance offer to meet their needs, at precisely the right time.

To achieve this, insurers must quickly model complex scenarios to improve decision-making, and develop the perfect product at the perfect price.

Insurers innovate to accelerate products and pricing

Agility is precisely what insurers need today to become faster, leaner, and more effective in addressing current and future market and consumer changes. IT and Business functions are being challenged to create highly personalized offers more efficiently with fewer resources. According to a McKinsey study an agile approach will allow insurers to launch new products or update new pricing models up to five times faster and boost customer experience. Many insurers are limited by legacy IT systems, which can stifle innovation. However, technological, and operational challenges can be overcome by adopting composable and agile technologies, that sit on top of the legacy IT systems, and are designed to digitally transform businesses. This enables insurers to model prices and deploy policies in a much shorter timeframe with significantly lower investment.

The right process and technology are key for innovation. Therefore, it is crucial carriers address the connection between business processes and the technology that supports them. According to Strategy Meets Action “insurers will need modern platforms that can plug and play with different channels and absorb new data sources”.

The opportunities already exist with instantaneous access to better, more comprehensive data coming from devices providing IoT and telematics data. But an IoT device, or any data source for that matter, cannot provide value on its own. It must be incorporated into business processes to provide sources of innovation in pricing, rating, etc. Automation can also accelerate data collection and data processing, speeding up processes, eliminating errors and reducing time to market to weeks and even days. For example, when it comes to UBI and pricing processes, insurers are running telematic data with machine learning and artificial intelligence models to offer personalized policies instantaneously.

A new policy for success

Analytics offers a powerful competitive advantage in modeling highly complicated scenarios to stay a step ahead of changing market dynamics and customer needs. Depth of insight and automation via process systemization gives pricing and product professionals the power to make decisions quickly. With the ability to make pricing and product business decisions quickly, efficiently, and accurately, changes that need to be deployed, whether price or product related, can be done rapidly – improving overall organizational agility.

The past is the past, today we’re seeing insurers implementing intelligent, composable, and agile technologies. As they do, they are reaping the benefits of developing and deploying new, highly targeted, personalized offers – faster than ever. This bridges the gap between what insurance companies need for their book of business and what consumers demand.

 

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