By James Harrison, Head of Insurance at Dun & Bradstreet
It’s been over two years since the pandemic began, causing significant turbulence for insurers tasked with keeping the weakened UK economy afloat. So much so in fact that, by September 2021, small businesses in the UK had been awarded $1.4 billion in full and interim business interruption payouts – all of which insurers were forced to foot the bill for.
And the challenges didn’t end there, of course. As the geopolitical landscape worsened as a consequence of the Russian invasion of Ukraine earlier this year, so too did the pressure placed on insurance firms to shoulder the growing financial burdens that came with it.
With the global economy still an extremely challenging environment, now is the time for insurance firms to get ahead of the next wave of hurdles, and develop an insurance offering that’s more flexible, digital and forward thinking – not just for their customers, but for themselves too.
In this piece, I’ll highlight some strategic ways insurance companies can evolve to fulfil the new demands we’re seeing in the sector – both now and in future.
Educate your customers
Traditionally, the only interaction between insurers and customers came about because of an incident such as theft or damage. But this needs to change.
It’s important that insurance firms lessen the negative association they might trigger by frequently communicating with customers about the more positive support they offer. This could include working with their broker partners to take on a more robust educational and advisory role with customers.
By proactively educating and supporting customers, instead of playing a reactionary role in times of need, insurers can develop a relationship that’s mutually beneficial.
As a result of taking on a positive advisory role, customers can learn the true value of insurance before an incident happens. For example, insurers must discuss with customers changes they’re seeing in the markets they operate in, and how they can plan for these advancements – helping them foresee any potential challenges and plan accordingly. If we take the ban on oil imports from Russia, insurers should contact clients working in this sector and emphasise the importance of looking for alternative suppliers now and provide them with information on how to stress test in order to mitigate risks – they will appreciate the strategic guidance and it also lessens the chance of future claims. And firms that offer continual guidance will ultimately gain customer trust and loyalty that will propel their business forward.
Readily provide solutions
As the world has digitalised beyond anything we could have imagined – even a decade ago – and this has created new opportunities, we have seen the evolution of the gig economy. As of March 2022, there were around 4.23 million self-employed workers in the United Kingdom, compared to 3.2 million in December 2000. Since self-employed workers make up a huge percentage of total workers, insurers now need to cater to the specific needs of this demographic by offering professional indemnity insurance cover to limit liability.
We have seen innovative solutions come to market, such as “Working from Home Insurance” but there is still more to be done for gig workers whose independent contractual hours take place outside of the home, such as Uber drivers. It’s time that business leaders be forward-thinking and more agile in providing innovative solutions to entrepreneurs – particularly as the demand for freelance insurance only increases with time.
Be technology-driven
It’s a digital age and insurers aren’t just living in it – they need to be part of it.
And as every organisation works through this uncertain time, insurance firms will have to undergo an ongoing digital transformation if they’re to maintain growth and keep up with higher customer expectations and demands.
It’s now the responsibility of industry leaders to invest in digital technology to enhance operational efficiency and move forward as one. Specifically, investing and implementing AI technology will help with providing instant quotes without the need for firms to carry out extensive underwriting decisions, and can also assist in the renewal probability assessments, and potential premium and policy changes process – streamlining the overall claims procedure and cutting down delays. This will not only deliver a strong customer experience but will also provide firms with a competitive advantage
However, when firms use AI to wade through data and improve operational efficiency, it’s also essential that insurance firms have up-to-date material to drive impactful decisions. This should be a priority for businesses, as more than half (52%) of business decision-makers say their company won’t survive without the best quality data and 67% believe their data is vital to the future success of their business, displaying the need for software to help with the data curation process and uncover actional insight to thrive in a competitive market. Although implementing AI technology is a must, it should be mirrored with the correct metrics if firms are to make a success of this new way of working.
Looking forward
Customers are expecting more from businesses across all industries and the insurance sector is no different.
In today’s volatile economy, even legacy organisations are vulnerable. So, businesses that want to thrive and continue to gain new clients must transform their business processes, provide optimised offerings, and cater to customer demands while providing a seamless user experience.
Now is the time to drive further innovation in the market to deliver on customers changing demands. We have seen smaller innovative players enter the market, such as Zego, Wrisk, Shift Technology etc., but their initiative now needs to become mainstream to keep the sector evolving and pushing forward.
