In 2008, connected devices officially outnumbered people. Analysts estimate that by 2025, there will be more than 50 billion connected devices. It’s no secret: the world has gone digital and no industry is safe from reimagination.
Technology and connectivity have transformed the way we interact not only with each other, but even more so with the tools we use to live and work. Digitization has given rise to brand new markets and this paradigm shift has sparked elevated expectations from consumers.
Today’s consumers expect products to be simple, transparent and accessible. The demand for seamless and frictionless experiences spans industries, from retail to healthcare to insurance. While other industries have found ways to address evolving consumer demands, insurance has been slow to catch up. Let’s take a deep dive into three key pillars of transformation poised to support insurers’ efforts to get ahead.
Meeting customers where they are
Consumers have changed where they shop. In the age of the sharing economy and pay-per-use models, access is practically ownership. The digital age has made distribution a major driving force of growth. In order to thrive, businesses have been confronted with the decision to embrace an ecosystem mindset, which enables consumers to enjoy a seamless and integrated experience. For insurers, this poses two main challenges: digitizing their products and integrating them into digital ecosystems. The goal is to make dynamic insurance products an organic part of the customer journey, meeting those customers where and when they shop. Ecosystems represent a $60 trillion opportunity.
Creating dynamic products
Insurance companies have traditionally relied heavily on historical data to assess risk, particularly claims data. But in the last few years, traditional insurance models have encountered challenges in dealing with mountains of unstructured data pools in the advent of the digital age. In our highly digitized world, new markets can appear and become key pillars of new industries overnight, meaning that there is no claims data to analyse and measure risk. According to Forbes, there are 2.5 quintillion bytes of data created every day. And that number is only expected to balloon with the rise of the Internet of Things. Understanding the underlying trends and mechanisms in this huge data pool is key to properly underwriting these new markets.
The challenge for insurers is to figure out an efficient and scalable way to transform this data into actionable insights that can be used to help understand, select and price risk. In addition, today’s evolving risk landscape demands more dynamic insurance products. In order to get there, insurers need to find a way to use artificial intelligence and machine learning technologies to: make sense of both structured and unstructured data sets in order to help make underwriting processes more informed and strategic; create new, customer-focused insurance products; bring these products to market faster; and more importantly, make these products easily accessible within preferred customer environments.
“Automation and artificial intelligence can massively impact the pillars of the insurance value chain — including pricing, underwriting, distribution, and claims. Indeed, there is an opportunity to evaluate the risk landscape of a carrier’s entire portfolio. The technology that’s present today is a huge enabler in helping carriers create and optimise the products that will add value to their customer’s daily experiences.” — Dr. Ernest Earon, EVP of Artificial Intelligence at REIN
Adapting to customer needs
In order to create exceptional value to consumers, insurers need to take a look at changing consumer behavior patterns. The sharing and on-demand economies provide a striking insight into how people purchase and consume products today. For insurers, that can mean shifting from annual policies to usage-based, continuous cycle insurance products that are tailored to each customer’s needs. Effectively, insurance is becoming a service instead of a one-off purchase. Historically, consumers only interact with their insurers at the point of purchase, renewal, and when they need to submit a claim. Today’s risk landscape has flipped that model and is requiring insurers to interact with customers more frequently than ever before.
“In the two decades that I’ve worked in the insurance space, I’ve never seen a shift in customer expectation as seismic as the one we’re seeing today. The demand for better user experiences, more interactive customer service, and easily adaptable products is prevalent across the board. The insurer that can create the most value and best engagement will separate themselves from the pack.” — Will Newton, VP of Insurance Product at REIN
Ready to adopt a scalable strategy for unlocking new revenue streams and accelerating value creation in today’s insurance landscape? We’re looking forward to work with you. Reach out to us at firstname.lastname@example.org.