Redefining insurance over the next decadeBy Peter Miller
Insurance providers must lay the transformation groundwork for innovation now.
The insurance industry in Asia has been accused of being slower than other industries to embrace digital transformation. This can be attributed to a combination of factors, including a resilient business model, legacy systems, and the highly regulated nature of the industry.
But as major forces such as climate change, an uneven economic recovery, and global uncertainties reshape the market, the industry is confronted with unique challenges – and opportunities – in this window of time. To open the way for success in the coming decade, insurance providers must lay the transformation groundwork for innovation now.
The next level of customer experience
Travel insurance is what digitisation should look like. Today, most of us get our travel insurance online, either through an insurer’s website or when booking our flights. But must customer contact begin and end at that transaction?
For instance, when a traveller is unwell, modern ecosystems allow for telemedicine and/or the nearest medical personnel or transport to be dispatched to the traveller’s location. Rather than limiting contact to an impersonal claims process that happens past the fact, a better experience would be to ease an unpleasant situation by working with partners to deliver relevant care and help at the point of need.
Needs-based advice has been spoken about for decades but now with an abundance of real-time customer data available it is possible to make the right offer at the right time through the right channel including incorporating behavioural economics.
Customers for life
Customer ‘’lifetime value’’ is a concept often discussed but not practised as broadly as it should be. For example, some banks offer an initial interest-free overdraft and in effect free upfront cash to students opening their first bank accounts. The idea is to invest in their potential life-long customers upon graduation whilst recognising they may not make any money from these customers for several years.
Initial insurance sales can be the start of a life-long relationship to nurture as the customer progresses through different phases and needs in life. Having a customer for life also means supporting customers beyond the initial point of sale. A customer who purchased insurance from a bank should be able to go back for support; one basic area banks should support customers more is by integrating pertinent information about their insurance products into their banking apps.
The core of the insurance industry revolves around protection from risk. One way to augment this is by having a broader view of protection beyond financial compensation such as helping customers remain physically and mentally well by encouraging exercise, regular medical check-ups or identifying early signs of stress. Gamification supported by behavioural analysis is one technique used to ensure an engaging experience.
Building an ecosystem
Delivering superior customer experience and nurturing life-long relationships would not be possible without a strong digital foundation. Digitalisation sets the stage to bring us to the next level where an insured customer can bring their vehicle to the workshop and be assured that they are getting a fair price, the right parts, and know exactly when repairs will be completed.
Such an experience can only materialise through participation in a broad ecosystem of service providers and insurance firms. With the right ecosystem provider, insurers can leapfrog the competition and gain the opportunity to offer products to a broader audience or incorporate protection into services or products from other partners.
Insurers have long relied on partners to offer their products, be it extended warranties at car dealers and retail shops, travel agents offering travel insurance, or banks offering insurance products over the counter. This means that insurers already have the innate knowledge of how to operate in a decentralised environment and can adapt far quicker compared to other industries.
The future of insurance will be driven by data and rich connected ecosystems to deliver tailor-made products and exceptional end-to-end customer experiences enabled through deep insights. Future purchases will be part of a life-long relationship between customers instead of a one-off and with banks or insurers, they trust.
Delivering this vision requires participation from all stakeholders, whether motor workshops, clinics, to insurers. The industry is still at the early stages of this journey, but we are moving in that direction. The next decade of insurance will likely look very different from today.