By Adam Bimson, Chief Customer Officer, Vuealta

Insurance relies on the ability to be able to effectively plan, model and predict the likelihood of future events. But a disrupted landscape, heavily impacted by the pandemic, has made these three things increasingly challenging for the insurance industry. On top of dealing with remote workforces, outdated technologies, and customers with ever evolving and heightening expectations, providing good customer experience and meeting demand has never been more difficult.

These customer expectations are very much driven by a growing focus from consumers on their health and the feeling of needing to better protect themselves. Separate reports have found that the number of people making wills has risen at the same time as life insurance has seen a spike in interest. And for commercial lines, corporate customers are carefully scrutinising their current and future business disruption insurance, again with an eye on increasing their cover.

Increasing demand and ultimately more custom seems like a good thing, and of course most of the time it is. But what about when insurers aren’t equipped to handle such growth in such a short space of time? No business wants to fail due to too much success, but if insurers want to ensure they leverage the opportunity afforded by recent disruption, they need to be able to adapt quickly. Whilst there may be an uptick in demand in some areas, the market is still awash with competition and tight margins. So, there is little time to waste.

Added to this are the demands of other disruptive forces, such as new regulations like IFRS17, which is due to come into force in January 2023. Two years may seem a long time, but the amount of work needed to meet its requirements is not small – insurers will have to embark on significant organisational, data and technological change. And they need to do so, now.

Adapt and reinvent: the keys to better insurance

This all points to the need for a fundamental shift in the way insurers operate in not one, but two areas.

Firstly, there is the need to adapt their operational model so that the effects of disruption, whether driven by the pandemic or regulation, do not impact the experience their customers receive.

Adam Bimson

Secondly, they need to reinvent their business so that the services and products they provide are both appropriate for customers and capable of withstanding future upheaval.

In both instances, technology, or rather the ability to consolidate, analyse and action data-driven insights through the use of technology, may offer the solution.

Why? Because as with so many things, the issues that insurers face are built on data. Being able to harness it gives them a much better chance of tackling those issues head-on. For instance, when it comes to operational models, better visibility (powered by data), combined with accurate scenario-based modelling and planning, will aid the development of a more agile organisation. Whether it’s adapting to a reduction in staff headcount as infections spike in different parts of the country or anticipating when customer service functions may be impacted by local lockdowns and increased restrictions. Being able to identify problems and react accordingly will be critical to delivering operational continuity and, therefore, unimpeded customer experience, and data lies at the heart of this.

Then there’s how it can be applied to evolving products and services for customers. Customers, whether consumers or businesses, are going to want to feel covered by their insurance – insurers will want to balance this with the need to not overexpose themselves to events that could appear out of nowhere. Here’s where the combination of accurate data use and the right digital tools, such as artificial intelligence-driven solutions, can help insurers take a major leap forward. Premiums can be adjusted, and more dynamic products tailored to the needs of customers can be developed.

Being able to use data more effectively is going to play a major role in complying with IRFS17, both in getting ready for its implementation and meeting its requirements in the years to come. Complying with a reporting standard will drive an investment in data and technology, but harnessed correctly, that investment can unlock wider benefits – the same commitment can be used to cover off all the challenges already covered.

In short, those that use technology effectively, and plan for scenarios appropriately, are more likely to build the types of products and services that fulfil both those objectives, and ultimately keep customers coming back.

Making the impossible, possible – planning for what comes next

As with almost all other sectors, insurers fundamentally need to revamp their business models. Technology should form the foundations for this, as legacy technologies simply cannot keep up with today’s fast-paced environment. What’s more, this technology has to support a better use of data, offering a solution to both operational and customer experience challenges, as historical information can no longer be relied upon.

Planning for the unpredictable may seem impossible, but by using a variety of data sources, and more importantly, by being able to connect them all and read them effectively, insurers can ensure they continue to meet customer expectations while preparing their businesses for whatever comes next.