By Tim Dimond-Brown, VP Sales and Operations at Quadient.
After several years of, at best, stagnation, the insurance industry’s growth in 2015 was welcome news. However, this doesn’t mean that there aren’t challenges ahead: not least, making sure insurers can both continue to attract customers, and that those customers remain. According to Accenture, despite seemingly high levels of customer satisfaction, 30 percent of customers are likely to switch insurers; this rises to 41 percent of those who have made claims. This switching economy is worth $5.8bn in the U.S. alone. At the same time, there is a growing threat of digital disruption to the industry. Yet could one of these challenges provide a solution to the other?
The Digital Threat:
While for many, digital disruption means price comparison sites, its actual impact could be much larger: potentially altering the way the industry works, and driving regulation to match. For instance, look at how businesses such as Uber and Airbnb disrupted the taxi and hotel industries by essentially acting as brokers for individuals who would provide the service and take on the risk of owning and maintaining a car or home. While both have encountered significant challenges from regulators and existing players, they have also changed many people’s expectations of how services work. With enough members, a similar approach to insurance is possible; acting as a broker for users who will take on the risk of covering claims, while taking a share of premiums.
The Digital Opportunity:
Insurers shouldn’t wait for digital disruption. The fact is that new technologies and customer expectations are already driving the industry towards a digital future. If insurers cannot keep up with this, they will inevitably be left behind. Instead, they should take advantage of digitalisation right now, in order to better serve their customers and ultimately secure their share of the switching economy.
For instance, the digital approach can greatly improve the experience of making claims, by far the most stressful interaction for a customer. It can automate the process; allow claims to be initiated from anywhere at any time; and recording all information at all times, minimising the work the customer needs to do. Such claims will increasingly interconnect with other online resources. For example, in France the aftermath of car accidents, including any vehicle damage, must be photographed, and those images stored in a national database. Connecting with that database would allow insurers to gather independently verified evidence on claims while also streamlining the process for customers. Looking further ahead, developments such as driverless cars, personalised health data, constantly connected devices and a need for policies lasting only hours will demand insurance evolves. Digital services will be critical to its success.
The digital age is one of uncertainty for many insurers: adapting could be a costly, time-consuming process. However, ultimately the underlying principles of customer service will remain the same. Whether helping customers decide on the best policy, or supporting them through the claims process to make it as painless as possible, the digital revolution should first and foremost focus on customers.