Article Synopsis :
Insurance company CEOs know they work in a disrupted industry, but haven’t seen the level of disruption they had anticipated, says this PWC paper. Moreover, they see sensors and telemetric as delivering risk mitigation that will improve their own businesses.
The data comes from research conducted with almost 1,300 CEOs across 85 countries, but the authors of the paper question whether these businesses have underestimated the need for these businesses to change and become more flexible and customer-focused.
However, insurance companies may be their own worst enemies thanks to what the paper refers to as its “strong culture of self-reliance and stability [which] is a major hurdle for putting innovation at the heart of an organisation”.
That sounds like “if it ain’t broke, don’t fix it”. Or, as the insurance industry has done for years, recognise it is broken, but patch it up instead of seeking a permanent fix.
While many recognise the need to adapt, 85% are concerned about the pace of that change. The answer? To adapt through learning about what your clients want. And that requires going digital.
Of course, digital opens a business to the possibility of seamless automation that simplifies, removes error and ultimately saves money.
It will also deliver data that allows insurers to better understand their customers, say the authors and not only serve them better, but anticipate their needs.
There are, off course, barriers. Legislation exists to protect consumer data and new regulations such as GDPR in Europe give consumers more power over their data than ever before.
This is helpful, for while 70% of European consumers are concerned that their data might be used for purposes it was not collected for, only a quarter of Americans believe companies handle their data responsibly and 15% that it will be used to improve their lives.
Data protection regulations has raised awareness among consumers and though business needs explicit permission to collect and use data, research shows that half would share more data with their insurer in exchange for a better deal and that more than two thirds would instal sensors at home or in their car to reduce their premium.
The paper suggests insurers would do well to educate customers about their data rights in order to benefit from simple disclosures that will provide powerful data sources.
Companies will have to be seen to be trustworthy, or they will not persuade customers that they are worthy of having access to this data.
The conclusion is that analytics lies at the heart of future success and that insurers will benefit more from a number of small innovations over believing in a big systems implementation solving all their current and future problems.
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Digital Insurer's CommentsInsurance companies must embrace change and become more flexible and customer-focused. The future lies not in the huge systems implementations of the past, but small innovations that build and retain trust with the customer.
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