Insurance as a Living Business
Article Synopsis :
The future of insurance, asserts this paper from Accenture, belongs to ‘living businesses’. Accenture calculates that revenue opportunities for ‘hyper-relevant, customer centric’ insurers will be as much as $375 billion within the next five years.
Key Personality Traits of a ‘Living Business’
To be accepted by customers as relevant, trusted and important in their lives, insurance organizations need more than just good customer data, IT and marketing. They need to develop a personality that is appealing and authentic. Some of the key attributes are:
- Engaging: This means ‘being there’ for customers and commercial clients, a trusted, relevant and empathetic ally as they navigate the vicissitudes of life and business. Living insurers look ahead and constantly strive to offer advice and services that are timely and useful, and that protect or compensate individual and business customers on their terms.
- Intelligently personalized: By understanding and anticipating individual customers’ and businesses’ needs, and having the ability to change products and platform features to meet these needs, living insurers deliver relevant, context-matched offerings at scale.
- Credible: Like many financial service providers, insurers have a trust deficit to address. More than just putting the customer at the center of the business, living insurers demonstrate their commitment at every moment of truth, across every channel and end-to-end in the value chain. This includes responding to feedback, participating in social conversations, and ensuring employees ‘live’ the brand values at all times.
- Consistent: Delivery of the same branded experience anytime, everywhere, across all channels and devices, though challenging, is essential. It includes ensuring that the actions of ecosystem partners reinforce rather than undermine the brand.
- Generous: Insurers will not be regarded as the customer’s ally if they are seen to willingly accept regular premium payments but then dig in their heels whenever a claim is submitted. Inexpensive gestures or services offered to customers at no cost, simply to reward them for their loyalty, can help diminish the ‘me vs. them’ mentality.
Business Opportunities for the Living Insurer
Increased penetration of existing market segments difficult to reach profitably with traditional methods but which are proving more accessible as new channels (online, mobile etc.) mature and as new technologies (analytics, geo-location etc.) enhance insurers’ effectiveness. Examples include:
- Direct business model for the micro and small commercial market
- Micro-insurance / small-ticket insurance
- Simplified underwriting / instant issue life coverage
- Low-income home contents
- Middle-market life insurance
- Worksite life insurance
- Robo-advice (life)
Estimated value: $144 billion
New risks that have emerged as a result of technological and other innovation and that present opportunities for new insurance offerings. Examples include:
- Cyber insurance
- Increased longevity risk
- New commercial exposures in motor insurance
- Insuring digital / virtual assets
- The sharing economy
- The freelance / gig economy
Estimated value: $111 billion
Relationships with non-traditional intermediaries and ecosystems (such as GAFAs) that enable insurers to engage differently with customers and discover new sources of value for them – and new revenue for the business. Examples include:
- Payroll companies
- Car manufacturers / OEMs
- Wellness companies & lifestyle brands
Estimated value: $80 billion
Monetization of ‘the new, where insurers offer their assets to ecosystem partners and other players who can benefit from them. These assets include data and customer insights, platforms and models as services, risk algorithms, digital identity verification and more. Examples include:
- Providing data-driven services
- Healthy living
- Selling proprietary algorithms
Estimated value: $28 billion
Value-added services or products, including advisory services, that help customers reduce their risks. Often enabled by the Internet of Things, these personalized services will allow insurers to position themselves more positively, increase the frequency and value of their customer engagement, and generate revenue at the same time as lowering the incidence of claims. Examples include:
- Using wearables to help aging relatives stay at home longer
- Selling connected-home devices & home security services
- Car-buying service
Estimated value: $12 billion
The five key areas for transforming to a living insurer are:
- Targeting the desired value roadmap
- Designing living services
- Building and iterating intelligent platforms
- Connecting to diverse ecosystems
- Sustaining a fluid organization
The report provides examples and case references within each of the five areas, depending on your interest.
Digital Insurer's CommentsRegular readers of the Digital Insurance Library know that reports on self-driving cars, smart homes, and IoT typically carry dire predictions for overall shrinkage of premium pools in key large personal and commercial insurance segments. Here, finally a report quantifying the financial upside of digital disruption.
$375 billion is a big number. And within five years? That’s an aggressive window. Fortune, we agree with the report, favors the bold.
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