Insurance in an age of customer intimacy – The Economist
Article Synopsis :
Are insurers ready to change? What is the new thinking around core processing systems? Interactions with customers? Distribution arrangements? Data leveraging?
In the report “The way forward. Insurance in an age of customer intimacy and Internet of Things”, the Economist Intelligence Unit (EIU) shares the results of a survey of 338 senior executives of mostly large life and non-life insurers in primarily developed markets.
Key findings of the report include:
- Insurers have had to rethink not only the value of internal and customer data, but also the very concept of privacy, as insurers are able to offer discounts for customer information.
- Innovations such as telematics, or the remote transmission of information and data over telecommunications devices, have already enabled premium discounts in exchange for information. Wearable technologies and machine-to-machine (M2M) or “Internet of Things” capabilities are rapidly opening up new avenues for data exchange that support underwriting and loss control.
- As insurers strive to keep up with the changing expectations of consumers, distributors and their own associates, new sources of data and analytics are driving the ability for insurers to evaluate, price and underwrite risks more precisely.
- The ever-increasing reach and influence of the Internet are also spurring new distribution relationships and enabling insurance product and service innovation.
Future success will depend on an insurer’s ability to discern the relevance of several important technologies and develop an effective plan for adaption. The report suggests the following steps in this direction:
- Modernise core policy administration environments, transforming legacy systems to enable market agility, create data transparency and facilitate consistent customer interaction.
- Begin the journey to the cloud, leaving internal system integrations behind in favour of better integrated solutions. Insurers should begin small, create a vision and gradually migrate applications.
- Complete the journey to customer-centricity, creating a unified customer experience that enables communication and transactions seamlessly through all channels, including mobile.
- Accept that Big Data and analytics have the potential to transform the industry. Where possible, move from batch to real-time analytics, making analytics an enterprise competency, continually exploring emerging sources of external data.
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Digital Insurer's CommentsDespite being one of the first industries to invest in data processing on a large scale, insurers have, by their own admission, lagged technologically over the last decade.
But as Insurance carriers – traditionally organised around policies and lines of business – move toward a stronger customer orientation, forced to meet the bar set by other industries catering to smart consumers and mobile devices and anytime/anywhere computing, large-scale investments in front-office, customer-facing technology seem inevitable, for even the most conservative of carriers.
Beyond the satisfaction of digital customers, data analysis from these new streams of interaction (and external sources) creates vast opportunities for competitive advantage in risk measurement, pricing, and product development.
Insurance has always been about data; in a world with vastly more of it, in different forms, not only new tools but new ways of thinking are required.
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