Article Synopsis :
Policyholders are ever more concerned that their insurance cover isn’t enough to protect against emerging risks, such as those posed by cyber attack or climate change, according to The World Insurance Report 2019.
Most consumers want a cover that is more comprehensive and dynamic, changing according to their personal needs.
Despite the considerable opportunity, this presents to the industry, insurers are still behind the curve.
The reports show that insurers have been slow to respond and identify five macro trends that pose emerging risks for insurance customers and their businesses. They are: disruptive environmental patterns; technological advancements; evolving social and demographic trends; new medical and health concerns; and business environment changes.
That lack of adaptation shows in the consumer data. Fewer than 25% of business customers across all geographies (and fewer than 15% of personal policyholders) believe their coverage is insufficient to insure against any one of these emerging risks.
However, fewer than 40% of life and health insurers said they have built a pipeline of new products to cover emerging risks comprehensively. This is leading to a significant coverage gap in emerging risk areas.
The report estimates 83% of personal insurance customers have medium or high exposure to cyberattacks and the same probability of living beyond their savings. Yet, only 3% and 5% respectively are comprehensively covered against these potential outcomes.
Employee healthcare costs are going up for 81% of business customers, yet only 17% of them are well covered.
Cyber risk is high for 87% of these business customers, but fewer than 18% are comprehensively insured against attacks.
The same goes for natural catastrophes. While 75% are threatened by such events, only 22% have an effective cover.
Capgemini says that the current products are not enough to protect customers. Policyholders need to be made aware of any gaps and the industry should adopt the 3P customer engagement model – partner, preventer, payer.
This means insurers must assume a partnership role to help their customers understand the risks better. They must also take on a role as preventer in order to mitigate those risks. The role of payer continues as before, but Making that process easier will win support from consumers.
As this model more closely centres on policyholders’ lives, the brands that succeed will be the ones who engage best with consumers.
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Digital Insurer's CommentsDespite all the rhetoric about digital transformation, Capgemini exposes some worrying gaps in cover but also delivery.
Insurers must up their game to make consumers understand that greater freedom in product choice comes with responsibility. They must better understand their risk profile in order to find the best product for their needs.
At least until some time AI and machine learning nails the product selection process. While that may be coming, it won’t happen any time soon.
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