The insurance industry has appeared under a huge pressure (good for it): the business has to be rethought otherwise it has no other chance but vanish into the air. According to the predictions at least 40% of the insurance companies will disappear. The point is that the entire industry business model is being disrupted, and nowadays the leaders of the industry feeling a clear danger. They know something has to be done with it.
Business leaders came to realize that digitalization or digital enablement is the key for the bottom line. So it is essential for the insurance company to embrace digital stance and figure out the way those technologies can be incorporated into business operations in order to drive profitability. In this respect there should be a clear idea of the business problem and the pain points of the new economy.
Technologies evolve at fast pace, so do customer's expectations. In context of the insurance industry (which is finally aligned with the other spheres more open to innovations), consumers are now demanding seamless experience and seamless digital life. In other words, it has to be friction-free. If the company keeps on having sensible friction points, it will become the thing of the past, whereas those dealing with tomorrow's pain points in value-added and cost-effective way are likely to become triumphants.
The nature of insurance, in fact, is all about prediction and being proactive, and this is juxtaposed with the inefficient business practices we have seen for decades. Getting back to the roots of the insurance, the data appears to be the lifeblood of it — no more, no less. However, the statistical numbers are really sad: 97% of business decisions are based on the data that is considered of unacceptable quality by the company managers. And only 26% of insurers do not hesitate to validate their data sources. Sad but true.
The seamless digital life I am talking about is literally simplicity and accessibility to which the present-day audience is accustomed in other sectors. Customers want quotes and prices at the application they choose, here and now; they are looking for the value not just price. Thus, the insurance policies have to be well-tailored with respect to these requirements. The major mistake of the insurance carriers is that they focus on ratings, risk and products themselves which means their understanding of their audience is lagging behind the advancements of telecommunications and internet.
According to PwC 26% of consumers surveyed purchased their policies online. The majority of the insurers are still concentrated mainly on e-commerce. The industry leaders are constantly working on deeply personalized and long-lasting relationships to gain the enhanced, granulated knowledge of their customers. Speaking of competitive advantage, it is implied by being capable of moving away from the competition on price to effective risk management.
What I mean by digital: it is the term comprised by four key elements: Social, Mobile, Analytics, Cloud (SMAC). The customers are extensively using social media to find out about insurance products. They also want to purchase insurance or make claim with the use of their device in the pocket — 'policy in the pocket'. The conjunction of social, mobile and sensor channels provide a wealth of data, and the analytics of this data provides sharp customer profiling and adequate pricing. Last, but not the least, cloud computing literally means more flexibility and access on-the-go.
go2solution(Kasko2go) belongs to the far-sighted tech-savvy movement that realizes the vast array of the opportunities provided by the technologies. In order to survive and evolve in transforming environment, insurers must be exposed to the innovations completely. They have to try and test new ideas and discard the old ones that do not work without any hesitation. And again — some get confused: a lot of companies put digital at the center of the strategic shift which is a huge mistake. Digitalizing is just the tool, and customer has to be the core of the business.