Insurance is an industry that has been with us for hundreds of years and many of the practices today still resemble those from the distant past. When 17th century ship owners needed to mitigate the risk of cargo being lost at sea they could buy insurance from brokers that would pay out in the case of a disaster taking place – an extremely similar process to that which present-day car owners experience today.
But the insurance industry is changing. A relentless wave of emerging technologies, social networks, and customers that are always connected via smart devices is having a dramatic effect on insurance companies globally. It would even be possible to suggest that this wave of digital transformation is creating more innovation in insurance than the industry has seen in decades.
What are the key trends driving this rapid change? Here are the top 5 digital transformation trends in insurance as defined by Forbes magazine with my comments on why each one is important:
- Self service: Finding a policy, making a claim, tracking repairs. Many customers are comfortable just using an app on their smartphone for almost all the basic services an insurance company offers.
- Easier claims: Using an app and phone camera to immediately process a claim without needing to speak to anyone is much easier than gathering policy documents then phoning to make a claim or visiting a broker.
- Comparison: The ability to compare complex policies is now taken for granted by customers. They want tools that can compare dozens of policies and offer the ability to immediately sign up.
- Seamless experience: Insurers are getting smarter about personalization and the need for an easy customer experience. The insurance company has details on your policies, purchase and claim history, and personal preferences, so they should be personalizing your service based on this knowledge.
- Insurance as a service: The ability to only pay for insurance when the insured item is being used – such as car insurance that only applies when the car is being driven or camera insurance that is only charged when the camera is being used and away from storage at home.
The first four trends here could be defined as led by the customer experience. They are all using technology to improve the customer experience and to make life easier for the customer. The last point is a more profound use of technology to redefine the market and it could even go further through the integration of the Internet of Things (IoT). For example a health monitor worn on your wrist could let your car know that you have alcohol in your blood, so the vehicle is disabled.
Naturally some customers will be concerned about access to all this personal information, but I believe that as insurance companies start offering more discounts for customers who allow their risk to be priced more accurately – by releasing real-time use data – it will be far more attractive to sign up for these policies compared to a traditional one where you just pay an annual fee.
Digital tools are transforming the insurance industry globally. Apps such as Lemonade, which pays home insurance claims in seconds, are showing customers that insurance can be updated and can even be enjoyable – which sounds strange, but it’s true.
Let me know what you think about the changes taking place in the global insurance market at present? Leave a comment here or get in touch via my LinkedIn.
Related article: Insurtech & The Connected Customer within the Insurance sector