SSP managing director Keychoice, insurer partnerships and data services Adrian Coupland talks about how insurers have to rise to the challenge being presented by potential disruptors to the insurance industry
Insurers are operating in a tough environment, with a number of forces of change they need to embrace early or react to.
There has been an explosion in data sources and technology available, with an emerging market for new devices that didn’t even exist five years ago, and the pace of change will only increase.
This, in turn, has led to changes in the competitive landscape. Until now, industry challenges have come in the shape of aggregators and claims management companies, but the market is opening up to new types of competitors.
Although there is no Google or Amazon of general insurance yet, Google already operates a price comparison site in the UK and California, with more US states to follow. So it is just a question of when these players, or others, will disrupt the insurance market.
All of this disruption is tough for insurers to embrace, but disruptors don’t focus on how things are done today. They look at the consumers they are going after and start their proposition process there.
It is all too easy for an established provider to start its thinking about innovation closer to home.
Doing nothing is not an option
One further challenge – and conversely the solution to ensuring insurers survive and prevail – is that the world is becoming increasingly digitalised.
Research by PwC showed that about 70% of consumers carried out some form of digital research before buying insurance and more than one-quarter bought their policies online.
This means that doing nothing about being truly digital is simply not an option.
While becoming digital is a radical step change that is quite disruptive to the traditional business model, it also brings a wealth of opportunities. As well as being able to offer customers the optimised experience they desire, insurers can also take advantage of streamlined and simplified processes, improved risk analysis leading to personalised pricing, and the ability to offer new types of cover in different ways.
Once insurers understand what being digital means for them and the benefits available, they can start putting a strategy in place.
There is no one-size-fits-all approach, however, so insurers need to decide where they are already in the digital process, where they want to get to, and, perhaps more importantly, whether their existing technology supports this transition.
This will enable them to develop a strategy that supports their top business priorities while addressing both the opportunities and risks presented by digital.
The strategy should include where in the changing market they will focus, which capabilities they need for the medium to long-term, and how to manage the transition from their present business model.
The strategy also needs to set out the immediate actions required to make sure they don’t get left behind in the short term, because change is happening now, and it’s happening at a blistering pace.