Accenture managing director, digital and innovation Roy Jubraj takes a look at the threat to the market from disruptors, and how insurers can react to a changing marketplace
The rise of direct insurance sales and aggregators have been the most disruptive trends of the past decade, enabled by the rapid growth of the internet. The pattern of disruption is set to continue well into the future as new digital technologies emerge and others begin to mature.
Insurers face competitive threats from several sources, some of which we have probably not even begun to conceive. The giants of the internet – Amazon, Google and Facebook – have powerful brands as well as the data and analytics capabilities to put themselves in the driving seat of customer experience in a range of financial service products including insurance.
What if, for example, one of them muscled into the market by buying a well-known UK aggregator and its massive insurance customer database? How could they change the market with their mastery of analytics and their obsession with customer service? Could they attack the traditional insurance value proposition with cheaper and more flexible pay-as-you-go options? Could they force the direct channel insurer into a utility-type service? How would the insurance market respond?
Another shift many trend watchers see unfolding over the next decade is a shift from consumers owning big ticket items towards a rental marketplace (usage-based insurance across different models). Using embedded electronic sensors, rental companies could monitor customers’ use of these items and put penalties in place to curtail abuse of the goods and fraudulent reports of loss and theft. This could bring dramatic changes to property/casualty insurance by making leasing companies rather than consumers their major customers, as well as by reducing claims.
In this environment, insurers have several options. They could become no-frills operators in the vein of Ryanair and offer a cheap and cheerful, commoditised product. Or they could place themselves at the centre of the customer’s life-cycle and become a central part of their ecosystem that offers a range of services and products that make the convenience factor for the customer become a ‘life’ partner of the insurer.
The shift and disruption will be gradual – until a point of reflection where it will be significant. So, in the immediate future you will see a shift in how data and other mobile related technology is harnessed to drive services that are more customer-centric rather than product-centric.
Whichever route they take, technology holds the key to success. Now is the time for insurers to start experimenting with tomorrow’s digital technologies and business models, even if they do so in a lab-like environment or through smaller experimental projects.
Roy Jubraj leads the digital and innovation agenda for Accenture UK & Ireland insurance business. He joined Accenture in 1997 as a strategy and process consultant in New York before moving to London in 2004.