Helen Jales, Zurich’s head of strategic propositions, and Gareth McChesney, director of personal lines pricing and underwriting, talk about how the insurance industry could use technology better when it comes to customers
Technology is evolving rapidly, but how is the insurance industry responding? While the industry embraces technology to improve efficiency, especially in claims handling, it could use it more to improve customer propositions.
As insurers and brokers, we’re committed to putting customers at the heart of what we do. But we need to keep up with change and how customers use technology. For brokers, close customer relationships present opportunities to see how customers live, the technology they adopt and what insurance-based changes would appeal to them.
Tailoring propositions with technology
When considering using technology in insurance, we should look back at the original purpose of insurance: to provide peace of mind for our customers. Technology allows us to understand our customers’ lifestyles and activities in ways that have not been possible in the past and allows us to provide them with tailored solutions for insurance and risk management advice.
Although comparison websites and a focus on price have led to an increasingly commoditised insurance product, technology can empower more bespoke, differentiated products that can truly meet customer’s needs.
Brokers, with their experience and expertise, are uniquely positioned to dig deeper into those needs, but what must remain important is identifying the need before asking how technology can help.
Brokers who evolve in this way can work with insurers to develop inventive and unique products that will differentiate them. The right propositions alongside technology can provide not just the traditional risk transfer and annual renewal provided by insurance, but a new type of service built around customer needs.
Future risk: threat or opportunity?
Societal and technology changes will bring different risks and customer requirements for protection to the insurance industry. One example is managing cyber risk among the ‘Internet of Things’ in which an internet-enabled kettle could be a gateway for criminals to access confidential information, or identifying liability for viruses that corrupt a customer’s next door neighbour’s computer network.
Among these types of threats there are opportunities: technology can allow better tracking of people and cover for risks previously difficult to insure and better information will open up risk appetites and could help improve a customer’s claim experience, with accident data enabling insurers to prove a driver wasn’t at fault.
But will customers share their data to access new products? How willing customers are to relinquish privacy and data control is likely to come down to whether propositions are strong enough.
New technology will demand stronger partnerships between insurers, their customers and data-led organisations. But some insurers consider companies such as Google a threat: the company’s own research in conjunction with Boston Consulting Group (Insurance @Digital – 20x2020; June 2014) suggests that insurance purchases online will reach 75% by 2020 – a figure that probably underestimates the UK market – which demonstrates the company’s dominance in collecting online customer data. A 2014 study by the Economist Intelligence Unit on behalf of SAP (The Way Forward: Insurance in an age of customer intimacy and Internet of Things) found that senior insurance executives mostly feared digital firms entering the insurance market.
Yet, these companies want to collaborate on insurers’ data; and more insight into understanding and pricing risks could help insurers get a more accurate assessment of risk, which is good for the insurer, customers and companies like Google. But this openness and understanding of how one set of data can be linked to another to make the customer experience better is a culture shift for brokers and insurers.
TELEMATICS – ON THE ROAD TO WHERE?
Telematics has been present in insurance for several years and currently it is targeting young drivers, who can obtain affordable motor cover with the help of this technology.
But where else could telematics help? Mature motorists are already getting a good deal with relatively cheap premiums, so telematics would need to broaden its customer appeal by adding more value. For example, if older drivers could obtain feedback about whether they’re still fit to drive, they could give their families peace of mind that they are not a hazard.
If the motor insurance industry was founded today, with the internet and connected cars, it would look very different. Telematics could be deployed to track and recover a stolen vehicle and, combined with GPS, would enable better breakdown services by identifying a car’s location immediately.
Overall, if telematics could enable people to judge their driving objectively and make better decisions, it could become a proposition people will buy.
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