The way Insurers help their customers is changing and technology plays a major role in this transformation.
While the insurance industry has extensive knowledge and experience in risk management and the ability to collect risk data, Insurers now need to adapt to a new business scenario, moving forward from their traditional models. And there are several reasons for doing so: first of all, the fear of tech giants. Insurance is in fact one of the industries where large tech companies could spin up new business units. Auto, health and life insurance in particular.
Increasingly, digital platforms are enabling consumers to conduct a great part of their daily life through a one-stop-shop experience which includes purchasing insurance cover. And if it is true that a successful insurance business depends on distribution, insurers have reason to worry. Facebook, Amazon, Apple and Google have a direct relationship with their users and can hold detailed information about them. Not only can these companies predict your mood and your shopping interests, they also have access to tons of your location data, photos and video. In other words, they have all the data they need to predict your insurance needs, as happened with Tesla, for example, when planning to introduce an insurance product for Model S Waymo. And in the future, car insurers will have to face the problem of self-driving cars, which means that more mobile telecom providers will get involved in car insurance. Companies like Google and Apple could also become competitors because of their access to data on road conditions, traffic and driving behaviour.
According to ‘The Future of General Insurance Report 2018/19’ from Insurance Innovators: “Amazon already offers not only extended warranties but also accidental damage cover when household goods are sold through its e-commerce site, and it is a practice our respondents expect to become standard in just over four years. Moreover, 88 per cent think PayPal is likely to introduce on-demand insurance into its check-out process, with over half, 53 per cent, believing this is highly likely”. So, it comes as no surprise that 98% insurers expect the amount of insurance sold as part of a principally non-insurance transaction to increase.
It is happening at all levels. Every tech giant is carving out its slice of the financial services cake, having a disruptive impact on the market. The insurance industry is just the next target. The good news? From cloud processing to chatbots or block chain, technology can help insurance companies rapidly accelerate their capabilities and transform the customer experience. One strategy can be to leverage digital communication channels that automate interactions through smart technologies such as robotic process automation or artificial intelligence. So we can say that there is still a window of opportunity to act but, it is no secret, that window is closing quite fast.