In the past year, we experienced a how to live without physical contact with friends, family and even strangers. What we learned is that many things worked surprisingly well and life continues to exist after the pandemic.
The times of when a business’ opening hours would restrict a purchase are over. There is a new “anywhere-anyhow-anytime” awareness that is already being transferred to almost all areas of life and will gradually affect all sections of the population.
Long gone are the days when you could only reach a younger generation with online offers. Today, almost everyone, including every retiree has internet access. Amazon has a reach of over 80% in Germany, with the UK coming in second in Europe, and almost 60% of German households now use streaming services such as Netflix.
Everyone, from shopkeepers to governments, had to find a way to reinvent themselves in 2020.
What do insurers need to do to reinvent themselves for the digital age?
The insurance industry likes to convince itself that it will not be affected by any disruption and things can continue, as is, ad finitum.
Protected by a few regulatory firewalls, people point out that the entire spectrum of insurance business, from private customers to industrial customers, continues to run essentially through the same sales and service processes as it did 27 years ago. 27 years BA (before Amazon), back when Jeff Bezos founded his online shop, which now has a market capitalization 16x larger than Allianz.
Of course, insurers and brokers are on the internet. But, in an industry comparison, many are roughly at the level of the turn of the millennium in terms of development. The most advanced, only reach the technology available in 2010. In terms of modern e-commerce, insurers must have the ability to sell products online, offer online self-services and enable partially automated claims processing in individual lines of business.
Meet growing demands from digital customers
The time for insurers to move towards next-level commerce has already passed. Even if Lemonade is not yet Tesla and the big external disruptor is not yet recognizable, customers are making their demands known through their purchase behaviors.
Provide a consistent user experience
Insurers and brokers must take customers and their rapidly evolving needs seriously. Orientation towards “anywhere-anyhow-anytime” is a key to success. First and foremost, insurers and their sales partners must ensure that they can offer customers a consistent user experience regardless of channel or device. Personal interaction is only one element of a complete digital transformation.
Offer customized insurance coverage
On the product side, customers expect modularity to be standard. Products must be configurable and combinable according to customer requirements. Finally, insurance coverage must also be adaptable. Depending on the situation, this can be the case at the customer’s request and, in the best case, even takes place automatically depending on the customer’s behavior and his environment.
Offer Risk-based insurance protection
In the end, it all boils down to the ability to personalize products and services. And this, in turn, requires that insurers and brokers manage to actualize the customer data that is already available. Because more and more devices are already connected to the internet, the amount of data available will grow exponentially. For example, industry 4.0 is reaching the German manufacturing SMEs, but their insurers and brokers are not able to update existing data and use it more for risk-appropriate insurance protection.
Invest in data
A real effort is now required in the area of data and analytics. Investments need to be made in both human resources and new software platforms. The insurance industry competes with other business sectors in both areas. It must open up to stay up-to-date. Insurtechs offer more than just inspiration. With their help, insurers and brokers can reinvent themselves if they boldly break new ground and consciously rely on new talent and service providers.
The future starts today.