A series of 3 articles looking at technology within insurance, where it is now and where it needs to go…
The Insurance Industry is Very Busy Standing Still in the Customers’ Eyes
So where do we go from here? You can barely turn a page in the trade press without some mention of insurtech, Artificial Intelligence (AI) or Machine Learning (ML) and how it is going to revolutionise insurance. Some spin a version of utopia, some portend the end of the world as we know it, so where does “reality” lie between those extremes?
Where We Are Today
Let’s take a look at where we are starting from…
Consumers worldwide are, to varying extents, weary and skeptical of insurance companies and their willingness to cover what’s needed, price competitively or pay out claims. On the one hand they see the coverage they want included in their policy. On the other, so many jargon-riddled terms, conditions, exclusions and deductibles mean that it hardly seems worthwhile paying the money for it. Sometimes when they do come to claim, the process is so cumbersome and anachronistic, out-of-character with how they run the rest of their lives, that it leaves a bitter taste in their mouths, regardless of whether the claim is paid or not.
And it’s this expectation of being begrudging, difficult-to-deal-with and behind-the-times that so many consumers label insurance with, in complete contrast to our own industry’s fascination with “new and shiny” insurtech. So the first thing we have to realize, whether we’re an insurer or a broker, is that we have a very different view of our industry and the products we sell than our customers generally do. That sounds obvious, but in my day-to-day interactions with insurance businesses and their customers, we don’t always do a good job of showing that understanding.
We All Need to Understand Our Customers Better
Right now in Canada, insurance customers (people) are in the business of relying on other people to look after their insurance needs. Insurance is still, by and large, a “people” business and loyalty generally comes with people relating to each other year-on-year, building trust and recognizing value in that relationship.
The problem is, that relationship is changing. More and more customers are choosing to place their business directly with insurance companies or with other institutions rather than relying on their (often local) broker. On top of that, we are all more accustomed to running significant elements of our daily lives now without having to interact personally with anyone – think of mobile banking, TV/cable/broadband packages, social media. The value that customers once equated with the skill and diligence a broker might bring is now being overtaken by the value that convenience and immediacy 24/7 offers. That has been true for the past 10 years, but the pace at which customers’ expectations are changing is increasing rapidly as the rest of their lives is managed ever more on a 24/7 on-demand basis.
Other Industries Have Done Better and Can Show the Way
So while the insurance industry luxuriates in the technological advances it is undoubtedly bringing to the underwriting, claims and operational spheres – all “back-end”, by the way – where is the huge advance that visibly improves their customers’ insurance lives? If you pick another “grudge” relationship like the one most of us have with our bank, where is the customer-focused technological advance in insurance that they have already seen in being able to bank online, or from the palm of their hand, 24/7?
Customers have benefited significantly from fintech in so many ways, where does insurtech need to go to bring the same recognition? What is already out there?
Read part 2 of Insurtech and the Great Blue Yonder… Really? – Part II.
I wonder if the broader challenge is how to engage customers with insurance, rather than build technology to simplify / improve the current process which no-one really cares about. The majority of people have no interest in engaging with insurance because they see it has having no value – they only interact when they purchase, renew or in a minority of cases, when they make a claim . So, sure, insuretech can help people buy their insurance in a much better way, but this is ultimately a process that no-one cases about apart from once every 2-3 years. The thinking could be around how the product can better support the client on an ongoing bases and this will then give the tech industry lots of good challenges to facilitate.
I agree Nick – there is SO much around customer engagement that insurance can and must improve upon. Product (r)evolution should be such an important part of how we drive change but it’s really difficult to do that when you’re confined to a 20th century way of engaging with a customer (desktop and phone) rather than something a little more, ahem, modern like a smartphone or tablet. Unfortunately though we still have to remember that customers just don’t like insurance as a concept in the way they are accustomed to seeing it – the big question remains whether any “tech” can change that.
Agree Neil… insuretech could and should be the outlet for us to collectively drive a different proposition for the consumer. Telematics is a good example for auto – where the insurance proposition can be engaging around driving styles and habits to gamify the system beyond buying car insurance. Connected homes probably bring big opportunities in this area too.
One undeniable point is that it has to ultimately connect to a handheld device and better still, be centred around it. In Canada that would be a game changer in itself!