February 6, 2019 - Comments Off on Clearing the Digital BLUR™ for the Insurance Industry
Until the 1980s, the average Indian household believed in either working with the government, the military, or established family businesses. Insurance was a primary reason for this pattern of behavior. Government sanctioned jobs assured job security, post-retirement pensions, housing and vehicular support, and life and medical insurance policies. In other words, the government guaranteed risk management for its employees.
Private-sector jobs became popular with the boom of information technology. Insurance companies focused on helping private sector employees manage and mitigate risks that their private jobs couldn’t do. This started the advent of door-to-door insurance selling. When telephones became widely popular, door-to-door selling shifted to cold calling, each department calling prospects to sell their product.
Today, insurance companies are attempting to reinvent themselves as one-stop shops for all insurance services. This is a slow process, causing technology companies to race ahead with platforms for insurance services, while providing consumers with something more. Case-in-point: BEAM, a new-age dental insurance company that is charging through the digital age, effectively disrupting several industries through a single, integrated platform for all things related to oral health. To stay up-to-the-minute and win against organizations such as Beam Dental Insurance, insurance incumbents need to embrace the Digital BLUR™:
B – Boundaryless organization:
The digital age has put the customer at the centre of the value chain. Instead of comparing and choosing between existing insurance products, customers hold the power to create and demand the solution that rightly fits their needs. Beam dental insurance allows consumers to decide the dental care plan that is best suited for them, while creating a community of customers for dental check-ups, dental hygiene, and dental habits.
In essence, insurance companies face a new market place in the digital age, one that is flooded with a number technologies and platforms, driven by IoT and data analytics. For insurance agencies, this demands a shift in the core business model, from being a product-oriented organization, to one of consulting and solutioning, and creating new ‘InsurTech’ partnerships. In other words, besides specializing in safety and assurance, insurance companies need to start thinking like a technology company to ride the digital wave.
L – Limitless Digitization
By digitizing their existing business, insurance companies can reduce significant costs across the value chain, attracting more customers and increasing customer lifetime value. In the changing scenario, insurance distribution is being redefined by new channels, and tools such as chatbots, allowing insurance companies to directly communicate with customers, provide superior customer service, and increase sales. Beam’s mobile app provides consumers access to everything from finding and rating dentists, to accessing dental insurance cards, an integrated brush app to control the experience of brushing teeth and gaining points and badges throughout the entire engagement process.
Insurance agencies are also turning to other forms of digital technology such as blockchain, augmented reality and Robotic Process Automation to streamline processes and operations, such as property assessment, fraud detection, and claims verification and processing. Lemonade, an insurtech company broke into the insurance market with an impossible fast claims processing process thanks to machine learning and an AI-based chatbot, effectively poaching an average of 17% clients from incumbent insurance companies such as Geico, Liberty Mutual, Allstate, etc.
These technological advancements create new opportunities, propelling insurtech companies to develop more novel technologies that complement the evolving landscape. For incumbents not getting on the band-wagon, the competition is insurmountable.
U – Unbounded Innovation:
Limitless Digitization complements Unbounded Innovation firmly. Digital technology, data, and data analysis give insurers the chance to know their customers better. Beam has also created their own Bluetooth-enabled toothbrushes which manage the experience of brushing teeth through the mobile application – power, speed, and quadrant buzz, providing data to help Beam better serve customers, continue to enhance experience, and stay ahead of the curve. Data makes a big difference to insurance, a privilege that is not afforded to them in the analogous world, where they are caught unaware of their customers’ actions.
As several physical and tangible entities become digital, the world is faced with additional causes of worry and risk, namely cyber security. Concerns about cybersecurity will create demand from companies and even households for products that prevent and protect against the breach or loss of data, and damage that might ensue. Coalition, a San Francisco-based insurance start-up provides personalized cyber insurance coverage and risk management tools to protect small and mid-sized businesses.
Another suite of products in the insurance portfolio is likely to emerge from a ‘Gig Economy’, resulting from platformed businesses like Airbnb and Uber. Homeowners now become hoteliers, and car owners become driving partners when they take on customers through these tech platforms. Verifly, which started as an insurance provider for drone pilots now also services the workforce of the on-demand, gig economy.
R – Relentless Iteration:
To stay competitive in the medium to long term, traditional insurers will need to reinvent themselves with digital at their core. Insurers providing low-cost, highly digital, and transparent products will obtain stronger customer bases. In the highly competitive scenario, insurers will need to constantly iterate their offerings to match competitor positioning, customer need, and consumer experience. The important thing to remember is that in a highly competitive industry such as insurance, to truly be ahead of the curve, relentlessly iterating the business model, innovation, and the products and platforms is the key to succeed.
Insurance is always going to exist, because people seek safety, security and risk management. However, the medium through which they receive this assurance will depend on who fulfill the need for cost-effective and flexible solutions that add value to the complex insurance landscape: insurance incumbents who reinvent themselves with digital at their core, or technology companies setting up platforms for all consumer insurance needs.
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Published by: Anand Udapudi in Blog