The Insurance field is often rebuked for being one of the slowest industries to digitally evolve, the ‘laggard’ in the so-called FinTech revolution that’s sweeping through the Financial Services landscape.
In South Africa, just 12 of the 30 insurers (across all forms of Life, Health, Short-term, Commercial, and other insurance) have demonstrated meaningful efforts at mobile and digital strategies.
This is a strange finding, considering that digital innovations have a huge potential to improve customer experiences and satisfaction levels, increase the accuracy and personalisation of risk modelling, and create entirely new revenue opportunities for insurers.
South African insurers won’t be able to shelter under the warm blankets of their protected markets for too much longer. Like the broadcasting, telecoms, and metered taxi industries, Insurance is ripe for radical disruption in the coming months and years.
If you’re still not convinced of the seriousness of the threats, consider that :
- Google has already been granted licenses to sell insurance in 48 US states, and retail giants like Walmart and IKEA, as well as a number of telcos, are also moving aggressively into the Insurance field*.
- In 2015, insurance technology startups raised a combined $2.65 billion in funding from venture capitalists looking for the next big disruption opportunity.
- Connected sensor technology – the ‘Internet of Things’ – is advancing at rapid rates, giving the owners of that data unprecedented visibility into their customers, and placing them in a powerful position to provide insurance for their homes, cars, devices, etc.
If their feet remain rooted to the spot, traditional insurers may well find themselves losing control over the customer relationships to more nimble FinTech players, becoming relegated to back-end infrastructure providers, or mere underwriters hidden well within the background.
So, how can Insurers avoid this fate?
With Digital at the centre of it all, there are a number of strategies that today’s incumbents should employ, to maintain their positions in the Insurance sector:
- Consider the customer pain points… critically analyse all of your customers’ needs, the nature of their interactions with you, and where they are suffering from the most frustration. Optimise your customer journeys with intuitive digital tools, and enable customers to ‘self-serve’ wherever possible on their channel of choice.
- Transform both your core systems and your digital touch-points… It’s not just your web portals, mobile apps, or wearable services that need re-invention. Core risk and policy management systems must also keep up with the quickening pace of the digital revolution. There are gaps in the data, process, business rules and channels, when you consider the customer perspective.
- Gather and use data… to provide tailor-made insurance services to customers that dynamically change to suit new customer requirements (rather than lumping people into broad segments and re-evaluating their profile annually at strategy time). By pulling in external data sources – such as social media and location based information – insurers can also build far more accurate risk modelling tools.
- Capitalise on new mobile and IOT technology… tomorrow’s winning insurance companies will tailor premiums based on driving behaviour, provide early warnings right before your geyser is likely to burst, and automatically alert emergency response teams in the event of suspicious activity in your home, for example.
- Become a trusted advisor to the customer… by evolving the relationship from a simple purveyor of insurance services, to a lifetime partner that analyses your risk and creates a personalised suite of insurance offerings, insurers can retain the loyalty of the increasingly demanding customer. The role of the broker will change to be more that of relationship management.
I’ll leave you with a stunning example of what’s possible with technology in the Insurance space. Oscar, a Silicon Valley darling that’s raised more than $150 million for its innovations, blends wearable tech, with gamification and rewards, and insurance policies. Read more about it here … it’s no wonder that investors are excited.
I wonder who will be the first South African Insurance disruption to light a fire under the traditional players?