Affordable Coverage Isn’t The Only Threat To Big Insurance
There’s no denying the Affordable Care Act is disrupting the insurance industry. But for all of the pros and cons surrounding this controversial piece of legislation, turns out far greater threats are eating into the profits of traditional insurers.
According to a recent survey from SAP and The Economist Intelligence Unit, longstanding insurance entities are struggling because other industries, bolstered by new tech innovations, are now able to offer more compelling products and coverage.
Industry pundits discussed this hot topic during a recent SAP Radio Broadcast, “The Future of Insurance in the Age of Customer Intimacy and IoT.”
Re-thinking Tech Strategy
Anthony O’Donnell of Insurance Innovation Reporter, believes traditional insurance providers will have to rethink many of their strategies, including technology architecture, in order to remain competitive.
“They may just have to say, ‘You know what? That’s not the way to do it anymore,” said O’Donnell. “You have to do what works and that can be a painful transition. It can mean letting go of things you believed were the way to go.”
Karen Furtado, Partner, Strategy Meets Action believes letting go paper-based methodologies while taking advantage of the latest tech innovations, are important steps in driving competitive advantage.
“The way products are delivered – and the competition – has changed,” said Furtado. “There has been a lot of underestimating of aggregators such as Google and Amazon in our markets. I guarantee in ten years, the use of data and analytics will transform the way we make decisions in insurance,” said Furtado.
Hugh Anderson, senior principal in SAP’s value engineering practice for insurance, said as insurance companies make huge investments in their business and IT infrastructures, they can’t lose sight of what’s really important.
“In the world of technology, you’ve got to stay ahead of the curve, not just keep up with it,” said Anderson. “As a policy is created, as a bill is produced, as a claim is processed, as an aggregator tries to take your business – what’s important is that regardless of how technology is changing things, people still need insurance.”
Connecting With Customers
Now that insurers are faced with consumers who have more sophisticated technology than they do, it’s the perfect time for insurers to get their front office in line, according to O’Donnell.
“The difficulty is that the back office is not well matched to the front office. That’s why there’s a huge potential for industry and external competition to do a better job of reaching customers and potentially owning the customer relationship.”
Furtado agrees the consumerization of IT has created a disconnect with consumers as there is a lack of compelling products in the market to attract people. But she also believes there are still great opportunities to re-connect, especially if usingcar insurance as a model.
“When we introduce new products like Pay-As-You-Drive and shared vehicles, and I start to pay for what I use, I think people will get more connected with the insurance experience,” said Furtado. “We’re just at the start of offering what will be more intriguing products to the general consumer base.”
According to SAP’s Anderson, consumers not only want great products, they expect whoever they’re doing business with to know and remember them across all touch points.
“The opportunity for insurers is to not address those touch points from your point of view but to really get in the mind and the patterns of the individual or the business that’s on the other side of that interaction,” said Anderson. “If you still know them a year later, that’s what creates loyalty.”
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