This article was written by Marc Kamphausen, Global Head of Core Insurance Solutions, SAP
There is an urgent need for insurance carriers to redefine their business model – driven by global mega trends, the financial crisis, and evolving customer needs. I expect that insurance carriers that are unwilling – or unable – to redefine their business model will die the corporate death within the next 10 years.
We are living in a digital world. While generation X experienced the change in technology over time, generations Y and Z were born into the new digital reality and have different technology needs and expectations. If these generations require insurance, they don’t rely on the traditional intermediaries or brokers. They start their search engine; look for aggregators; or check Twitter, Facebook, and other social media for recommendations.
While technology needs and expectations vary between generations and regions, one thing is obvious: insurance carriers need to tackle the challenges of the digital economy today to survive!
Creating a positive customer experience
I believe that owning customer data and creating positive customer interactions are essential to delivering personalized, meaningful customer experiences. Traditional insurance carriers are often perceived as anonymous and bureaucratic organizations with only a few customer interactions, such as:
- Invoicing and billing
- Cross-selling activities
- Claim settlements
The majority of interactions with insurance carriers are not considered positive. Creating a positive experience means providing unique services to consumers, such as those provided by Google.
No company creates more customer interactions than Google. And no insurance carrier knows as much about its customers as Google. As Gartner pointed out in its ITxpo symposium, Google invests in aggregators, smart home technology firms, and smaller FinTech companies. Google is also way ahead in developing self-driving cars – which aren’t only a thread to the automotive industry but to the insurance sector as well.
How to fight the premature corporate death?
In my opinion, offering useful services and creating a unique benefit for policy holders will create positive customer interactions without intermediaries. And owning customer data and delivering positive interactions are key to building a likable brand. These are the factors that keep customers with the same insurance carrier, instead of running through aggregators to find the cheapest coverage every year.
Technology is causing the disruption. And technology is the way out.
It is obvious that the main driver of global mega trends is technology. If technology is the cause of disruption, then technology must be a key element to mitigating its impact. And, if insurance companies are able to transform their business model to support the latest technology, it may even help drive the insurance business to new heights.
Today, some insurance carriers are investing in technology, like user portals and apps for mobile devices. However, redefining the business model will require more than that. To become successful in the digital economy, insurance companies need to transform their business model, as well as their technology, according to a recent report published by Ovum.
Insurance carriers should really start redefining their business model and transforming it now, or they are going to die the premature corporate death!
Please watch the recent webinar: Core Transformation: A Critical Imperative for the Insurance Industry
Also,check out the Ovum Global Infographic