New technologies are important - but so is strategy
New technologies have created many new insurance opportunities for incumbents and insurtechs alike
writes Alex Zukerman, chief strategy officer at Sapiens. Yet technology must not become an end in itself.
The insurance industry is facing challenges of unprecedented scope and speed as a result of digitalization. The use of technology is driving business forward so quickly that "business as usual" is no longer a long-term option. That's because the industry can only secure customer trust through a complete, but also thoughtful digital transformation.
Sales is changing
Sales have evolved significantly in recent years. Products and matching insurance policies are increasingly being offered to customers as a "bundle," often with significant added value. The automotive industry is at the forefront of this revolution. Traditional automakers like Ford and Volvo, as well as new entrants like Tesla, are partnering to offer insurance as part of the buying experience. Strategic lateral thinking allows each automaker to leverage its strong customer base to sell a new insurance product. This product is usually part of a more specialized product line and fits the company's image.
In other industries, too, insurers will have to enter into new partnerships in order to use this distribution channel. For example, in the areas of software, home security and repair services, total packages can be offered to open up new markets.
Be bold!
Changing consumer behavior offers opportunities for those who are brave enough to take advantage of them. For example, consumers are increasingly willing to share their data with trusted recipients. This trend has led to "connected insurance." Insurers are thus able to develop insurance coverage and risk management to be more personalized than ever.
Data collected from connected devices ("Internet of Things") enables insurers to tailor their offerings to an amazingly wide range of customer needs and budgets. In addition, the IoT enables monitoring and alerting to improve risk management.
Products or solutions?
Products are all about the insurer. Solutions are all about the customer. A forward-thinking insurance company must adapt to the latter view: the customer is at the center.
Not only do customers have different needs, but they are also at the forefront when it comes to taking out insurance. An insurer that offers solutions tailored to the specific situation and needs will win both: Trust and customers.
Technology influences the business model
Before deciding on a path to digitization, the insurer must identify its core competencies and then build on them. Technology can then be used most effectively to maximize the value of both the technology and the business as a whole.
Digital transformation can lead to entirely new business models. One of the most revolutionary is DTC (direct-to-consumer) or BTC (business-to-consumer), where insurance is sold online from insurers directly to consumers. This process is often mediated by online comparison portals (aggregators) that provide information about multiple insurers in one place.
New technologies have created new insurance opportunities for both incumbents and insurtechs. Providing digital experiences and solutions for customers is no longer just an option. It's critical for any insurer that doesn't want to fall behind. These solutions must be deployed carefully and intelligently to gain and maintain customer trust.
