Talking about the pace of change seems a bit cliché. Business transformation, changing consumer behaviour, technological advancement are all buzz terms that try to capture what is happening in the world today, not least in insurance. Equally finding a fresh approach to discuss these things and building engagement with the market is a challenge. But maybe it doesn’t need to be because the reality is quite clear – ignore them at your peril.
It is imperative that they are part of our everyday dialogue. They should be topics that are continuous, repetitive and embedded in our thinking. It’s the context and the triggers that become the point of discussion and this is never truer than when it comes to talking about being able to price competitively and dynamically, to win new profitable business. The context for discussing the pace of change today is around recognising the two key drivers for setting the change agenda: changing consumer behaviour and technology advancement.
How consumers demand and buy products and services is changing faster than businesses can respond, and technology advancement is instigating this. You can be sure that whatever happens in the FMCG industry will influence what happens in business sectors further down the line. When consumers hear about the price of oil rising or falling they expect to see it in the cost of their petrol, instantly. When a major supermarket leads the market with a price war and drops a best seller to an all-time low, others either have to respond or look to other product lines to carry the burden. Distributors and retailers that don’t respond promptly lose out.
So it’s vital to have the ability to respond to markets with dynamically priced solutions or be first to market. This is becoming more paramount, as any market is increasingly competitive and very immediate. Consumers expect the best price and service, right now, regardless of the channel they buy through. The fact that they shop around in real time across different channels means that pricing is much more volatile, transparent and visible. Any business
needs to be able to respond with dynamic and immediate pricing to remain competitive.
Unsurprisingly it’s now a well known industry problem for insurers to do just this. This is an industry hampered by legacy that’s embedded in multi-platform, extended supply-chain, multichannel complexity. Getting new rates straight to market is painful, slow and costly. And who bears the burden? Consumers take the hit of uncompetitive premiums and are urged to switch more often and brokers are caught in the middle. Brokers have to deal with a cumbersome process and need to compete to retain business. Insurers are hit hard by not being able to go to market with immediate and precise prices to retain and win business. So many carry the burden and it is an ever-perpetuating issue.
What’s causing the pain?
Whilst not directly impacting the usual prolonged process of distributing new rates, a number of industry factors are all bearing an influence on how arduous it becomes. Despite good intentions, ever-increasing regulatory, legislative obligations or industry initiatives are causing significant disruption. The Financial Conduct Authority (FCA) continues to ensure scrutiny.
Making changes to any process fraught with considerations and risks to guarantee that any new approach is robust in fulfilling regulatory requirements. Change isn’t easy and it’s a long journey for insurers to ensure existing processes do this.
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