Technologies such as driverless cars, telematics and the connected home are changing the world of insurance, with the need for more tailored covers and components that can be utilised in different ways to suit particular niches and markets.
Speed is of the essence when delivering these products. Insurers need the ability to change existing products within hours and launch new ones in days. Yet the corporate culture and regulatory pressure that prevail at larger insurers mean they can be held back by the time taken to resolve diary clashes and internal compliance requirements.
To overcome this, insurers need to build everything just once. By defining the rating and pricing as part of a hub that every channel can connect to, insurers can reduce both the cost and the time to market.
Even that is not enough. With insurtech companies having raised $3.71bn (£2.99bn) in 2016, the insurance industry is ripe for disruption. Such companies are taking full advantage of not only the technology drivers for change, but also consumer demands for a revitalised insurance experience with products that match their lifestyles.
With students requiring car insurance only when they drive their parents’ vehicle during the holidays, a number of the larger insurers now offer short-term car insurance cover. Others have taken the on-demand principle further, with AXA and Trov partnering up to provide on- demand individual cover for the chosen items uploaded by consumers through the mobile app.
It isn’t just the limitations of annual insurance contracts that need to be tackled. Insurers have traditionally pre-packaged coverages together based on their view of customer requirements. This has led to car insurance being bundled with hire car and third party cover, and customers potentially buying policies they neither need nor want. Innovation is about unbundling these coverages, so while two coverages may be mandatory, customers can select their own profile from the remaining elements.
Gartner estimates the booming Internet of Things (IoT) market will lead to there being nearly 21 billion connected objects in use by 2020. While 13.5 billion of these will be consumer items, the enterprise IoT spend will be close to that of consumers, proving the technology drive is not limited to personal lines.
Already in the African market we are seeing sensors used in fields to detect drought for individuals with crop insurance. If there is no rain for more than 60 days, there is no need to make a claim, as the individual is automatically sent new seeds and money. In the future, drones will be used within commercial lines insurance, making it quicker and cheaper to survey a building, either when checking application details or following a flood. According to the Federal Aviation Administration, business sales of drones are set to surge from 600,000 to 2.7 million by 2020.
We’re also set to see increased use of chatbots within insurance as millennials look to engage with insurers via automated chat rather than through call centres or online. Gartner predicts that 30% of web browsing will be done via chatbots by 2020.
Facebook opened up its Messenger service to businesses last year, meaning insurers can now communicate with customers on its platform. The next stage would be for third- parties to build apps that integrate with Messenger, enabling insurers to offer quote-and-buy facilities in this way.
In the face of these technology drivers and evolving customer demands, insurers need to have a system that enables them to develop innovative products that continue to address customer needs. As these products are tested, deployed and refined, innovation becomes an ongoing journey that enables insurers to keep pace with the changing world around them.
"Insurers need the ability to change existing products within hours and launch new ones in days"
This article is an extract from SSP eye issue 10
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