Digital Trends in the Insurance Industry
We all know that the pandemic has precipitated a universal sense of displacement, with people and businesses looking at new ways to do things. The Insurance Industry is no different, so let us look at some digital trends that may help deliver better outcomes for Insurers and their customers.
1. Enhanced UX and new product development for Millennials
As mentioned in a previous blog post: "not only do consumers expect ubiquitous digital interactions but they now want to transact with organisations on their own terms, expecting convenience and a seamless customer experience across all touch points."
Furthermore, as digital native Millennials are now in their 20s and 30s, they represent an important demographic for the Insurance Industry. However, here is where the challenge lies. This cohort expects personalised, digital experiences and products that chime with their lifestyle – if they are unhappy with a given product and/or service they are more likely to shop around and switch provider.
The challenge for Insurers is to stay on top both in terms of technology and user experience while also delivering tailored, price sensitive products – especially to the tech-savvy Millennial grouping.
2. Big Data and new data points when making decisions
For all insurance companies, big data is now the fulcrum of their business. However, it is those companies that can truly harness and interpret these disparate data sets when making underwriting decisions, and indeed in others areas across their business, that will gain competitive advantage.
By incorporating new data points into their risk assessment and premium calculations, insurers can not only offer customers more tailored products but also negate unnecessary risk.
An article in artifical.io gives a good example of big data in action: "[an] interesting use of big data is when it is used as a tool to predict and even change customer behaviour. This is tied into the IoT; insurers who can correctly analyse customer behaviours using data from a wide range of devices may be able to step in before a claim is even made to remind policyholders to adjust high-risk behaviours, such as driving too fast or forgetting to set a burglar alarm."
3. Cloud, SaaS and Agile Delivery
In recent years, insurers have started to realise that on-prem hosting, and software, stymies the ability to be agile and react to market forces and customer expectations. This has come more sharply into focus in the last year with the almost wholesale societal shift to online.
One prediction for 2021 is that the C-Suite will have to, if not done so already, invest more in cloud computing and Software as a Service (SaaS) as existing technologies become redundant and unable to quickly adapt to today’s tech-driven market.
To make the most of big data, and give customers what they want and expect, insurers will need to further embrace cloud-based technologies that can work in tandem with agile IT methodologies to quickly bring innovative products to their customers.
4. Data-driven Personalisation
By now it should be clear: data dictates the course of action in the digital-first world. For insurers to get ahead today, data-driven, personalised digital experiences will generate engagement, brand loyalty and ultimately increased revenue.
However, as I remarked in an article last year: “marketing professionals have become aware that siloed data sources lead to incomplete customer experiences and disparate marketing channels lead to asynchronous communications, ultimately damaging customer satisfaction and revenue.”
This is where a Digital Experience Platform (DXP) comes into play. Insurers are increasing going beyond merely a CMS to manage their digital presence, and an integral component of the DXP ecosystem should include a Customer Data Platform (CDP).
A CDP unifies and centralises disparate customer data, making it available in real-time for segmentation, campaign automation and personalisation. By using an intuitive user interface, segments and cross-channel campaigns can be created without reliance on IT.
So in keeping with the necessity to attract and retain the tech-literate Millennials, we predict that a CDP – as a single source of the truth for customer data - will increasingly be adopted in the insurance industry.
One of the big questions for insurance CTOs has been how blockchain can be adapted to improve the way records are maintained, transactions executed, and how to incorporate it into the customer lifecycle.
We know that Blockchain is a distributed registry of transactions that does not require a central validation body and its merits, including security, are well documented. However, as Gary Shaw of Deloitte puts it: “[The] key questions centre on whether blockchain’s unique attributes could help insurers cut costs, manage risk, improve customer service, grow their business, and, ultimately, bolster the bottom line.”
So Insurers need to ask themselves the question: is investment in blockchain worth it? Shaw continues in his espousal of blockchain for Insurers: “New systems, processes, security protocols, and business models are needed to respond to rising customer expectations for tailored services, heightened privacy, innovative products, added value, and competitive pricing from their insurers.” Surely, this is where blockchain can come to the fore.
It will be interesting to see what progress will be made in this area as it represents a paradigm shift for traditional Insurance companies.
6. Data Privacy & Security
We are all now familiar with increased data privacy regulation - GDPR & ePrivacy – that have meant that Insurers have had to invest to make sure that their processes, data, and digital interactions are compliant with legislation.
However, as we have already mentioned, insurers are increasingly combining and analysing data from a myriad of sources to give them enhanced insights throughout the value chain. This in turn throws up data privacy challenges that were not previously experienced in the traditional focus on regulatory compliance.
So for 2021 and beyond, it will become imperative that Insurance players will have to invest more time and money hiring specialists in terms of data privacy and advanced data analytics.
7. The Growth of "Headless" Tech
As companies have begun to embrace a Digital-First Strategy, with digital being their primary channel to market, we predict the further adoption of “headless” technologies.
In terms of DXP architecture, this involves the development of a set of APIs from the constituent technologies (WCMS, CRM, CDP etc) that enables any front end framework to integrate with these APIs, thus providing bespoke customer experience for a given channel.
However, the term “headless” is a bit misleading. A more appropriate moniker could be “adaptable”. You can change your frontend technology depending on the digital channel – to AngularJS or GatsbyJS for example.
As EasySend comments: “In insurance, this is particularly important, as back-ends are mired with legacy technology problems that, for the most part, make them incompatible with the modern front-end experiences customers expect.”
8. Continuous Innovation – Experimentation & Exploration
As customer preference and necessity has moved online, Insurers need to continuously innovate in terms of insurance policies, sales strategies, operations, and customer experience.
Like all financial institutions, Insurance companies need to invest in digital exploration and experimentation as their customers increasingly become more digitally literate and expect new ways to interact (& transact) with their insurance suppliers.
For example, Doxee.com notes: “[T]he future of marketing and customer experience of the [insurance] sector can come from VR (Virtual Reality) and AR (Augmented Reality) systems… especially when these systems add personalization.”
Furthermore, insurers will have to take further steps to ensure that their employees are empowered to use technology that promote teamwork, efficient collaboration, and remote working. The wholesale, full-time, return to the office now seems to be redundant with many saying that they can be as, or more, productive working from home. So possibly a hybrid model will be the future.
The perennial challenges for Insurers such as risk-assessment, claims processing and policy sales still remain.
Though the pandemic has accelerated digital transformation across the world, in reality traditional insurance companies need to further embrace new technologies to keep in-step with societal digital expectations.
The digital trends in this article represent some of the innovations that may create better business practices, enhanced efficiencies and customer experience.
Those companies who have a piecemeal or limited adoption of digital advancements will lose market share and have to watch their competitors forge ahead.
Need advice on how to take advantage of these trends?
Annertech has a strong heritage in the Insurance Industry. Why not get in contact to discuss how we can help you achieve your digital goals.
Gary Cosgrave Commercial Director
Gary is Annertech's Commercial Director and for over 20 years has advised clients in both the public and private sector in digital adoption and achieving meaningful ROI.