2017 Trends in the Insurance Industry
As 2016 becomes a distant memory, and most of us are glad to see the back of such a turbulent year, our focus moves towards 2017 and beyond. January’s media are always full of expert views about the strategic trends we should all be considering. While Michael Gove may believe that Britain has had enough of experts, we think it is wise to see what they have to say and use the information where appropriate.
We’ve taken a look at the news since the start of the year and want to share with you some of the views that are out there. Mr. Gove, you may want to look away now, but for the rest of you, here are some of the things that people in the industry are talking about.
Unsurprisingly, technology is the driving force behind many of the topics but let’s start with customers.
According to one article we read, the key to developing a digital environment and improving customer service is to automate workflows where necessary. As social media usage continues to rise, and interaction with organisations occurs across multiple channels, customers are looking for a personal service from their insurance agents and brokers. The research agency Forrester says that “online and cross-channel customer experiences will get the most attention in 2017” when it comes to investment budgets.
While standard face-to-face interaction may be less common between insurance entities and their clients, relationships are still vitally important, if not more important than in the past. As a result, insurance agents need to spend more time interacting with their customers and less time sifting through papers, ploughing through admin and staying on top of claims processing. This is why the automation of workflows will be critical to advancing the digital transformation in 2017.
One Forrester-Accenture report called 2017 the “age of the customer,” where the customer experience is at the core of digital innovation. Nothing new there, you might think? But there is an emphasis on a subtle change. Technology and processing investment will no longer be implemented with administration as the primary goal. A genuine customer-led approach will mean that inefficiency in technology, which people grudgingly used to accept, will no longer be acceptable. In fact, it could become a deal breaker.
Application forms that ask you to key the same data twice will stop people in their tracks and leave them cursing your company for ever more. Today’s customers expect a seamless, intelligent process from insurance businesses. While this may signal some disruption to internal processes for the brokers, the main objective must be to make technology easier to use for the customer, not just the IT team.
In summary: Be ruthless when it comes to defining your customer experience and keep an eye on the details. If you don’t, you can be sure your competitors will.
New year, new buzzword. Lowering costs and working efficiently are core competence of any insurance business. However, this can’t be viewed as a sustainable competitive advantage over the long term, or as a major differentiator.
An increasing number of organisations are looking to the future, and ‘engagement innovation’ is the term being used. This though is more than just multi-channel access for customers. Engagement innovation not only includes customer experience, but customer-centred products, new added-value services and new business models too. But what does this look like? Examples include:
- Using data from different interconnected devices to build a complete picture of a customer’s behaviour. This will enable insurance companies and brokers to develop bespoke products and propositions.
- Companies using this data to talk more extensively about prevention programmes and alternative forms of risk management.
- Personalised pricing and development of pay-as-you-go business models.
In summary: The rule book has been ripped up. It will pay dividends if you can keep up to speed on the latest developments and make sure your organisation is thinking ahead about new ways of working.
There is rarely a time when the insurance industry is not looking to economise on its processing costs. This trend will continue in 2017 but the prediction is that the pace and focus will change. Insurtech will make new technology available, which will force the whole insurance industry to up its game as no-one wants to be left behind. Additionally, the Insurtech segment will provide new technology which the industry can utilise.
According to a Harvard Review report, insurance agents who embraced digital practices reported a 65% cost reduction and a tenfold increase in turnaround time for key insurance processes. The other major factor to consider will be the changing legislative landscape. As the UK enters uncharted waters politically, technology needs to be more flexible and dynamic so that it can adapt to changing requirements and directives.
In summary: Drive cost out of your business through intelligent use of the right technology.
Relationships between insurers, brokers and insurtechs will become much closer. The established players will look for ways to learn from the insurtechs they are working with, competing with and investing in. Right across the whole financial services sector, established institutions are looking to set up their own incubators and investment programmes to keep pace and be ready for the rapid evolution of the industry. Last year we wrote an article explaining how to plan for these changes, which can be found here.
In summary: Stay close to the latest developments in the industry as opportunities will arise from these changes.
POLITICS, MICHAEL GOVE and CONCLUSIONS…
Meanwhile, the seismic shift in the political landscape looks set to continue. This will undoubtedly cause bumps and derailments along the way, but will also unearth opportunities, as all change inevitably does. The one thing we can be certain about in this uncertain world is that no-one can confidently predict how the political landscape will unfold. On that point, we can agree with Mr. Gove.
The final comment comes in relation to all the hype about technology. These new developments must all come with a fairly large health warning. Decision makers need to be mindful that investment has to be clearly thought through, and that the benefits to customers and their businesses is tangible and fit for the long term. It’s easy to get sucked in by the latest shiny new toy when, in reality, the marginal gain in productivity or the customer experience does not justify the outlay.
There’s always a danger that so much change will lead to complication, and that business decisions will become muddled. We close therefore with the words of one of the greatest innovators in the consumer age:
“Simple can be harder than complex: You have to work hard to get your thinking clean to make it simple. But it’s worth it in the end because once you get there, you can move mountains.”
Steve Jobs knew how to harness technology in a manner which was appealing to consumers and commercially successful. In the same way, the real winners in insurance will be those that can balance the two.
This article was first published on the Premium Credit website