Industry is constantly evolving and change can sometimes happen terrifyingly fast and with dramatic effect. Like the asteroid which exterminated the dinosaurs, the well established players in the UK and European insurance industry are in danger of ignoring the threat of change. New technology is on its way, ready to cause climactic changes and the big players of the industry will find it very difficult to react to the impact.
Just as Blockbuster did not know what hit it when Netflix gained popularity or the way black cabs in London are now desperately finding ways to counter the impact on their business model by Uber, the insurance industry is ripe for a shift, both in technology and customer experience which could take down the dinosaurs of the industry. A poor customer experience is a sure-fire way to lose customers, either to direct competitors or to newcomers with fresh ideas. In the same way that banks are suddenly fending off the likes of Apple and Google, insurers may well soon be up against a host of brand new competitors.
Not just a sticking plaster
The challenge of leveraging technology in the insurance industry is not really about what platform to go for. That is merely surface level change. Instead there needs to be a major cultural and business transformation in the way insurers think about using technology and how it can be most effective. One crucial aspect of leveraging technology correctly is making the digital customer experience the core of the business strategy.
Some companies believe that in order to survive in a digital world, all they need to do is invest in mobile apps and attempt to use analytics to understand their customer’s experience. And it’s true that doing so is a good idea. For instance, automating the parts of their existing customer service functions to make life easier for their customers is an important improvement to the customer experience. But it is only ever a temporary fix until the next wave of technology advancements happen and companies begin to lag behind again.
In order to flourish, companies must keep a sustained focus on their digital offering at the forefront of their business strategy. This way, the major insurance industry players are ready to react to changes quickly rather than playing catch-up all the time. Take the example of the core process of underwriting within an insurance comparison website, aggregating multiple data points quickly and working with the insurance companies to deliver the latest offers. Even established players in the insurance industry partner with these comparison websites as these companies offer better digital customer experience. Adopting technologies that can make customer’s life easier, deliver results quicker and offer the ability to engage with customer anywhere, anytime at the customer’s choice. These are the mantras for a positive customer experience.
Keep the customer satisfied
Recent research has shown that the insurance companies with the most positive claims experience are better at customer retention and keeping customers for life, no small feat in such a competitive industry. That should be a powerful message to companies about which areas of the business should be selected for a digital investment. However, because claims is a cost to the company, therefore, the whole claims processing aspect is often over-looked in terms of customer experience. The US seems to be ahead of the UK and continental Europe here, using technology for faster claims processing. There are solutions in the US which allow people to take a picture from their mobile cameras at the scene of a motor accident, instantly generating a claim.
Generally, the insurance industry is a laggard in terms of adopting technology to improve customer experience. While other industries, such as banking, have been quick to make digital customer experience a vital differentiator, the insurance industry has not really taken to it in the same way. Compare, for example, the growth in mobile and online banking; where today a number of banks want to be seen as a digital brand, to the lack of such an aspiration in the insurance industry. Banking is also an industry which is set in its ways but saw the need to change as consumer behaviour changed. Banks recognised that they needed to keep in step with user expectations because it was sink or swim. Insurance hasn’t had the same pressure because on the whole the industry hasn’t needed to change in such an emphatic way yet. However, as banking has demonstrated with the likes of Metro Bank establishing itself purely leveraging the customer experience, unless insurance companies improve their customer experience, they will very quickly find other companies taking their market share.
This is as much a cultural struggle as a technological one. The insurance industry struggles to attract digital age employees which means they lack new talent with fresh ideas who can be a catalyst for change. However when the insurers embrace to digital ways of engaging with the customer, this will directly improve the industry’s image and it automatically encourages younger talent to become part of this industry. However, failure to understand the shifting technological landscape could well consign the ‘traditional’ insurance industry to the dustbin of history.