Growth priorities for insurers
As insurers look to keep pace with change, we’ve seen the rise of the digital consumer and acceleration of digital agendas. We’ve figured out how to collaborate and innovate virtually, and we’ve seen first-hand the growing role that data plays in every decision firms make today. Given the current set of challenges, most insurance leaders are aligned on five key priorities:
Priority 1: Building customer trust
A major priority, as we look to the post-pandemic era, is customer trust. While this has always been an issue, the pandemic has certainly accentuated it. As all kinds of insurance products have been stress-tested by this exceptional set of circumstances, many policy holders found that their cover afforded them less-than-ideal protection, particularly on the business and commercial side.
The erosion of trust is a challenge that requires immediate attention and a thoughtful response. So how do insurance companies build it back? I believe the simple answer is: building better connections with customers. The solution, however, is not a simple digital fix. In periods of high uncertainty (and it seems safe to say that even as the pandemic abates, uncertainty is likely to be a theme for a while longer), customers need two seemingly opposing things: the speed and ease of digital interactions, and the reassurance of human contact and guidance. To rebuild trust, insurance companies must help customers feel absolute clarity in what the product they are buying covers, by offering both access to customer service agents and frictionless digital services within a data-led customer experience that’s custom-made for the post-pandemic era.
Priority 2: Ethical use of data
When it comes to data, we’re learning all the time: which data to collect, how to use it, and where to apply it. Ethical use of data is critical to good business and to customer relationships. It goes further than simply adhering to the rules and obligations imposed by regulators; insurance companies must also apply their own judgement in line with organisational values and commitment to building customer trust, then act on it. For example, data loops will tell insurers to give insurance to people who need it but can’t afford it, or to people who can afford it yet don’t need it. And so, businesses must ask themselves, ‘How do we apply ethical rigour in these instances? What would that look like?’
The insurance industry is progressively becoming better in leveraging data to offer value-adding personalised interactions and product recommendations. Now they must master using data in a way that also addresses the exclusions and inequalities inherent in data pipelines, as part of their wider commitment to ethical, value-adding and responsible use of data.
Priority 3: Embracing the rise of intangible assets
A major shift taking place right now in the world is the move from tangible assets to intangible assets. From cash to crypto, from physical items to non-fungible tokens (NFTs), this rapid change demands immediate strategic attention from the insurance industry. Why? Let me give you a case in point: in March this year, a piece of art by the artist known as Beeple made history when it was sold for around £50 million at Christies. The owner gained not a painting, or even a sculpture or installation in return for their winning bid. Instead, they received an NFT- essentially, a blockchain-based digital token-for their investment. The appetite for intangible assets, it seems, is only just getting started. This high-stakes example highlights an important point for the insurance industry: while cyber insurance has been gaining traction, we have only really seen the tip of the iceberg. As digital and non-tangible assets continue to grow in popularity, acceptance and value, the insurance industry must keep up by designing products that are fit for purpose-and, crucially, fully understood by the customers who are buying them.
Priority 4: Demonstrating value, enhancing profitability
Every insurance company is facing pricing pressure right now. In the age of comparison sites and persuasive digital marketing, there is a widespread assumption on both the customer side and the industry side that the best price wins. But aggressive pricing does not equal profitability- nor, necessarily, satisfied and loyal customers. To re-energise profitability and build up business resilience at the same time, insurance companies would do well to focus on demonstrating value to customers rather than simply hammering down prices.
The good news is, there are endless ways to do this, and data can help. Useful questions to ask are, ‘Where can we introduce moments of value into the customer journey?’, ‘How can we use data to better serve our customers with the right products, in the right way?’, and ‘Which new products would be beneficial to our customers?’ There will always be price-sensitive customer segments like young consumers, for example, but insurance companies cannot afford to underestimate the real and evolving needs and preferences of customers in the post-pandemic world- and often, they’re not just about price.
Priority 5: Finding opportunity in regulatory measures
New regulations, such as the Fair Pricing Act, are justifiably causing concerns in the insurance industry. Prescriptive pricing might sound like a barrier to profitability, but insurance companies must consider ways in which they can turn this reality into an opportunity. For instance, can new regulations in fact become levers for growth? As I’ve already asserted, customer experience, innovative products and track record can, when leveraged well, overcome pricing constraints to become major differentiators. Now is the time to start thinking, and using data, more creatively than ever.
The Need for Speed
Most insurers are looking to accomplish similar goals using similar technology. Every company is working with data to better understand customers while protecting user privacy, to develop products that better and more clearly cover intangible assets in an increasingly digital world, and to finds ways of balancing resiliency and growth. In this environment, the only differentiator is speed - how quickly a company can implement and scale the data and digital capabilities these objectives require.
Executive Vice President and Head of Insurance