How will the insurance of the future look like?
There is only one answer from analysts: absolutely customer-centric. Putting the needs, but also the dreams, i.e. the desires of customers, at the centre of the service is (and increasingly will be) the starting point of a winning offer from the point of view of business. Yet, from the point of view of user experience, there are few insurance companies capable of orienting their offer within this framework.
In fact, most of the experience clients have with their insurance companies is buying a policy with complicated contract formulas. Even the underwriting process can be said anything but pleasant. Not to mention the annual premiums to be paid which, when something bad happens, do not resolve the relationship: it is the customer who lodges a complaint and hopes that it will be paid. For customers with increasingly gratifying expectations through interactions with more advanced players on customer centricity issues such as Amazon, Uber and Facebook, the gap between the insurance industry and the rest of the industry is becoming wider and wider.
How and why investing in technology is a must
A hint that things have to change now is here. Companies are starting to look around and look for answers in technology and data. The technological transformation of insurance worldwide, according to analyst Juniper Research, will generate earnings of $235 billion between now and 2020. By 2022, through the use of the Internet of Things applied to home automation and Artificial Intelligence, it will be possible to improve the speed and quality of policy delivery, which will save customers an average of $221 per policy.
In the face of investments in Insurtech, Italy continues to be the country in which you spend the least. Data from the National Association of Insurance Companies (Ania) show that in Italy the ratio of insurance premiums, excluding motor premiums, to gross domestic product is 0.9%, compared to 8% in the Netherlands, 2% in Spain and 2.5% in Germany.
Abroad, in fact, Insurtech are riding the disruption to reinvent a functional and successful customer experience. One case for all is the customer experience designed by Lemonade, a startup that with $180 million in funding from the major VCs in Silicon Valley is among the most fascinating and promising global insurtech dedicated to P&C. Using Lemonade’s AI-powered app, which forwards messages just like a real agent would, customers can get a personalized quote, sign up and be insured in just 90 seconds. Similarly, they can ask questions and submit their requests, which are processed using payment methods that are resolved in just three minutes. Lemonade’s policies cost a fraction of their competitors because of lower costs, which should make the incumbents think. Other Insurtech companies such as Hippo and PolicyGenius for individual insurance coverage as well as CoverWallet, Embroker and Insureon for corporate insurance coverage are not only introducing new efficiencies and improving customer service. They are part of a wave of digital-enabled innovation that is radically transforming the relationship between insurance companies and policyholders.
Future insurance: possible models
Investing in digital technologies is important. The problem is the vision: the digital revolution made us aware that what one day seems revolutionary will soon become standard.
“What the software industry has done to hardware manufacturers – commented Ido Segev, consulting partner of McKinsey -, digitization is going to do to traditional insurance companies. The digital revolution is creating new risk formulas and thus new opportunities for insurers. As we have seen over and over again, the companies that become protagonists of the disruption or that benefit from it are constantly those with the ability to imagine the future, preparing in time for how the market will evolve.
Let’s see how digital innovation will help shape the insurance of the future according to McKinsey experts:
– “Omnibus” coverage
Today a user has to take out several policies to get coverage on the home, car or life. In the future, insurance coverage will allow the customer to choose a single “product” of personalized protection. Whatever the media used, customers can buy directly from a single aggregator that, acting as a front end, will allow them to receive coverage for all insurance needs, with the possibility of defining even the most consistent purchasing policies. The customer experience will be greatly simplified, while the back-end systems will optimize and customize the coverage options, making an automatic match between all types of existing insurance policies.
– Work in progress policies
Insurance companies will be able to release new products on a continuous basis. The concept is one of constant updating, so as to ensure a dynamic adaptation to the needs of customers, who may vary lifestyle (for example with the birth of a child or change of job) or against cybercrime. Any change will still have to be approved by the customer but the guarantee is to have a more fluid and relevant approach to the policies underwritten.
– LifeStyle policies
Products and services will not only be measured, customized and priced dynamically but also provided as needed: automatically or according to customer requirements. Insurers can already do many of these things by working with new companies. One example is FitSense, a company that has developed a fitness app that works with the insurance industry by sharing customer data to enable personalized policies based on the data from the apps loaded on the customer’s devices. By working with this type of wellness player, insurance companies will be able to have more timely information about their customers, which will also reduce premiums for the healthiest and most virtuous customers, minimizing the need for claims because they can offer proactive support in making better decisions about their health. This will also be an evolutionary step for insurance companies that will change their “repair and replace” approach to a “detect and prevent” model. An example, in this sense, is Quantifyle by Digitteria, an app that facilitates the sharing of customers’ personal information with insurers in exchange for incentives and premiums.
– Instant Insurance
Today, thanks to the use of the sea of data available today on lifestyles and behaviors of each individual, it is possible to develop consumer insurance models. For the mobility sector there are those who predict the rise of instant insurance: in essence, depending on the vehicle used, it will be possible to activate coverage for a single user depending on the type of vehicle chosen: car ownership, car sharing, bike sharing and so on.
