In 2010, PwC began a scenario analysis around the trends reshaping insurance and what the industry would look like by 2020. The scenario planning was based on interviews with more than a thousand executives worldwide.
The latest update, titled Insurance 2020 & beyond: Necessity is the mother of reinvention, provides fascinating insight into the realities likely shape the financial services industries internationally. The introduction poses the following interesting question:
“Insurance is facing more disruption than any other industry, posing threats for some and opening up promising commercial possibilities for others. What does this mean for your business? Are you equipped to compete?”
In line with our recent focus on customer expectations, we extracted a section of the latest report which provides insight into what is possibly the most important aspect of our business – our clients.
Evolving Customer Needs
The insurance marketplace is becoming increasingly fragmented, with an ageing population at one end of the spectrum and a less loyal and often hard to engage millennial generation at the other. The family structures and ethnic make-up within many markets are also becoming more varied and complex, which has implications for product design, marketing and sales. Reaching out to this splintering customer base and developing relevant and engaging products and solutions present both a challenge and an opportunity for insurers.
On the life, annuities and pensions side, this could include broadening the offering by designing targeted plans for single parents or shifting from living benefits to well-being or quality of life support for younger people.
On the property and casualty (P&C) side, this could include more partnerships with manufacturers and service companies. It could also include coverage for different lifestyles, such as flexible pay-as-you-use insurance or providing top-up coverage for people in peer-to-peer insurance schemes.
As the nature of the marketplace changes, so do customer expectations.
Customers want insurers to offer them the same kind of accessibility, understanding of their needs, and products that fit their requirements that they’ve become accustomed to from online retailers and other highly customer-centric sectors. Digital developments offer part of the answer by enabling insurers to deliver anytime, anywhere convenience, streamline operations and reach untapped segments.
Insurers are also using digital developments to enhance customer profiling, develop sales leads (e.g. digital profiling and social media dialogue), tailor financial solutions to individual needs and, for P&C businesses in particular, improve claims assessment and settlement.
Further priorities include the development of a seamless multi-channel experience, which allows customers to engage when and how they want without having to repeat the same information with each interaction.
Because the margins between customer retention and loss are finer than ever, the challenge for insurers is how to develop the genuinely customer-centric culture, organisational capabilities, and decision-making processes needed to keep pace with ever more exacting customer expectations.
Under a different section of the PwC report titled “Disruption and innovation”, mention is made of new routes to market and new ways of engaging with customers, including mobile and internet channels. While this may sound ominous and alarming to many advisers, the following point should be of some consolation: “…agents will still have a crucial role in helping businesses and retail customers to make sense of an ever more complex set of risks and understanding the trade-offs in managing them.”
This might involve a lot more focus on continuous professional development than most of us anticipated, but the adviser will, as in the past, still be the major conversion factor.
Nowhere in the study did I get the impression that, in the future, insurance will be bought. It will still need to be sold.
Download the full PwC report here:
Insurance 2020 & beyond: Necessity is the mother of reinvention