The future is not out there, somewhere in the, um, future. It is here. A recent posting by Forbes of a blog by Bain Insights contains the following examples of where we are heading.
In Australia, for example, you can use your smartphone to snap a photo of something you want to insure, such as a bicycle. Upload the picture into an app called Trov and then request a policy for a specific period, say a month. Trov uses available data about you and your bicycle and, within seconds, comes back with an offer. If you like the terms, you press the “I accept” button, and you’re covered. Claims are also handled online, with a rapid exchange of photos and texts.
Consider a car accident that occurs in the near future. Immediately following an incident, software built into the vehicles will assess the damage and notify a towing service, if necessary. Assuming the drivers are not seriously injured, they’ll use their smartphones to record 3D images of the damage and then send the data, together with the electronic address cards of all the involved parties, to their insurance companies.
Digital technologies will also help with claims prevention, thanks to the Internet of Things. In the future, for example, a sensor will be able to monitor a household’s water consumption patterns, detecting potential leaks and interrupting the flow before the basement is flooded, thus preventing major damage and a costly claim.
Spoilt for choice
Insurers deciding which digital technologies to adopt have learned to focus on those that are most likely to both improve the customer experience and help them differentiate themselves from their competitors. In a rapidly evolving environment, companies are using test-and-learn approaches, rapidly bringing new prototypes to market and continuously improving them. Leading insurers have recognized that they need more than new technologies; they need to establish a digital culture, staffed by trained and motivated employees.
Insurers can ask themselves a simple, and fundamental, question: Will it enhance the customer’s experience? Putting the customer first is more than a platitude. An improved customer journey—one built on ultra-precise information, greater transparency, more flexibility and simplified interactions—is good for business. Shades of TCF there?
Take the typical experience of a customer calling an insurer today. It’s likely an automated answering service will tell the customer to press buttons 1, 2 or 3 for various options. With machine learning, though, insurers will be able to serve a customer much faster and effectively, without all the button-pushing. The system will instantly analyze the customer’s flow of communications across all channels, including past phone calls, letters, emails and even public social media postings. When the customer starts speaking, the computer can analyze the tone of voice, determining whether the caller is confused or angry or both. Armed with all this information, a virtual agent can assess the customer’s needs and suggest a solution.
For P&C insurers (property and casualty) battling in a fiercely competitive marketplace, digitalization is a multibillion-dollar opportunity. Using digital tools, insurers can lift profits, while delivering new services, lower premiums and an all-around better experience to their customers.
What’s in it for us as advisers?
We need to heed these developments, and the impact it can have on our business in the future. The growth in market share of direct insurers is a strong signal that there are many DIY clients out there for whom insurance is a grudge purchase, and who will eagerly jump at opportunities like the examples listed above to cut out the broker in the mistaken belief that it will lead to a reduction in cost (commission).
A leading life office has already developed an app which allows clients to apply online for accident cover for brief periods, thereby making the long-term addition of this as a rider on a life policy superfluous.
The “online” generation is sure to embrace this opportunity as well, which means that we will have to work out a counter to stay relevant.
To read the full Bain Insights article, click on this link.
PS: Please do not be distracted by the attractive lady in the mini to the left of the article.