Globally, insurers are investing in digital technologies to meet increased customer expectations for more customised solutions. JC Oberholzer, Chief System Architect at SilverBridge, believes the rise of insurtechs are adding further impetus to the need for incumbents to embrace more innovative product development.
The transition to this more dynamic environment has not been without its challenges. An increasingly complex regulatory environment, a history entrenched in legacy systems, traditional business approaches that promote a siloed approach, and a culture resistant to change have contributed to perceptions that insurers are still too slow-moving around innovation.
“Fortunately, insurers are aware that things must be different in a digital environment if they are to remain competitive. Most report that the pace of innovation at their organisations has accelerated over the past three years as a result of emerging technologies being available.”
However, this has resulted in a challenge of a different sort – one of differentiation. With most, if not all, insurers looking to adopt an insurtech mindset towards solution development, the onus is on decision-makers to determine how best to offer something unique the competitive landscape.
“Already, insurers are using technologies that include social networking, mobile apps, real-time data analytics, cloud computing, and the Internet of Things. But clearly, using technology on its own is no longer good enough. Disruption needs to be channelled in new and different ways while still keeping a focus on the most fundamental element for any insurer – its customers.”
People’s expectations around their service providers have changed. Personalisation, customisation, flexible solutions, the list goes on. They have all come to expect a richer product environment. Inevitably, this has also resulted in a reduction in customer loyalty as people are inclined to move to any insurer that can offer the most compelling solution at the best possible rates.
“While digital has led to the adoption of emerging technologies, what happens next is integrating these as core competencies inside the business. Instead of viewing them as a value-add, the insurer must see them as a critical component to any strategic product development of the future.”
Oberholzer says that one of the ways this can be done effectively, is to imagine the environment where this is a reality and work backwards from there.
“It is about approaching product development using a different mindset. This is driven by a digital platform and how agile insurtechs are driving competition in a more fluid market.
Customer-centricity and unlocking the value hidden in the data that the insurer has at hand can contribute greatly to this differentiation and product development. Working in conjunction with this is simplifying the myriad products available to the customer and moving to non-traditional distribution channels.
“Just like solutions providers in other industries, becoming a part of the daily lives of customers is critical in this regard. Putting the individual at the centre of solutions and developing around them will be a vital part of differentiation not only in the digital world but beyond that as well,” he concludes.