Getting ready for more digital disruption
In the previous post in this series, I looked at the technologies that will enable tomorrow’s connected insurers. I’d like to wrap up by pondering a few of the disruptive trends insurers might face in the years to come as a result of digital technologies.
The rise of direct insurance sales and aggregators has been the most disruptive trend of the past decade, enabled by the rapid growth of the Web. The pattern of disruption is set to continue well into the future as new digital technologies emerge and others begin to mature.
Insurers face competitive threats from a number of sources, some of which we have probably not even begun to conceive. The giants of the Internet – Amazon, Google, Facebook and others – have powerful brands as well as excellent data and analytics capabilities. This would put them in the driving seat of customer experiences that support a range of financial service products, including insurance, should they choose to go there.
What if, for example, one of them muscled into the market by buying a well-known UK aggregator and its massive insurance customer database? How could they change the market with their mastery of analytics and their obsession with customer service? Could they attack the traditional insurance value proposition with cheaper and more flexible pay-as-you-go options?
Another shift many trend watchers see unfolding over the next decade is from consumers owning big-ticket items – cars, fridges, and even smartphones – towards their renting them instead. Using embedded electronic sensors, rental companies could monitor customers’ usage of these items and put penalties in place to curtail abuse of the goods and fraudulent reports of loss and theft. This could bring dramatic changes to P&C insurance by making leasing companies rather than consumers their major customers, as well as by reducing the amount of claims.
In this environment, insurers would have a number of options. They could become no-frills operators in the vein of Ryanair and offer a cheap and cheerful and commoditised product to their customers. Or they could place themselves at the centre of the customer’s life as part of an ecosystem that offers a range of services and products that make life safer and more convenient every day.
Whichever route they take, technology holds the key to success. Now is the time for insurers to start experimenting with tomorrow’s digital technologies and business models, even if they do so in a lab-like environment or through small experimental projects.
In my next post I’ll be discussing the Internet of Things, and how it’s poised to turn the insurance industry on its head. If you’d like to read the first post in this series you can find it here. The Accenture Technology Vision for Insurance 2014 explores many of these ideas in more detail.