Insurance Blog | Accenture

In my previous post in this series, I mentioned that up to 40 percent of some carriers’ risk protection revenues are at risk of disruption by 2020. The regulatory and capital barriers that have, to date, helped to shield insurance carriers from the risk of digital disruption are rapidly falling away.

New technologies are reshaping the insurance value chain, creating openings for new entrants to exploit. In this context, insurers have a fragile grip on their customer base because of three major vulnerabilities in their business model:

  • Late positioning in the consumer’s decision-making process: An insurance carrier is often the last to know when a customer needs a new policy or an extension of his existing cover after buying a vehicle, moving into a new home or getting married. That means competitors or aggregators often get to make their offers earlier in the purchase cycle.
  • Low levels of interaction with customers: Outside of paying premiums, making claims and renewing policies, most customers have few interactions with their home, auto and life insurance carriers. Insurers have passive and disconnected relationships with their policyholders, in turn leading to low levels of customer engagement and loyalty.
  • Lackluster customer experiences: Many insurance carriers are failing to deliver the convenient and accessible experiences their customers expect to find on their digital channels. Few insurers today, if any, can claim that they delight customers in their everyday lives, as the leading digital players do in other industries.

Each of these three vulnerabilities represents time and space in the customer relationship that the typical carrier is leaving open for competitors to occupy. The following components of the insurance value chain are at risk:

Distribution: Digital platform companies, aggregators and insurtechs are positioning themselves early in the consumer’s research for insurance cover, with some using sophisticated algorithms and AI to make recommendations to customers.

Operations: Self-service channels and intelligent automation allow digital insurance companies to rapidly settle claims, delivering a faster and more pleasant customer experience in one of the most important moments of truth in insurance.

Risk assessment and claims: Internet of Things technologies and big data empower digital disruptors to assess and price risk in real-time, based on more numerous and relevant data points than those insurers have used for decades before.

This clears the way for them to offer innovative products or services such as microinsurance, on-demand insurance, usage-based pricing and real-time protection. What’s more, automation in consumer’s everyday lives via autonomous cars, the connected home, connected health and more will dramatically decrease the frequency and intensity of insurance claims.


In my next post, I’ll suggest ways that insurers can address these vulnerabilities and threats to their risk protection revenues, defend their relationship with the customer from aggregators and digital platform companies, and prevent their offering to the market from becoming further commoditized.

Read The Everyday Insurer to find out more.

The Everyday Insurer




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