The digital era has given birth to a connected customer who has higher expectations than ever of his insurance carrier. In this series of blog posts, I’m going to explore what this means for the competitive landscape in insurance and for traditional insurance business models.
I’ll also share a few thoughts about what insurers can do to become more customer-centric and compete more effectively in this fast-changing environment. A good place to start is by looking at the ways in which customer expectations have changed in a world where they are always on and always connected.
Consumers today expect friendly, personalized, relevant and enjoyable experiences across multiple channels, selected on the basis of their specific circumstances and points in time. They’re also better informed than they were in the past, since comparing product prices or seeing what people are saying about a brand on social media is a matter of a few clicks.
Customers no longer expect wide differences in their experiences with different industries—they expect their insurers and all their other service providers to deliver the same gold standard service they get from the likes of Amazon. Insurance might be a regulated industry, but consumers won’t accept that as an excuse for a poor customer experience.
Now, thanks to the way digital technologies are blurring lines between industries, insurers must face up to the growing danger of competition from new sources. Thanks to the reach digital technology gives them and the information they can collect about individual customers’ needs, preferences and locations, these new competitors pose a serious threat to insurers.
This is especially true in distribution. Today’s mass technologies negate the need for broad segmentation and standardization. Whichever insurer—incumbent or new, composite or niche, domestic or international—manages to fulfil the needs of the individual customer best, that insurer earns the mandate to serve him.
Banks have already entered the insurance space in search of new fee-based business. They currently distribute a significant portion of the life business and are increasing their presence in the P&C insurance sector too. High customer-touch mobile telecom providers, Web dominators (Google, Apple, Facebook, Amazon, and Alibaba, for example), retailers and the like are testing the ground.
As such, the competitive pressure on insurers to re-assess their strategies and operating models and to enhance their customer-centricity comes from both inside the industry and from other sectors. In my next post, I’ll take a closer look at the new context of competition and customer-centricity in the insurance industry.
To learn more in the meantime, download this report: The Customer-centric Insurer in the Digital Era