The Great Fire of London destroyed huge swathes of the city, ushering in a new, more modern infrastructure and the birth of the insurance industry as we currently know it.
Today, a new fire is raging – the fire of digitalization.
Fueled by a perfect storm of new technologies, digitalization is destroying our preconceptions of how the insurance industry works and giving rise to new business models and new entrants that see an opportunity to grab niche segments of the market.
The new technologies are giving rise to a new digital world, where everyone and everything are connected, where information flows unimpeded between devices of all types, and where huge volumes of data can be captured, analyzed, and distributed instantly.
In this world, insurers have a huge opportunity to reinvent their business, to move from risk protection to risk prevention, to go beyond the policy, and engage with customers’ digital lifestyles, providing the personal services they want and expect.
How can traditional insurers make this transformational change? We think they need to reimagine their business in three key areas.
Reimagining business models
In the digital economy, consumers want and expect to be treated personally and individually, and to be able to interact with insurers through whatever channel they choose. Satisfying these expectations will require a customer-centric business model that uses profiling and micro-segmentation to offer individualized products that support clients’ digital lifestyles.
At the same time, connected insurers have the opportunity to collaborate with partners in other industries – such as automotive, public sector, service providers, and healthcare – to extend their value chains and provide previously unachievable services.
Driving all this will be the dynamic use of data. Taking information from devices connected to the Internet of Things (IoT) will enable insurers to explore opportunities that drive more personalized, contextual customer engagement, as well as mitigate and protect against risk.
Reimagining business processes
The second opportunity comes from using real-time computing and Big Data to simplify and personalize end-to-end processes across multiple interaction channels.
Using these technologies, insurers have the opportunity to anticipate customers’ needs in real time and, as a result, proactively offer products and services based on their lifestyle and contact preferences. At the same time, they can use detailed analysis of customer behaviors and market trends to rapidly innovate new products and services.
In the back office, real-time processes and Big Data offer the ability to digitize and improve a whole range of processes, from underwriting to fraud management, regulatory compliance to claims management.
As the new technologies enable a massive reduction in, or even elimination of, manual tasks, employees will be able to focus on higher-value activities. Ensuring they have the requisite skill sets will be key to successfully meeting customers’ service expectations.
Mobile technologies offer insurers huge opportunities for deploying intuitive apps for the sales force, underwriters, service agents, and managers. Providing the right information at the right time will empower them to become truly digital insurers while driving down costs.
In addition, not only can internal knowledge bases and predictive, self-learning software help to guide employees through processes and transactions, they can also provide detailed analyses of the business for a better understanding of performance, costs, risk drivers, and other key factors.
The digital economy offers insurers the opportunity to truly reinvent themselves and transform every aspect of their business.
For more information about how SAP envisions the digital insurer, click here, where you can download our complimentary report “How Insurers Can Prepare for the Digital Revolution.”