Innovation across the digital spectrum is transforming industries across the world. For the insurance industry, this is not just a blurring of traditional boundaries but transformation of the complete value proposition and where it sits in the end-to-end value chain.
Technology such as IoT, machine learning, and blockchain are bringing significant opportunity to the industry. When I talk about the value proposition changing, technology is enabling insurers to move from loss compensation to loss prevention, in parallel combining with value-added services focusing on the customer experience.
This change in the value chain has opened the door to new entrants and emerging alliances with partners from alternate sectors. I believe this is pushing the industry further to think outside of the traditional insurance box.
In Australia, we need look no further than the private health and life insurance sectors. The fitness tracking social app Bupa Boost was launched in September to help Australians live longer, healthier, and happier lives. MLC, the insurance and wealth arm of National Australia Bank, now offers members the chance to save on life insurance premiums by attaining fitness goals and adopting a healthier lifestyle.
Susan Galer, communications director, SAP, recently published a post titled “Will self-driving cars kill the insurance industry?”. It’s an interesting read that hits the nail on the head on how insurers are currently balancing technology innovation with spawning a new value-added service for consumers without eradicating their own existence.
In the article, Birgit Fien-Schmalzbauer, head of research & innovation, insurance, SAP, provides a glimpse into how the convergence of physical and digital worlds is expanding opportunities and providing this value-added outreach: “We’re seeing huge demand from customers and insurers for micro-insurance services. Someone going on vacation can add security protection for their connected home, or adjust insurance coverage for their connected car, as well as medical coverage for their connected health.
“These are high-value services allowing customers to easily adapt coverage and insurers to generate revenue. For example, the SAP HANA Cloud Platform for Connected Home revolutionizes the insurance industry’s business model while increasing customer satisfaction with new, high-value services.”
In today’s connected society, this provides insurance with an exciting era of opportunity. It enables insurers to establish wider ecosystems of partners, resulting in an extended scope of services and unique value propositions for its customers.
Uber recently announced a partnership with Circulate in North America to provide non-emergency medical transport for patients who struggle to find accessible, affordable transportation to medical appointments. This is a great example of where new partnerships in the digital age are bringing to market unique propositions for consumers, and in this case acting with the objective of preventative care–a risk-preventative approach.
ADT, the largest security company in the United States and Canada, has announced a partnership with State Farm, which insures more homes and cars than any other U.S. insurer, to provide a “complete solution for your smart and secure home.”
It’s an exciting time to be part of the insurance industry as it pushes the boundaries of innovation. But how ready is the industry to support this innovation focus? Keep an eye out for my next blog, where I’ll discuss how insurers can look ahead to foster an innovation culture.