Smart Coverage: How Insurance Companies Can Use Technology to Delight Customer
Connected technology is revolutionising the way that people interact with their service providers, but the potential is probably never greater than in personal finance – specifically insurance. For too long insurance consumers have faced endless frustrations in dealing with large and powerful – but slow-paced and monolithic – corporate insurance companies.
Technology promises change for insurance. Many of the personal items we hold most dear need insurance – our homes, their contents, our lives, our possessions on trips abroad and even our pets – but the perceived value of that insurance by the consumer is often low because it’s difficult to get cost-effective coverage and for claims to be processed quickly.
Data: The Driver For Change?
The UK is rife with InsurTech start-ups offering disruptive services centred around making consumer experiences smoother. Across the pond US InsurTech Lemonade has raised $480 million to date, as a result of its extremely fast, artificial intelligence-driven claims handling processes. Then there’s Californian based Hippo Insurance Services, which analyses data from municipal building records, satellite imagery and smart home devices to enable customer to qualify for insurance coverage immediately – it also announced a $100 million investment recently and is valued at $1 billion.
These eye-watering investment sums are driven by the opportunity that data has presented to the insurance sector – when the data is used to its potential. According to PWC nearly half of insurance companies believe personalisation through use of data will be the most key competitive differentiator in their sector – but still many companies struggle to deliver customised experiences. Risk is often calculated across the industry rather than on the circumstances of each new policy holder. In turn premiums offered to innocent consumers can be driven up by others making fraudulent claims. Furthermore, the endless complexities of making a claim, the painstaking amount of time it takes to complete one as well as new customer versus existing customer premium levels overwhelmingly fuel consumer discontent.
How To Modernise – Foundation First, Innovation Second
To change this sentiment amongst their consumers, insurers need to evolve their approach to modern technology adoption. Connected technologies are turning the relationship between insurer and policy holder upside down. Smart devices – everything from heating and ventilation smart systems, home security systems, personal health trackers and personal digital assistants – are providing an overwhelming body of highly individual data, upon which insurers can calculate more personal risk assessments and premiums.
In the financial services sector the rise of open API adoption has impacted the services companies can offer in innumerable ways. Lenders, investment managers, banks and other sub-sectors have been able to integrate new markets and offer more efficient services by becoming more “open” as a whole – insurance is no exception to realising the potential of APIs.
All these innovative technologies can only be converted to their full potential when built on a foundation of modernised core systems. Older insurance companies are often held back from achieving these innovations by their legacy tech. By prioritising digital transformation with a modern approach to delivery, they can begin to invest in the future of “InsurTech” without dealing with a complex web of systems. Not only does this offer the consumer an improved experience – investing today in digital transformation will lower administrative costs – such as dealing with complex data management or functional bugs in legacy code – for insurance companies in the future.
Read here how Godel is helping financial insurance company Intelliflo shift to an open architecture ethos, after driving a complete microservices digital transformation across their systems – https://www.godeltech.com/case_study/intelliflo/
In all, insurers who adopt technology with the right strategy will drive three key changes in how they engage with their customers:
Personalisation – data not only allows insurers to personalise policies, it allows them to do it at scale. By harnessing both structured and unstructured data properly insurers can understand existing and new markets to a better extent, enabling much better decision-making processes. Reducing the negative impact of fraudulent claims on overall policy generation can also be achieved through AI and machine learning.
Speed – In the insurance industry artificial intelligence is now a strategic investment with massive potential rather than a novelty. AI-based insurance processes deliver real-time policy underwriting, much faster claims management and instant intelligent advice. The days of waiting three weeks or longer to claim are fading as InsurTech companies adopt AI and machine learning to drive faster, more convenient services.
Independence – according to a PWC report the balance of power being switched from insurers to the consumer is imminent, as InsurTech moves the market forward into an era of simple, fast and transparent insurance. Consumers open to switching provider are likely to remain loyal if they have a positive experience, so future-focused insurers should prioritise delivering this.
The modern insurance company should be agile and embrace change. By ensuring that a foundational modernised system architecture is in place they can adopt new technologies to deliver better consumer experiences. Get in touch with Godel to explore how we’re helping UK insurance companies such as Ripe Insurance and comparethemarket.com modernise and innovate at a fast pace.