More important for many incumbent insurance companies is the sector’s transformation in the age of the Internet.
For a long time, the traditional approach to an insurance business model had been embraced by everyone because it tends to humanise interactions between both customers and agents. As things are, nearly every sector is looking to automate and digitise its business model: from sharing information to customer interaction to business collaboration. Leaving behind an exception: The insurance sector has reflected a slow progress in digital disruption. For this and other purposes, the sector is swiftly warming to the idea of digitisation.
Digitalist Magazine noted that according to IDC, “enabling contextual and meaningful interactions across the customer journey—and across multiple digital channels,” is a chance for insurers to reinforce their core business models. For example: Insurance platform Slice has come to the realisation that by automating its processes—there is a fair possibility to trim down 65% of business cost, reported Forbes. The company has INSURANCE built a wholesome website to bring data to customers. The process is quite simple—one-click to draw any relevant information. As the McKinsey report reads: By and large “Automation can reduce the cost of a claims journey by as much as 30%.” For companies, the symptom to not understand the fundamentals of convenience that customers want is a major obstacle, or worse it becomes increasingly challenging to produce attractive numbers.
It appears that “leading companies are using data and analytics not only to improve their core operations but to launch entirely new business models.” Companies such as MassMutual, Grange Insurance, Nationwide and Safeco are analysing data to comprehend customer lifestyle for the sake of personalising offers and ensuring an interactive experience. As discussed by IDC, a data-rich world is more accurate to assess individual risk against historically established case records because the former solely seeks to understand real-time consumer behaviour patterns and individual choices.
“Insurers of the future will play more of a risk avoidance role and less of a risk mitigation one,” Andrew Rose, CEO of US insurance comparison website Compare.com, said. Such experts’ argument for the sector going digital has been proven exact by real instances. MassMutual is carrying out a data mining exercise on social media to classify customers more sensibly. The outcome will help to position products and services with more relevance to the market.
Overall, modern insurance companies are understanding the new challenges and opportunities that alter the sector’s presence in the market. This points to the digital forefront. This means, insurers can “price and underwrite more accurately, and better identify fraudulent claims,” the report stated. To the question of how they can apply this exercise, the answer is, by using this force they can offer clients more enhanced products. Case in point: “auto insurance that charges by the mile driven.”