Historically, we’re used to seeing insurers react to incidents.
As business models change in response to cybersecurity concerns and technological advances, however, insurers should be changing their mindset and shifting their focus to prevention rather than being the guy to call when all has gone wrong.
Below, I’m looking at four key factors that are transforming the insurance industry today and how this will impact their relationship with customers for the better.
Should insurers bring their expertise to the boardroom to give their company a competitive edge?
Data analytics -reinventing the insurance sector
The level of technology we have access to now has meant insurers can engineer this shift towards prevention.
Data analytics can help insurers understand patterns in behaviour, for example, and can lead to the identification of opportunities for personalised services while also identifying potential risks at an earlier stage.
Access to such information can prove extremely valuable.
With consumer demand shifting towards personalisation, insurers could become strategic advisors, offering insights about the customer that were otherwise out of reach. External data analysis can also help insurers solve problems such as minimising the damage of extreme weather conditions.
For instance, floods, droughts and heatwaves could cost the economy tens of billions of pounds and hundreds of thousands of jobs by 2050, according to a new report commissioned by conservation charity WWF.
Floods in 2013/14 alone were estimated to have caused £1.3bn worth of damage.
While little can be done to stop natural disasters, insurers can play an important role in minimising the damage.
By working alongside local councils and environment agencies, insurers can warn customers in advance so they can be fully prepared when extreme weather hits.
The data extracted from councils and the environment agency will also allow insurers to deliver fairer home insurance policies, so that premiums are calculated based on factual data from each specific home, rather than it being a postcode generalisation.
Better value for money; happier customers
While insurance has traditionally been a grudge purchase, with prices soaring consumers are beginning to question the value for money they’re getting from insurance policies.
This ensures risk is measured based on the consumer’s driving history and data, rather than age or gender.
From reactive to proactive
The digital age has ushered in an incredible opportunity for insurers to evolve the very purpose of the industry in the very near future.
New technology is enabling it to shift its focus away from reactive to proactive.
This will help them collect multiple sources of data and spot trends, which in turn will make it easier to come up with new and exciting products that mix preventative solutions with financial fall back guarantees.
While the consumerisation of their services have given many a competitive edge, to thrive in a digital world they need to shift their mindset and build closer, value-based relationships with their customers.
This overall shift to prevention is the natural evolution for the insurance industry, and this is the time to bring insurers to the boardroom to make a real difference to the customer experience.