UK insurers urged to exploit digital
Only those insurers who are agile and flexible enough to reshape their business to suit the digital and economic challenges will succeed, according to Innovation Group’s ‘The Future Now Report – All change for the UK motor insurance industry’, which was published today.
Four significant shifts – regulation, economic conditions, customer behaviour and technology – have all occurred, nearly simultaneously, throwing the insurance industry into a state of flux. Economic concerns have led to trepidation and reduced investment, whilst the threat of increased competition from disruptive digital brands is likely to challenge legacy providers’ market share, prompting many to re-think how insurance is provided as a service, both now and in the future.
The key for insurers is understanding the significance of this change, both for their own companies and the industry at large. Economic and regulatory changes have stifled growth in some sectors whilst technology has not only raised the bar of consumer expectations but also posed challenges to insurers wrestling with how to embrace and respond to big data and advances such as connected cars.
‘One change is difficult enough but four at the same time is incredibly challenging for insurers’, said Chris Ashworth, managing director, UK Motor at Innovation Group. ‘The customer is currently in the driving seat when it comes to motor insurance. Digital transformation and increased competition have both helped push premiums down for sales teams and aggregators. As such, smart insurers must focus on delivering more value and a wider range of products to consumers. It’s not a threat, it’s very much an opportunity to embrace change and lay the foundations for future success, particularly in the claims arena.’
The Future Now Report was conducted by Innovation Group, the global software solutions and business process services provider, to ascertain the future of the UK motor insurance industry. It uncovers current trends within the UK motor insurance market and includes opinions and insight from a host of industry experts as to how these trends will shape the industry as it changes in the near future. It forms part of a series of reports that Innovation Group has conducted into the industry on a global basis.
Dan White, senior partner at Ninety Consulting comments, ‘Now is the time for an industry re-think, when you think of the products insurers sell many haven’t changed in the last few hundred years. But what has changed is that the technology has moved on. Insurers must make better use of the data they collect on their customers, using prescriptive analytics, and offer a ‘joined up’, strong customer experience at all touch points, be it via their mobile device or social.’
He continued, ‘The typical customer’s needs are also changing – the sharing economy and popularity of car sharing schemes is testament to this, and the increased familiarity with connected cars will alter the insurance landscape immeasurably.’
Penny Searle, managing director of Wunelli, points to how the Internet of Things (IoT) and Machine
to Machine (M2M) technology will alter the way consumers purchase, and receive, insurance. ‘Telematics has already seen big pick up and the EU-wide E-Call legislation will oblige manufacturers to install telematics in new cars. Collecting driver data will mean insurers and manufacturers will have access to the driver’s data straight away and in real time. Cars may be sold with an insurance policy, giving customers a competitive policy as soon as it’s driven out the showroom. In this sense insurance will be more of a service, than a product.’
‘Today’s customers are digitally dexterous and socially savvy and they expect their insurer to be too. To stay competitive insurers must embrace this seismic shift in the industry if they want to stay relevant in the future.’ Ashworth concludes.