Insurance is predicated on the ability to model accurately, to plan effectively, and to predict the likelihood and impact of certain events. While we are already facing significant regulatory, competitive, and customer disruption, the industry, like all others, has now been deeply disrupted by the pandemic. From an operational perspective, insurers have seen their workforces dispersed, their technologies stretched to the limit, and customers put under immense pressure – and in turn, that strain has been put on the insurers themselves. Then there’s the increase in customers focusing on wanting to better protect themselves. Reports have suggested that the number of people making wills has risen at the same time as life insurance has seen a spike in interest. And for commercial lines, corporate customers are scrutinising their current and future business disruption insurance with an intention to increase their insurance cover.
When is a growth in customers a problem? When you can’t handle each one properly. No business wants to fail, but if insurers do not adapt rapidly, that is the risk they entertain. Whilst there may be an uptick in demand in some areas, the market is still awash with competition and tight margins.
Two challenges to overcome to achieve better insurance
All of this points to the need for a fundamental shift in the way insurers operate in not one, but two areas. Firstly, the need to adapt their operational model so that the effects of disruption, whether driven by the pandemic or regulation, do not impact the experience their customers receive. Secondly, there is a need to reinvent their business so that the services and products they provide are both appropriate for customers and capable of withstanding future upheaval. In both instances, technology, or rather the ability to consolidate, analyse and action data-driven insights through the use of technology, may offer the solution. Why? Because the issues that insurers face are built on data along with so many other things. The ability to change this disadvantage gives them the power to tackle these issues head-on. For instance, when it comes to operational models, better visibility (powered by data), combined with accurate scenario-based modelling and planning, will aid the development of a more agile organisation. Being able to identify problems and react accordingly will be critical to delivering operational continuity and, therefore, unimpeded customer experience, and data lies at the heart of this.
Then, the knowledge of how it can be applied to evolving products and services for customers comes into picture. Customers will want to feel insured by their insurance and insurers will want to balance this with the need to not overexpose themselves to events that could appear out of nowhere. Here’s where the combination of accurate data use and the right digital tools, such as artificial intelligence-driven solutions, can help insurers take a major leap forward. Premiums can be adjusted, and more dynamic products tailored to the needs of customers can be developed. Conclusively, those that use technology effectively, and plan for scenarios appropriately, will most certainly build the types of products and services that fulfil both those objectives, and ultimately keep customers coming back.
Planning for the unpredictable: Much like other sectors, insurers need to revamp their business models. Technology, and the better use of data, offers a solution to both customer experience and operational challenges. Planning for the unpredictable may seem impossible, but by using a variety of data sources, and more importantly, by being able to connect them all and read them effectively, insurers can ensure they continue to improve customer satisfaction and meet customer expectations while preparing their businesses for whatever comes next.