The problem is that insurance is a service that only really adds value when something goes wrong.
There are not many other products or services that you typically pay several hundred pounds for and then not use. No wonder that most people then question what they are paying for. So is it time to re-think the way insurance-based products and services work?
Innovation is becoming increasingly important to the insurance industry. New technologies and business models are disrupting traditional industries such as retail, banking, music and transportation. It is inevitable that insurance is going to be seriously impacted too.
Consumers are no longer just comparing products and services between different insurance companies but also with providers of other seemingly unrelated services such as Amazon, Apple, Uber and the like. In addition we are going through a phase of massive technological change with new, disruptive technologies appearing almost every week – this along with consumer behaviour evolving at a phenomenal rate is bringing about a whole range of opportunities for insurers to create more innovative and compelling propositions for consumers.
Insurance is fundamentally a ‘safety net’ in case something goes wrong – the problem for most consumers is that things actually rarely go wrong. But what if the insurance industry changed its approach to one based around ‘guardian angels’: can insurers help to prevent something going wrong in the first place?
This would present the industry with a reason to engage with its clients more frequently and as a result build a much tighter relationship. This approach could potentially reduce the churn rate experienced by the industry and turn the offering into one with a positive feel. Preventing claims could also potentially be significantly cheaper than processing and paying out for claims.
Imagine if your car insurer could identify if you were falling asleep on the motorway and help in getting you safely off the road before you had an accident? Or what if they could anticipate when you are likely to need certain motoring related products or services and use their buying power to save you over £400 a year on your motoring costs?
Going further, what if they could alert you in advance if your flight was going to be delayed and maybe make the wait at the airport more enjoyable, or could alert you in advance if Bruno your pet Labrador was being more lethargic than normal. What about if your insurer could find the safest place for you to park your car when you turn up a new location or even suggest the safest route to your destination and then give you discount for taking the safer route?
The technology to enable insurers to create these types of innovation is already here – the challenge for the industry is in attracting the talent that wants to create these next generation propositions, or even to use the new disruptive technologies and business models to create companies that will potentially disrupt the traditional insurance model.
In a recent Ingenin Insurance Innovation Survey, 63% of insurers felt that the dearth of people within the business with appropriate skills was a significant barrier to them being able to innovate more effectively. Likewise, an Accenture survey last year identified that more than 40% of insurers are looking to acquire or invest in start-ups in order to bring innovative and entrepreneurial knowledge and skills into the business.
In short, Silicon Valley is no longer being seen as the place where ‘wacky’ new businesses are created; that moniker is now being bestowed on London. Increasingly, the capital is now recognised as the place to be if you want to create a tech based start-up targeting the financial services sector.
With consumers connected to the internet around the clock and exciting, potentially disruptive technologies appearing at a rapidly increasing rate, the insurance world could look very different over the next few years.
We may soon be talking about insurance companies in the same breath as Uber.