Consumers driving change: the evolution of future-forward insurance
At a Glance
Success in the insurance industry has traditionally been based on using historical data to assess and protect against risk, writes Atos’ Kulveer Ranger. Now, it’s about identifying potential for new models to make propositions more profitable and competitive while driving sustainability.
5 Minute Read
SVP, Head of Strategy, Marketing, Comms & Public Affairs, Northern Europe & APAC
More articles from Kulveer
To net zero and beyond: how digital transformation is redefining services
For the business of risk, it’s time to look to the future. The interplay between insurers and consumers is evolving to influence positive sustainable change, with technology as a critical enabler.
The insurance industry has a tradition, quite rightly, of being risk-averse
Close analysis of years’ worth of patterns and trends is an effective way to reduce exposure, deliver value and retain the confidence of stakeholders.
That’s why, in many ways, the emergence in the last two decades of the first generation of insurance ecommerce platforms has been so disruptive. With unprecedented choice, transparency and comparability, there’s more pressure on companies to better understand consumer needs, be savvy in terms of product design and, most importantly, look ahead in a fast-paced digital world.
Personalized and reciprocal
Take the car insurance market and its role in the digital transformation of mobility. Connected vehicle technologies generate vastly increased volumes of data which companies can leverage to tailor and target insurance policies. If your insurer can gather and analyze more real-time and historical information about you and your driving, then you can be identified as a safer driver and benefit from lower premiums.
This new kind of personalized and reciprocal relationship between insurer and consumer is the model for increasingly sophisticated data-driven change. It’s also a point of entry into the world of nudge theory, using mechanisms other than price to positively influence populations’ behavior.
Personal digital ecosystems
We’re seeing this to an even greater degree in health insurance, with the explosion in the use of wearable technologies.
Consumers are creating their own personal digital ecosystems comprising their connectivity (broadband, Wi-Fi, 5G), social media platforms (Facebook, Twitter, Instagram, TikTok) and devices (PC, laptop, tablet, smartphone, and now wearables). This all-encompassing, ever-evolving hyperconnected ecosystem is now ripe for the business of insurance across every domain.
Important questions inevitably arise about data ethics and the nature, availability and usage of personal information.
Devices fitted into vehicles may be seen as ‘big brother’, but they’re a prime example of the psychological shift that’s underway. Its acceleration is underlined by the numbers of companies now offering wearables as part of a health insurance package. Consumers are buying in, ready to be better informed about their lifestyle, and more empowered to look after their own health and wellbeing.
A two-way street
Possibilities for this form of self-actualization, having started with mobility then health, are continuing with conversations about sustainability. Across the insurance sector – reflecting wider public opinion – consumers are becoming more conscious not only of their own environmental impacts, but those of the organizations they interact with.
Research by BearingPoint found that
Over 70% of consumers in Germany, Austria and Switzerland expect insurance companies to promote sustainable behavior with their products1
It’s clear that consumers’ assessment of firms’ commitment to sustainable practices can influence their choice of insurer,
With research by IBM finding that nearly 70% of consumers in the United States and Canada believe it is important that a brand is sustainable or ecofriendly.2 Insurance customers will want to know what actions companies are taking, what they can do as individuals, and how their relationship with an insurer can enable them to behave in a more sustainable way. Insurers can differentiate themselves by communicating with consumers to establish this two-way street.
Accelerating climate action
This applies to every type of insurance, from corporate and business to building and personal. Firstly, from a policy-holder’s perspective: does their behavior enhance sustainability (cutting carbon footprints, consuming fewer products or less plastic)? Equally, from an insurer’s perspective: where do they direct their funds to more sustainable investments and how will they decarbonize their operations, services and supply chains?
Insurers are already taking proactive steps to support the transition to net zero, with the top 10 European P&C insurers having ceased or restricted insurance coverage of coal-related assets, and some actively divesting from certain asset classes.3
Underlying all of this is digital transformation
The shaping of the necessary technologies and infrastructures, the gathering and analysis of data, and the power of artificial intelligence, supercomputing and quantum computing to generate data models and forecasts that are easy for companies and their customers to understand and action.
Simplifying the customer experience
We’re still at the beginning of this insurance revolution; it has already spawned a plethora of models and variables that could be confusing for policy-holders. While many may be beneficial, over time it will be those companies that can simplify them and effectively engage consumers that will be the most successful. Customer experience and access (via digital platforms and other channels) will therefore be paramount in turning propositions into action.
The question of how better behaviors drive better outcomes has existed for a long time. Now, there’s more data, and therefore more transparency and insight, into how meaningful change can be effected. Given the significant commitments that businesses are making to meet the 2050 challenge, this is something insurance companies need to consider. Mutual relationships with consumers will be pivotal in enabling wider society to take advantage of the exciting possibilities that insurers can create.
Digital Insurance – Further Insights
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