Even though the value proposition behind insurance has not fundamentally changed over hundreds of years, advancements in technology and the rapid digital transformation brought about by the COVID-19 pandemic have contributed to an increasingly sophisticated customer base that is demanding more from service providers. Machine learning, the Internet of Things, artificial intelligence, and other shifts are challenging traditional insurance products and engagement models.
Today, incumbents have two key areas of focus – modernisation and digitalisation – as they look to respond to the enhanced expectations from their customers. But beyond the technology side of things, trust and relevance will be deciding-factors on whether customers stay with their current insurers or look elsewhere. These are two sides of the same coin. If an insurer does not deliver solutions tailored to the unique needs of an individual customer, then that person is likely to lose trust in how the organisation is using the data it has compiled of them.
This could result in insurers partnering with fintechs to deliver a more comprehensive offering that blur the lines between traditional products and more agile, future-forward ones. Critical to this partnership-driven approach is having the understanding that customers are integrated ‘entities’ and not siloed. They require insurers to have an overall view of all their needs and not just fragments of them.
Whether it is in partnership with one another or individually, insurers and fintechs must start treating customers holistically covering their physical, emotional, and financial wellbeing. Data analysis through modern, digitally-driven solutions leveraging the high-performance computing capabilities of the cloud become one of the keys to this success.
Doing so will see the service provider expand the value proposition. It is not a case of reinventing the wheel but identifying ways to enhance what is already in place. Rewarding ‘positive’ customer behaviour through discounts on premiums or other value-added services can also show them that the insurer is considering them more holistically than in the past.
Of course, the focus must expand to include identifying opportunities for growth. Simply catering for existing customer needs limits the business when it comes to potential to differentiate amongst its competitors.
Expanding its strategy to deliver more innovative solutions that cater for a younger customer base that is more focused on digitalised solutions can position the insurer for more robust (and long-term) growth. Along with this can come things like subscription or consumption pricing models for customers, leveraging mobile payments as a more effective way of collecting premiums especially in Africa with its large unbanked population, and even considering cryptocurrencies as payment methods.
The takeaway is that insurers must not limit their thinking to what has worked in the past. It is about identifying the modern innovations that are gaining traction with today’s customers that bring with it the agility needed to adopt to future trends more effectively.