Revolution or evolution for the insurance market? This question sparks up an active and interesting debate in the industry at present.
Those in favour of revolution point to exciting new technologies and the ever growing insurtech developments. In the article Evolution and revolution in insurance , the team at Direct Line side firmly on the side of current revolution and contend that ”we are looking at a fundamental change to the kind of insurance people will want and need in the future”
The evolution camp believes that the insurance market has always used the latest technology to bring efficiencies to process and products that have changed little over time. This they class as evolution not revolution. Indeed Frank Sentner who is actively involved in the Insurtech movement in the United States, has articulated this view in a recent article Evolution, not revolution.
Quite honestly though, I have started with the wrong question. A quote I read from Steve Jobs always sticks in my mind. Jobs said, “You have to start with the customer experience and work backwards to the technology.” So do customers want a fundamental change to the insurance they buy, or do they want the same kind of insurance products but just tailored to them personally and delivered more efficiently?
Do customers want insurance revolution or evolution?
This is the right question. So what is the answer? Unsurprisingly in the complex world of insurance there is not an easy answer. Customers are all different and likewise so are their needs. In essence there are three key stages for all insurance products. For customers these are identifying the right insurance cover; buying that product and then accessing the product afterwards either to make amendments or make changes.
Designing the right insurance cover
Customers have constantly changing insurance needs. Potentially they need a cocktail of cover including household, motor, travel and life insurance. Some of the cover may be long term, other needs may just be temporary.
London based insurtech Zego is a great example of temporary, or pay-as-you-need, insurance. This start-up allows Uber and Deliveroo couriers and drivers to pay for commercial vehicle insurance by the minute and has recently raised $42m (£33.3m) in investment.
So offering more personal and flexible insurance solutions is an attractive proposition. In our blog, the insurance business model needs fixing, we quoted the then Aviva Chief Executive Mark Wilson who summed the situation up in a quote on the Raconteur website “The dysfunctional market is a problem for the whole industry that requires an industry-wide solution.” Since that time Mark Wilson has left and Aviva has hit the headlines with plans to split its UK life business away from general insurance. Aviva denies any plans to follow the lead of L & G and LV and sell off their GI business. However, an article in Money Marketing confirms “Moving forwards, Aviva’s life and general insurance businesses in the UK will be managed separately.”
So, on balance, industry leaders seem to feel customers want evolution. No universal demolition of product silos seems to be on the agenda. After all, Zego is selling traditional commercial vehicle insurance. It is just personalising the product to the need.
Buying the chosen insurance package
First the telephone and then the internet changed the insurance landscape. Customers now have multiple options that offer the opportunity to compare products from various carriers, compare prices and buy insurance any time; anywhere. But customers have to be offered the right options for them.
This is not revolution; it is simply increasing the choice of how customers research and buy insurance. Choice is good, but only if it benefits the customer. We examined this subject in our blog Insurance should be about value and service. The way products are marketed and delivered has to suit the customer.
It is too early too know the full story behind Trov closing their on-demand insurance app in the UK, but the Important Update from Trov states that the company are “making the difficult decision to say goodbye to Trov’s On-Demand consumer offering in the UK at the end of September 2019. The obvious conclusion is that it was not popular enough to be profitable. Proof if any is needed that making any changes to the insurance research and buying process has to be customer not technology led.
Post sale insurance options
A claim is by far the most important post-sale process for customers. This is where Insurers earn Trust…and trust is the basis for future success. The right use of technology at this point can make a real difference. In our white paper The Future of Claims handling we concluded that an updated claims management system is essential to meet the expectations of this digital age, but again this is not revolution. It is simply taking advantage of new technology to deliver a faster, more efficient service when customers are at their most vulnerable.
Likewise, making post sales amendments should now be quick and straightforward. Self-service portals to store documentation and make amendments such as increasing or decreasing the level of cover should be straightforward. But these options should be offered alongside the more traditional channels. Not every customer wants the responsibility of making changes themselves. Some want the comfort of being guided, either by person or increasingly by the clever use of chatbots. And so the evolution of help and advice in the insurance market continues.
So do customers want insurance revolution or evolution? In truth I think he answer is they don’t care. They just want choice, flexibility and simplicity. And when the chips are down, they want to trust that their insurer will be there to protect them quickly with the minimum of fuss.