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DIGITAL TRANSFORMATION In association with Noria
The insurance sector needs to wake up fast to the changing needs and desires of customers. Effective use of technology is the answer.Ronny Reppe, CEO Noria Insurance Software, explains why and how. As we have entered the 2020s, most agree that the insurance industry will face rapid change in the coming years. During the next five to seven years, we will witness completely new demands emerging from the market, triggered by technological changes and new business trends driven forward by digital disruptors and early adopters. The changing environment of the insurance industry will ultimately require incumbents to provide their consumers with more value for money. To get there, insurers should focus their efforts on two significant areas: First, to increase their operational efficiency, and, second, to simplify and improve their customer experience. The insurance players that make the most optimal technological choices and best adapt to the new market conditions will be the industry winners.
This is the time for action
MANUAL TO DIGITAL Powered by increasing customer expectations and new technologies such as automation, machine learning, analytics and IoT, the insurance industry will undergo a transformative process that will evolve the industry from manual to digital operations. The industry is on the brink of disruption, being one of the most susceptible industries to future disruption, according to a recent survey by Accenture. This found that carriers that are slow to respond to the changing market conditions could suffer significant market share erosion. The already ongoing disruption of other industries suggests that this claim is valid. Take the telecommunications industry as an example. During the last few years, conventional telecom players have faced declining revenues as so-called over-the-top service providers (OTTs) have entered the stage to deliver services that reduce the demand for traditional voice and messaging business. These digital disruptors, such as Apple’s FaceTime, Google Hangouts, Skype and WhatsApp, use existing telecom infrastructure to deliver the same services that used to be under the domain of incumbent telecom companies. Built on innovative business models, these OTTs threaten to provide services at a lower price than traditional telecom providers. Telecom providers, then, may end up playing the role as an infrastructure provider while other companies take on more customer-facing roles. The telecom industry is not alone. Other sectors, such as The Marine Insurer P&I Special Edition | July 2020
media and banking, face similar challenges, and it is not unlikely that analogous situations will emerge in the insurance industry. Signals are already emerging, indicating that digital MGAs will leverage existing “infrastructure”, in the sense of insurance systems, administrative capabilities and risk financing, to build novel digital services. Incumbents, then, can be relegated to infrastructure providers while digital MGAs create a new layer between them and their existing customers.
THREE BIG TRENDS Three significant business trends are today emerging in the insurance industry – insurance ecosystems, on-demand insurance and dynamic pricing of risks – indicating radical change over the next few years. Embracing these trends is critical to stay competitive as an insurer during the 2020s and beyond. Ecosystems refer to a general business trend that is emerging across a wide variety of industries, where organisations group together in networks to create novel and value-adding solutions for customers and consumers. These networks often involve players from different sectors, whose products and services in some way or another complement each other. Within the insurance sphere, forward-looking insurers are already creating or joining ecosystems with players in other industries to provide better services for existing and potential customers. Take the insurance company Progressive as an example. It has partnered up with the fleet management company Zubie
