Insurtech firms, powered by artificial intelligence (AI), machine learning (ML) and the Internet of Things (IoT), have caused an upheaval in the insurance industry. These nontraditional players have created a new class of offerings that range from capturing behaviors, such as personal driving habits and data from wearables, to preventing loss by using IoT sensors to monitor environmental conditions such as humidity and temperature.
To ensure relevancy and competitiveness, insurance incumbents should take a fresh look at how to apply new digital capabilities to their own value chains — including their products, distribution methods and service models. Based on our work with insurers, we suggest companies pursue three primary digital-engineering goals and share recommendations to achieve them.
The first company to introduce an appealing product gains a potentially sustainable competitive advantage. To be first to market, insurance companies need to anticipate customer desires for products and experiences before those desires are even expressed. They also need the right tools, processes and infrastructure to quickly convert these customer insights into products.
Examples of recent innovations:
We helped a large P&C insurer modernize its outdated quote-to-bind to accelerate new feature introductions and improve the user experience.
The high cost of legacy IT, including infrastructure, application maintenance and upgrades, can starve innovation. Moving applications to the cloud frees funds by shifting capital expense for data-center upgrades to a predictable operational expense. Application maintenance costs drop when monolithic applications are replaced with modular microservices, which enables developers to quickly update features by working on affected microservices instead of modifying an entire application.
A leading life and annuity insurer wanted a faster way to build and deploy customized portals for its thousands of affinity groups, each of which expected a tailored experience.
In today’s crowded insurance market, even the most appealing new offerings will fail if the customer journey is cumbersome.
Customers evaluate insurance-product experiences based on their convenience, the speed to resolution (such as policy activation or claim payout) and personalization.
Technologies such as electronic document capture and processing, robotic process automation (RPA), and robo-advisors improve serviceability to create a competitive advantage.
A global insurer sought growth by partnering with airlines, travel agencies and multiple other distribution channels to introduce a new product that offered one-click enrollment, pay-per-ride coverage and real-time claim payments via a mobile app. With the larger customer base, the company also needed more capacity to handle the influx of claims.
To compete with nontraditional market entrants, insurance companies should first identify their comparative advantage — whether it be product, experience or distribution — and then do some combination of the following:
To learn more, read “Modernizing the Insurance Value Chain: Top Three Digital Imperatives,” visit the Insurance and Digital Business sections of our website, or contact us.