The number one priority for insurance companies before the pandemic was growing revenue, a Forrester Research analyst pointed out during a webinar hosted by FintechOS in the fall of 2020. “Guess what’s number one now?”, Ellen Carney, Principal Analyst at Forrester Research, asked back then. “The experience of our customers (…)” was her prompt answer.
The reason why customer experience has become a priority for insurers recently is already well known in the industry. The internet has given customers powerful tools to compare products and experiences and switch to the cheapest and most user-friendly providers, no matter the industry. This explains the success of the likes of Amazon, Airbnb, Netflix and Revolut.
But can customer-centricity turn into a way of doing business in the insurance industry as well? And how can it be achieved? FintechOS explored the topic with a panel of industry experts during FintechOS Annual Summit, which the company hosted to offer a glimpse into the future of financial technology innovation.
Yes, customer-centricity can become a way of doing business for insurers since the trend “is already set by companies outside the insurance industry”, Valentin Coroiu, President of the Managing Board – CEO at UNIQA Asigurari de Viata observed.
Customers, especially young people, expect the same kind of personalised digital services delivered by the likes of Netflix, Amazon, Google or Facebook.
“Insurers need to accept that customer experience is not only built on how we design our product, but also on how we anticipate customers’ needs and respond to them in each touchpoint”, Coroiu said, pointing out that competition should no longer only be thought of in terms of product and pricing.
“I think customer experience is very important. Insurance companies have already started to put the customer at the core and become customer-centric organizations”.
Pedro de Sousa Avelino, CTO and COO at NN Hungary, thinks alike: becoming customer-centric “is not a matter of when, it’s a matter of how”.
“We are talking about the customer journey, the customer experience and customer-centricity. But sometimes we neglect this: are we owning this journey?”, he asks, mentioning the intermediaries, agents and other distribution touchpoints that insurers work with. This dependence “reflects the relationship that we have with them. When you own this journey, you get closer to them”.
Now it’s time for insurers to rethink this relationship, to get closer to their customers, but that requires innovation, which “is the only way to survive”, according to Pedro de Sousa Avelino.
But survival through innovation is not insurers’ only hope in a digital economy. They can target growth in a reinvented industry. First of all, because the Big Tech players and insurtech companies – which are the incumbents’ main challengers – don’t seem to want to move into the regulated space. “I think they don’t want to move to the regulated space at all”, believes Robin Merttens, Co-Founder and Partner of InsTech London.
They want “to win the customers, and they want the customers’ data and they want the ability to make money from the fact that they have a superior understanding to most incumbents”, Merttens thinks.
That’s why, for now, insurtech companies are building “small solutions to a small part of the value chain rather than for the whole value chain”.
Or, as Sergiu Neguț, Co-Founder and EVP of FintechOS puts it, “the most complex needs and products will be better addressed by the incumbents, for example, those relating to corporate insurance”.
However, it’s such a disruptable industry, and it’s been like this for 20 years since the internet came along “and we all thought the world was going digital, and it has gone digital, but the insurance hasn’t”, Merttens of InsTech London recalls.
In short, disruption comes with good news –opportunity. “There is an enormous global opportunity to build the next generation of insurance companies”.
Even if “the most sophisticated needs” are still likely to be better served by incumbents, Sergiu Neguț of FintechOS thinks that when it comes to simple journeys, for simple products, “a newcomer in the industry will always have an edge”. Why? Because of the technology, which challengers place at the core of their business.
What can insurers do about that? “I think that with the right technology enablement, incumbents can defend and can push into the future. New players will keep on putting pressure for disruption to happen”, Neguț said.
“If I can offer a better experience at a lower price, why should I say <No>? That’s why technology is actually one of the responses, because it allows you to reduce costs and streamline customer experiences. Technology is an enabler, not the solution. The solution is the cultural shift”.
Manjit Rana, an Insurance Innovation Consultant, has a different angle on the matter. “If you look at most of the major global players on the marketplace, they’ve all spent tens of millions on policy administration and claims management systems. Is it really the technology that is actually holding the industry back? Or is it the thinking? Or is it the fact that we don’t have people from the outside challenging them? If we look at the people working in insurance, most of them have been here for 15, 20, even 30 years”.
Therefore, refreshing talent in the insurance industry – people’s thinking, skills and vision for growth – may be part of the solution that Sergiu Neguț mentioned earlier: the cultural shift. And, of course, we can add to that the technology that enables transformation and customer-centricity.
Yet, besides the technology and the cultural shift – as a means of keeping up with challengers and embracing the future – another practical approach is talked about among industry experts: buying market share. M&A has always been a viable solution in the world of business.
“It’s true, Big Tech companies like Google and Facebook are a threat, but this is happening in every single industry. So if somebody comes and takes too much from your market share… then you just buy them”, Merttens of InsTech London said.
No matter the strategic means preferred by insurers – a new culture, money to buy market share, refreshing talent or investments in technology – the way out of this mess caused by newcomers and their disruptive technologies is “shifting the focus towards customer experience”, according to Valentin Coroiu of UNIQA Asigurari de Viata.
Insurers should not feel scared by newcomers, Coroiu concludes. On the contray, “we need this influence”. “And we need to be simpler, and we need to go back to the roots of insurance”.
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