The new digital players entering the already crowded insurance market make formidable competitors. At home with data analytics and artificial intelligence, and with the ability to deploy these technologies effectively, they are surging ahead with new business models. Disruptive change lies ahead for the insurance market. This doesn’t mean game-over for established providers. Their position is strong. With a broad clientele, worldwide presence and the financial clout to unlock digital opportunities, they have the power to stay in the lead.
Cognizant has identified four areas for insurers to focus on:
- Go digital
“Big Data” scored as the most important technology in the insurance market by respondents to a Cognizant study, and organizations will need analytical skills to make sense of myriad information sources. As objects from wearables to cars capture more and more data, providers can make use of AI-powered analysis to understand their clients better, assess risk and identify monetization opportunities. These technologies will also reduce the need for routine work, with machines taking on many of the tasks that are now performed by insurance agents.
- Know your customers
Apple shipped 9.2 million smartwatches in Q4 of 2018. That’s just one quarter, for one company. This is a huge market – and still growing fast. Wearables are a rich source of data for insurers, providing insights into the lifestyles and fitness of users. With policies designed more closely around individual customers, insurers can identify risks and define premiums more exactly. They can even gently encourage people to adopt healthier habits as a way to reduce claims, and incentivize customers with a reward system. AI is even being used as an early warning system for illness, for example to detect and even treat depression.
- Transform the business
It takes courage to run with a new business model. Still, new insurance ideas are flourishing. In Europe, home-grown players such as Friendsurance are pushing ahead with peer-to-peer insurance, using blockchain technology to create the ecosystem of trust for services. The Berlin-based company has already expanded to Australia. In these new business models, the customer experience is paramount. Insurtech startup Vantik, also in Berlin, is making it easier for people to manage their retirement savings. Instead of waiting for an annual statement from their insurer, users can consult and manage their account via smartphone.
- Find strategic allies
These new business models represent fantastic opportunities for the providers who get on board. Established companies are making their move: Allianz and Swiss Re are just two of the traditional insurers that are adopting blockchain technology. One highly effective way to acquire this new insurtech expertise is through strategic alliances. Innovative start-ups can respond with greater agility to market trends – and older partner companies stand to benefit.