The 2016 edition of the World Insurance Report that was published end of February by Capgemini Financial Services and Efma focuses on a couple of trends that impact insurers, Generation Y and the Internet of Things.
Gen Y Experience suppresses global improvement in Customer Experience Index
Comparison of Customer Experience Index scores from year to year showed an improvement. Insurers worldwide seem to be better equipped to provide positive experience to their interactions with customers. Still, they are falling short of meeting the expectations of Gen Y, comprised of the tech-savvy individuals born between 1981 and 2000. Over time this generation will become the industry’s core customers, influencing older generations and future generations. Gen Y representatives have high expectations and strong preferences from digital and social media channels. They communicate more with their insurers than non-Gen Y customers, and tend to prefer digital channels. There are regional differences. Customers from Latin America and developing Asia-Pacific interact with insurers more often than those from mature markets.
Laps in service through these channels lead to less positive customer experiences. Looking forward, insurance customers of all ages are expected to make more use of digital channels in the next 12 months at the expense of the agent channel. All of these findings point to a number of opportunities for insurers to appeal to Gen Y customers. If traditional insurers don’t address these chances, competitors like fintech entrants will. The report showcases examples like the United States start-up Oscar (smart, simple health insurance), and Zhong An, a China-based insurance start-up offering 100% internet services.
Insurers should view customer tendencies toward greater interaction as a prime opportunity to deepen relationships, disseminate product information, and understand customer needs. Firms with proficiency in a variety of latest technologies, including channel integration, customer data analysis and digital interaction, may be well positioned to attract customers. Insurers must face the threats of fintech firms head on, by working to better understand customer needs and increasing their agility in addressing them.
Internet of Things: Connected technologies threaten traditional insurance models
As consumers increasingly adopt connected technologies related to the Internet of Things (IoT), the impact on the insurance industry will be unavoidable. Main technological disruptors to insurance business models are: smart ecosystems, wearable devices, and autonomous devices such as driverless cars.
Again, agility of insurers and consumers on adopting new technologies, is a crucial factor. Risk variables of insurance need to be realigned. Overall risk is decreasing, while risk transparency and risk sharing are on the rise. Product development, underwriting, and risk management at insurance companies, must be reorganized. Deep proficiency in data management and analysis is essential to meet evolving customer needs and keeping pace with emerging competition.
The report highlights examples of insurers’ capabilities to streamline their business: United Healthcare’s myClaims Manager, Aetna‘s use of @aetnahelp to respond to customer queries and concerns, and software solution providers such as Simplesurance, Insly, aggregators Coverfox and Coverhound and an artificial intelligence powered digital personal insurance concierge from UK-based Brolly.
Infographic of the World Insurance Report 2016 Key Findings