Insurance has been around for a long time – dating back to ancient times. The very first written insurance policy was carved into a Babylonian obelisk; the “Hammurabi Code” offered basic insurance for people if your personal catastrophe made it impossible to repay a debt. Insurance grew even larger and evolve across centuries and continents. The guilds in Europe supported master craftsman with a type of group coverage to subsidize them and their families upon injury, disability or death. Deals made in London coffee houses to cover maritime risks were the beginnings of the London Market. These efforts met a universal and timeless need to stabilize individuals and also the economy against risk.
The evolution of insurance often followed emerging developments like the agricultural revolution, the industrial revolution and the information revolution. Each of these revolutions created and reshaped businesses, including insurance. Insurance evolved with each revolution to satisfy changing needs and also to adapt to new developments or technologies that changed businesses, markets and risk. Each revolution required a re-thinking and re-alignment. It required business leaders to shed sacred notions and awaken to the possibilities of rebuilding on the new foundation while keeping that old structure long enough to maneuver out safely.
Erasing the notion of moderate change
Our industry is getting out of bed and finding itself in the middle of seismic shifts. A revolution is underway: the digital revolution. This revolution differs due to the complexity, breadth and depth of converging factors and global changes. Our industry, steeped in centuries of tradition, must erase the idea that we are able to ease our organizations in to the new era with minor adjustments.
Think of methods digital revolution will reinvent your company model. Insurers are moving from product-driven to customer-driven strategies; from limited distribution channels (for example agents) to an array of channels according to customer choice; from line-of-business silos to customer-centricity and customer experience for those products across all lines; from simply containing risk to actively providing personal risk management; and from siloed solutions centered on transactions to a platform portfolio that brings together real-time interaction for those products and services for purchasers, giving them an Amazon-like experience. Whew! It stretches the brain to consider it all at the same time.
The rebirth of real opportunity
These influencers of change are challenging traditional insurance models, resulting in declining customers, loyalty and premiums. Whether it is the demand for mobile channels in addition to agents; or declining life insurance coverage or personal auto and residential insurance due to demographic changes; or declining premiums for items like car insurance due to the emergence of technologies like crash avoidance, connected cars and autonomous vehicles, these influencers of change demand there exists a re-imagination along with a rebirth of insurance.
The commitment of digital revolution is that we are able to. Traditionally damaging business factors no longer have to be met with traditional business adjustments.
Insurers must turn to reinvent the company plan, not unlike how Uber reinvented the taxi model. Increasingly, insurance CEOs are speaking out concerning the coming disruption of insurance and also the need for insurance to aggressively rethink the company plan.
On May 27, 2021, Generali's CEO, Mario Greco, commented in the Financial Times that insurers will disappear unless they embrace sweeping technological change. He went on to state that the insurance sector is “on the verge of a revolution and has been lagging behind every other industry – it has been paralyzed.”
On June 30, 2021, Lloyd's CEO, Inga Beale, produced in the Financial Times that insurers have been in danger of being “uberized” as technology allows companies from other sectors to undermine insurance sectors role to manage risk.
So how do insurers move forward? First they have to keep their current business viable and growing to fund the future. This requires transformation from the existing business by leveraging a platform of integrated solutions – laying the groundwork for any renaissance of insurance.
Insurers may enhance auto or life insurance policies, processes and customer interaction. Foundational transformations can also be used to reinvent insurance for example by offering a “family or lifecycle policy” that offers just one bundle to satisfy the broad chance of individual or family needs rather than individual policies for each of the needs. Alternatively, insurers could offer new risk mitigation or value-added services that leverage technology from the connected home and connected auto – all developing a new customer experience and engagement model.
In recent UK consumer research authored by Majesco, one in every three customers feel that insurers are failing on minimum service expectations. Even the highest client satisfaction score within the insurance industry — 69%, reached by motor insurance providers — compares unfavorably with world-class companies for example Amazon, which scores 87% in line with the UK Customer satisfaction Index for January 2021. Furthermore, a lot more than 70% from the market indicates they need a “family” product, combining motor, home, travel and pet in one insurance policy. Nearly 42% would purchase a family product tomorrow, while 30% were unsure but didn't eliminate the choice – highlighting that a significant majority (72%) of the market expects use of a product that isn't available today.
While some insurers will dismiss the findings as not highly relevant to them, they ought to instead visit a warning signal that policy bundling keeps growing in demand. The web has created a market with “no borders” because customers research online to search out offerings and choices to meet their needs. In today's digital world, what goes on in one region doesn't remain in one region. Rather, these new developments from products to services, new channels and new methods to risk are rapidly rippling to other regions.
The examples are lots of. John Hancock's new life product uses South Africa's Vitality concept. Google's Compare site was the result of the UK acquisition. Direct-to-consumer models cropped up first and many strongly in Australia and the UK. Any kind of 100 multi-national insurers can send a concept rippling across continents at the speed of the e-mail. Meeting the digital revolution with real transformation will require an acceptance that everything we've been aware of insurance was good for yesterday. The one thing we can count on is the demand for insurance which has held true from the Hammurabi Code until today.
So as you attend trade events and browse articles, blogs and reports, put the topic of economic transformation into strategic perspective. Is business transformation assisting you move from legacy software solutions to modern, configurable solutions which will handle the unexpected future? Are you providing a basis to alter traditional business assumptions and business models to supply an enhanced customer experience and value? Are you the traditional retailer or an Amazon? Are you the traditional taxi or Uber? Your answer will influence your strategic direction and relevance within an industry that is around the precipice of disruption. Will you be disrupted or be the disruptor? Majesco is centered on transformation like a road to renaissance. Are you?
