Insurance is entering a truly transformational phase — one in which customers, insurers and new entrants to the market are redefining the nature and the boundaries of the industry.
To succeed in this market, insurance companies should focus on several strategies, says Phil Ratcliff, vice president and general manager for Global Insurance at DXC Technology. The first priority, he says, is customer intimacy.
“They need to get much closer to the customer,” explains Ratcliff. “They really need to engage them on a personal level.” A better understanding of customers will help insurers identify and respond to life events that may trigger the need for additional or different coverage. Insurers that respond appropriately are most likely to retain and grow these relationships in an increasingly competitive environment.
Insurers should also look at how they can enhance their offerings, perhaps even broadening their product portfolios. “They need to look at how they expand their proposition,” Ratcliff says, “and move beyond pure indemnification.”
At a minimum, this expansion should encompass risk advice and mitigation. Another step forward could be to extend core offerings into related markets, such as the global travel market.
Insurers should also embrace simplicity and transparency across their value chains — not only with the products they offer, but also with the infrastructure they use to run their businesses. “The types of products people demand now are a lot simpler, and the way insurance products are sold needs to be simpler too,” Ratcliff says. Those insurance companies that offer products that are easier to understand — and are ultimately are easier to do business with — will be the ones attracting this new breed of customer.
Increasingly, new approaches to product development, customer acquisition and service will be driven by artificial intelligence (AI). Within the next 5 years, estimates suggest that up to 50 percent of customer talk time could be spent with automated systems.
This level of change in the industry necessitates new partnerships, with ecosystems enabled by seamless API integration. “Insurance companies are going to need to partner,” Ratcliff says, “and partner far deeper, far stronger and far broader than they’ve ever done before.”
To thrive in this new world, insurers must not only embrace new products and services, but also clearly define digital transformation strategies and strive to operate more efficiently.
“There is an incredible opportunity for insurance companies to really educate, inform and deliver new digital capabilities to today’s sophisticated — and increasingly demanding — insurance customers,” Ratcliff says.
To learn more about the changes that are transforming the insurance value chain, read Insurance boundaries redrawn: Where do you stand?