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Non-life insurance companies must reinvent themselves for the future

Any organization in any industry can flee. Insurance is no exception. If insurance companies fully understand the consequences of customer trends, competitive pressures and technological leaps, they will rightly be worried about their future – if they do not prepare.

Drones are an excellent shortfall for both the threat and the opportunity. If you fly helicopters in Hollywood to film, or you cover the traffic for tonight's driving news, or if you once flew a fighter jet in the Air Force, your professional demand is in jeopardy due to drone technology. The cinematography does not disappear. But the method of recording the video is changing. The use of drones for parcel delivery, survey of the electricity grid and even research on insurance claims will replace traditional methods with technical improvements. Those who have not adapted will feel threatened. Those who have adapted will feel liberated.

Non-life insurance companies must reinvent themselves. Reinvention begins with an understanding of the insurer's mindset. Most insurance companies still do not consider themselves technology companies. They are risk management companies. But in a hundred different industries we see the same change. Companies that thought they had their niche locked in are on the run due to the technology associated with their delivery. They must be technically flexible, technically activated and technically creative. Technology is still a tool and not the playoffs, but it is a thread that makes all insurance scenarios possible and exciting.

Once carriers have awakened to their need for change, most will quickly realize that their efforts are worth it. Each step out of the traditional business model is a step towards organizational opportunities and greater profitability. Jump through the arcs and suddenly the world opens up for rapid innovation and improved competitive position. Ask any manager if they would rather have their future dictated by technical limitations or if they might prefer to instead write their own success story with creativity as the ongoing theme. Innovation will always be "in".

Last week, Majesco and Capgemini jointly released a thought-provoking paper, Embracing Innovation and Growth Opportunities in P&C Insurance. The essay clearly illustrates the connection between industrial and market pressures and an insurer's future ability to fill opportunity gaps. Can insurance companies capture the right perspective on the forces driving them towards change? In this blog, we will discuss some of these pressures in detail, then we will touch on strategies that can bridge the gap between knowledge and implementation.

Pressure, threats and change ̵
1; the starting line for insurance innovation and opportunities

It seems cliché to say that we live in a perfect storm of insurance pressure, but the cliché fits. Non-life insurance is like a moving hurricane. The core may look calm, but it is also on its way to land. The storm affects everyone from insurance companies to reinsurers, brokers and MGA. Rapidly developing industrial dynamics offer new opportunities for those who can catch the wind. The Majesco / Capgemini report identifies five key areas:

1. New and developing risk scenarios: Business customers appear with new or unknown risks. Existing companies are switching to digital business models that require up-to-date coverage, such as cyber. Companies using IoT and artificial intelligence need new coverage. Disturbing environmental patterns increase and increase the risks. The pandemic impact on almost all industries and companies is forcing non-life insurance companies to adapt quickly and profitably to new needs, requirements and expectations.

2. Increased competition: Significant growth in Managing General Agents (MGA) and program operations, and reinsurance companies directly bringing new products and companies to market create rivalry. Non-traditional players such as car, retail and product manufacturers enter the market. According to the World InsurTech Report 2021 by Capgemini and Efma, more than 50% of customers are willing to buy coverage from non-traditional players. [i]

3. Customers' expectations are increased: Policyholders are now seeking full protection and they are conducting independent research to find out what is available and from which suppliers. Even more important is that they want digital access to their risk products and value-added services on the go and at a faster pace, holistically and conveniently, 24/7. Customers seek reassurance that their coverage is adequate and they take preventive measures to protect their assets and avoid claims. Changing customer expectations require non-life insurance companies to expand and revalue old paradigms.

4. New products and business models : InsurTech startups, greenfields launched by existing insurers, reinsurance companies, MGAs, brokers and other ecosystem players collaborate and launch new products and business models that address unmet risk needs, emerging risks such as climate change and new economic changes, new , new channels with built-in insurance and new product packages to meet customers' needs and expectations.

5. Accelerated technology adoption and landscape that shows more opportunities: Explosive growth in new data sources, AI / ML capacity, cloud platforms with APIs, microservices, ecosystem models and new digital platforms provide unmatched opportunities for insurance companies to improve business, innovate and redefine activities for the future. While some may think that these challenges translate into the worst of times, this is the best time for innovative non-life insurance companies that are ready to take on new opportunities to become the new leaders in the insurance of the future. NOW it's time to adapt the business strategy to the new, changing market needs in order to be implemented effectively.

A strategy for exploiting the wind.

Of course, these pressures drive everyone. Each organization will make its own decisions about how and when to make the changes that need to be made to remain competitive. Insurance companies can fight the current, or they can let it drive them to recreate themselves. Organizations that want to lift sails and let current and wind carry them on to something new, must understand where this journey is taking them. Although the organization plans to use a two-speed strategy for its business model, they need to imagine what the new model might look like. This model will be holistic and include products, services, customer engagement and, of course, processes and technologies that will provide data and analytics that will help the insurer and turn every moment into a learning tool.

New product strategy

Insurance companies need to rethink their product strategy and value proposition by identifying new risk areas, new value-added services and thinking beyond premiums and claims payments. Insurance companies should focus on providing comprehensive coverage, come up with innovative products to meet new customer segments, explore new business models such as use-based insurance and built-in insurance and simplify their offerings.

For example, Nationwide has launched comprehensive coverage for home-based customers – provides homeowner or tenant insurance, use-based car insurance and theft identification. [ii] They saw a need for a new insurance package and they created a hybrid product to suit.

Expanding the range of value-added services:

Insurance companies must go beyond just the risk product to focus on ensuring a faster return to normalcy and intervening in the right way time to prevent and limit the risks. Insurers should provide risk advice and encourage safe behavior, which improves the customer experience. They can use technology to warn customers about loss incidents, thereby preventing losses or reducing their severity. By expanding its role to partners and preventers, insurance companies can achieve the golden mean between growth, customer centering and profitability.

Preventive services are truly a logical starting point for P&C. The international insurance specialist Hiscox collaborated with the supplier of LeakBot, a smart water leak alarm, to offer policyholders a leak detection system for mobile apps. [iii] Insurance companies such as Chubb, Travelers and American Family have partnered with Wildfire Defense Systems for complementary prevention services for homes and businesses in the event of regional forest fires. , considering what and how the customer wants to get involved – rather than an internal business view. The customer experience strategy needs data to anticipate possible needs, and insurers must go from transactions to personal experiences and use a 360 ° view for the customer, whether it is about buying, servicing, submitting or paying claims and gaining access to value-added services – which make insurance relevant when needed.

New strategies for innovation and new business models to meet the new insurance world.

The next generation of customer experiences that engage and excite customers must have a holistic view of experience rather than a transactional view. Significantly changing customer risk management needs and expectations of commitment are forcing the insurance industry to move from past practices and technologies to new platform-based technologies and business models that will take them into the future. In our next blog, we will discuss that future from the perspective of the innovation strategy. Which approaches are most meaningful in light of economic considerations and traditional companies that cannot be changed overnight? For a preview of our conversation, be sure to download Embracing Innovation and Growth Opportunities in Non-life Insurance and sign up for Majesco's upcoming webinar, An intelligent core to transform your business, a conversation focused on real estate and non-life insurance companies and their obstacles and needs when you are looking at new core platforms.

Seth Rachlin, Global Insurance Industry Leader, Capgemini
Denise Garth, Chief Strategy Officer, Majesco [19659] 4502, continue this conversation,] [19659] 4509 with Seth on LinkedIn and Denise on LinkedIn or Twitter

[i] Capgemini and Efma, World InsurTech Report 2165902, September 2162,902,902,902,909, World InsurTech Report 2162,902, September 2120,902, September "Work from home? New insurance package built for you and can save money" June 24, 2021.

[iii] Insurtech News, "Hiscox collaborates with LeakBo t ", February 11, 2020.

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