Is this a possible excuse to put true innovation and personalisation on the back burner? Premium inflation might be down a percentage point compared to 2023 but policyholders still resent the increases over the last few years.
Policy-centric core systems mean that communication between renewals is still bad and customers do not understand the impact of claim inflation and supply chain lead-time delays that fuelled much of the price increases. Extreme weather is understood but customers can be excused for thinking that insurers allowed for such events in their predictions and pricing.
The widespread use of price comparison websites shows that competition is still mainly by price rather than relevant personalisation and product differentiation.
Matteo Carbone, founder and director of the Connected Insurance Observatory provides data and commentary on how European insurers lag behind US ones in planning how to leverage telematics to personalise motor insurance for private and fleet customers.
With notable exceptions like FloodFlash, insurers have hardly changed coverage and products for homes and buildings in flood-risk areas. Combinations of parametric and other coverage are ideal for personalisation.
One key challenge? Core systems of record are historically based on managing policies rather than customers. If you cannot combine data from motor and home policies and customer behaviour s a first step, how can you expect to understand customers' needs?
If you cannot surface data from the multiple data silos prevalent in most insurers' legacy technology stacks, how can you expect to personalise products? That is a first step before leveraging real-time data available from external sources that is vital to be a customer-centric company.
Very few insurers have had the motivation to transform their heavily legacy technology-dependent IT infrastructures to the modern platforms that deliver the data fluidity, ecosystem enablement, and speed to market vital for true innovation.
Connecting the dots between claims and underwriting, distribution and product development, supply chains and claims management for starters.
Given the vast amounts they have to invest in these compromised mixes of legacy and newer architectures, you can sympathise with insurers whilst, at the same time, criticizing as over the next decades they will fall behind.
You can review case studies where investors, CEOs and the C-Suite have taken the plunge to plan the business models, products, and services that customers actually need. esure for one with its dynamic CEO ready to explain the vision, strategy, and combination of buy-in required across the enterprise and technology partners involved.
It will not be quick, or easy, but the outcomes may well be the difference between insurers of the future and forgotten brand names.
Once you have planned to be an insurer of the future you can choose the technologies and partners necessary to bolster the teams within the enterprise. Do not expect generativeAI to provide the strategies and plans as otherwise, you will end up with similar, average, and underperforming business models. Why? - because they are predicting based on what everyone else has written (Trained LLMs) rather than being creative.
If the majority did not predict claims inflation, supply chain disruption and negative CORs then why expect them to anticipate the uncertainties of the future? That's what the C-Suite, effective super forecasters, and a limited number of consultancies are there for.
Once you have the right vision, strategies, technology and implementation partners, and buy-in/commitment across the enterprise, you are ready to choose the technologies that will help achieve your goals.
I am indebted to Chris Surdak with whom I have managed successful innovation and transformation globally for this checklist to tick before adopting technologies.
1. Executive adoption decisions based on something other than FOMO
2. Compelling use cases
3. Honest and complete business case ROI
4. Systems engineering thinking
5. Effective test campaigns
6. User buy-in
7. Understanding of the technology's true capabilities
8. Understanding of the technology's true limitations
9. A back-up plan
10. Self-reflection over prior failures
You will find many use cases and potential partners in the articles under further reading.
Further Reading
Insurers Can Parlay Technology into a Competitive Edge- but too many don't!
Scaling Up Transformational Innovations
How technology in claims processing is changing consumer choices in insurance
Neary continued: “As ever, the challenge for UK insurers will be to carefully balance costs, provide support to customers – especially those most vulnerable – and accelerate innovative transformation programmes to ensure firms remain competitive into the future.”
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