Arguably, insurance actuaries were the first data scientists, analyzing mountains of data with which they made decisions about everything from coverage to pricing. Today, its data scientists are maturing, having learned to leverage the huge amounts of data they already have – and to prepare for the volumes to come.
Insurance companies have not always had the best reputation for excellent customer engagement, to put it politely. This has to change; competition from rising new entrants into the marketplace is an increasing threat to the traditional business model.
First of all, insurance companies have new competition in the form of digital-first insurtechs - offering insurance solutions in the way that millennials want. Insurtechs are not making a big impact on market share (yet) but, together with big tech, they have raised the bar for good customer experience (CX) expectations, and have changed the direction and speed of innovation (insurers are not known for being agile).
And second, insurtechs are leveraging new technologies to develop and deliver brand-new value propositions that are completely disrupting traditional insurance; for example, “pay-as-you-go” or “pay-as-you-live” insurance products. These are enabled by platform capability that uses the Internet of Things and artificial intelligence.
They need to get ready for IoT by modernizing their application landscape and automating processes so that they can deliver new personalized products that utilize wearables for health insurance, telematics for vehicles; sensors for property insurance. This generates huge amounts of data, which insurers can use to gain new insights into customers and generate revenue through cross-sell and up-sell; also helps manage risks in real time – for instance, house fires or automobile crashes.
So, what is “good” going to look like for an insurance company in the future?
- CX Excellence. Engaging in real time to support, market and prevent fraud to protect clients. This involves getting a 360-degree view of the client and analyzing behavior in real time – and acting on it!
- New Products. Create and launch and manage new products that allow customers to enjoy “pay-as-you-go” and “pay-as-you-live” insurance.
- Transparency and Automation. Business and IT transformation are prerequisites for innovation. This means rationalizing the application landscape & automating key processes so that all employees are focused on higher value activities.
The industry that spawned the original data scientists needs to acclimatize to the new, digital world in order to be agile and competitive. Growing up is never easy.
Click beIow to learn how integrated portfolio management (ITPM) with automation can support the insurance industry.