In this latest Opinion piece, Johanna Von Geyr, Partner and EMEA Lead Insurance at ISG, looks at how insurers and brokers alike can compete for business in a world of Amazon, Facebook and Uber.
Facebook knows when you’re falling in love and when you’re feeling low. Monzo knows how often you eat out. Fitbit knows how much you exercise. Uber knows what time you come home on a Saturday night. Amazon knows all about your secret chick flick addiction.
How well do you know your customers?
In today’s connected world, if you truly understand the wants and needs of your customers, you can innovate to develop products and services, in order to create great customer experiences and new revenue streams. The most successful digital businesses – including those of the ‘gig economy’ like Airbnb and Uber – have transformed the way traditional industries operate, through radical innovation.
At the heart of each of these businesses is a platform-based business model, flexible enough to be able to develop and release new apps, products and services. It makes sense in this new environment that Amazon, the brand selling you everything from pet food to plumbing, should diversify into insurance services for those products. Or that Uber, essentially a cab firm, offers home delivery (Uber Eats) from the same platform, to utilise vehicles that might otherwise be empty.
Some of the oldest brands in the world are getting in on the act too. When General Motors made a $500 million investment in rideshare platform, Lyft, it sent a signal to the automotive industry: even here, things are changing.
The insurance industry is transforming, too, bringing new models to its customers. Vitality partners with FitBit, rewarding customers who regularly hit their steps target, and giving health advice based on real data. AXA and other health insurers offer GP consultations, either online or face-to-face. Their customers benefit from reduced premiums, and the insurers benefit from helping their customers stay healthy. Automotive insurers offer dashcams to record driving behaviour, which is then reflected in the premium paid by the driver.
These are all great initiatives to either create engaging customer experiences, or reward them for reducing risk. But innovative insurers are also developing new revenue streams based on this platform approach. The Chinese company, Ping An, is arguably the most innovative of all insurance organisations, creating an entire ecosystem from its platform model (it is powered by a wholly-owned technology offshoot, Ping An Technology).
Ping An is the biggest insurer in China, with reported revenues of $94 billion, and a market cap of $180 billion. Its offshoots include a mobile app for booking hospital visits, and a healthcare portal, Ping An’s Good Doctor, with 30 million users. Think of the data and customer insight potential from those products. Interestingly, it has moved into B2B services, too, selling its technology know-how to SMEs through OneConnect, its technology solutions company (much as Amazon sells on Amazon Web Services to businesses).
There’s a parallel in the insurance sector with what’s happening in banking, where Open Banking has allowed FinTechs and challenger brands to offer innovative financial services to help consumers manage their money. There’s an obvious threat, too, to the traditional banks, which face disintermediation from their customers unless they innovate to compete – or work with – these new market entrants.
Similarly, traditional insurance companies that do not transform how they operate, risk only having contact with their customers at renewal time, or when they send out an invoice. That’s not the most motivating contact from a customer’s point of view. These days, customers expect more from their providers. The generations maturing now – Millennials and Gen Z – are less loyal than their predecessors, more likely to shop around and to switch providers for a better deal. That behaviour will translate into their business lives, too.
Insurers are sitting on a goldmine of data, but (mostly) are only just starting to explore its potential. Insights from data give you an in-depth view of your customer, which means you can create new models and products for their needs. It also means you can personalise your products or pricing to each customer, and offer great customer service that will keep them loyal. And using the platform approach, you can connect these models with third-party apps to maximise the potential for that data.
In a market that is increasingly commoditised, the insurers that innovate to develop new insights and revenue models will be those that adapt successfully to new market conditions in the future.
This article is sponsored content, produced in association with ISG