‘Tis the season of Predictions, so here are some thoughts from Steven Mendel, CEO and Co-Founder of Bought By Many, one of the big names in pet insurance in the UK;
Higher customer expectations
“This year we saw the insurance sector’s record of failure to innovate finally come home to roost. The industry was, by-and-large, completely unprepared for Covid-19. Many insurers were not in possession of the necessary digital platforms to continue operations and were therefore forced to close shop. As a result, many consumers found themselves in a situation where they could buy online but not receive claims payments.
“This situation will simply not wash with consumers anymore. As digitalisation has become the norm across all industries, customers have become less tolerant of inefficient services and archaic practices. They look at the ease with which they bank, shop and access media – and ask why other areas of their lives, such as insurance, remain so difficult.
“They are completely right to ask this. Insurers have no choice but to continue investing in digitalisation if they wish to deliver on rising customer expectations. While this may negatively affect profitability in the short term, in the long-term, it will be essential for survival.”
Demand for data
“It is safe to say that data will become yet more central to how insurers operate. At this stage, data still holds much untapped potential – it could be instrumental in speeding up claims processes, allow for handling fraud more effectively and much more. Until recently, we have seen data vastly neglected and underinvested in by an industry that, frankly, has been too change averse and too willing to rest on its laurels.
“This is now changing. We’re seeing the same wave of innovation that swept through the banking sector finally reaching insurance. But while banks chose to cannibalise their own business, insurance firms had to be forced to reinvent themselves, and so modernisation is now being rushed through with urgency. Unlocking and harnessing its possibilities will be key to any actor’s future success.”
“Regulatory issues will also force behaviour change in 2021. The FCA has quite rightly pledged to do away with dual pricing for motor and home insurance. It would come as no surprise if this is expanded into other areas of insurance before too long.
“These changes to motor and home, alone, will have a colossal impact on all parts of the industry and will force insurers to completely change the way they attract new customers. This will also have significant implications for price comparison companies. How they will meet this challenge remains to be seen. On the whole, however, this is undoubtedly a smart move from the FCA, which will put an end to an unfair practice that betrays loyal customers.”
Keeping it simple
“Beyond this, it is likely that will we see insurers move to simplify service and product ranges. The insurance sector has traditionally believed that the key to success is to sell the most extensive range of products possible. However, whether this still rings true in 2021 is questionable.
“We have seen the rise of global tech giants whose models centre on delivering a limited range of products or services to a superlative standard. Think Apple or Netflix. Insurers would do well to look at these organisations and consider whether they could replicate such successes in their own field by scaling back and adapting a more focused or even mono line approach.”