When I was a kid, car insurance mechanism was a sort of well-kept secret. I still remember my father going to the agent once a year, entering an old fashioned office (carpets, assistants, Ficus and that sort of things), waiting the boss to be free (sometimes 30-40′ minutes before being received), discussing all-but-about-his-driving-style for 10 minutes, get a quote out from a black box (a software on PC with a green phosphors display, at that time) and pay by a check. A sort of ceremony with no clue on how my father, his job, his history, his driving style (but accidents eventually happened in the last year), his maintenance book were influencing the final price.
Amazing, in a business mainly relying on historical data and the ability to associate a probability to a certain profile to a certain event.
That has of course changed a lot during the last decades but in a data-driven world, it’s gonna change even faster. Insurance business is definitively a data driven business: the more insurance company knows about you and your life (including acquaintances) the better personalized quote you get. And it’s a signalling game in the games theory, right? If you’re a good guy you might want to get a better pricing sharing information.
No surprise insurance telematics is booming: more data, more insights, better prices for those ones willing to share driving behavior and related data with the insurer. Better crash management, less frauds, better customer experience in case of an accident.
Let’s push it to the extreme. You post on Facebook about last weekend at the sea side or at the lake. Then you turn to Instagram to share some pictures of your kids. And then you tweet about your latest success in your job. In doing that, you created a digital profile of yourself.
When the day after you search for a new car insurance, the e-agent (don’t want to queue for 40′ in the old fashioned office right?) provides a personalized quote based on your digital footprint, no matter it’s first time you’re getting in touch with that company. And a bot is helping you to create your personalized quote on the go.
If you decide you’ll be a customer, your profile will be enriched more and more by data coming from your connected house, connected car, social engagement and the combination of all smart data collected by the cloud.
Digital transformation require Cloud Computing and Artificial Intelligence to be a fundamental part of insurance business: insurers will need to embrace digital as part of their core capability. Consumers are digital yet: mobile-first driven, used to digital touch points, always on. The need of new business models and capabilities from insurers is real: pay as you drive, pay how you drive, pay per per kilometer are just few examples of products the market will require, along with digital crash management which will ease life in case of an accident. If life is easy – and price is fair – with an insurance, why should you switch to a new one during the renewal?
Forget silos: smart home data could bring enormous value to car insurance, health monitoring from connected devices could be used to create a personalized retirement plan. Legacy systems are in my view dead: data should be always blended and used across the organization (including agents, employees and partners).
Data in the cloud are creating actionable insights bringing innovation (and thus new ways to do profit), impacting the entire value chain (and creating savings). A customer-centric approach will create more customer intimacy, along with new new personalized products and services.
Old-fashioned agents – the existing dealer network in many sectors is still a barrier to innovate, right? – will get more insights too. More insights will drive new business, more insights will create loyal customers (you don’t want to be in touch with the customer just once a yer in the most painful day… when he’s gonna pay the bill), more insights will allow to drive better decisions and, in the end, stay profitable.
Do you have examples of innovation in the “digital” insurance world? Would love to share ideas and best practices!
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