Insurance Nexus organizes an event around connected insurance on June 11th in London and publishes a white paper to support it named “IOT is just a technology“. Continue reading “Insurance Nexus – IOT is just a technology”
When we look at the connected objects of vehicles, or more technically what is called telematics, a major problem appears: the exploitation of data! The startup Otoconnect focuses on this segment and is working on the provision of multiple connectors, around a first target, the portability of contracts under the GDPR regulation. Continue reading “Otoconnect – Vehicle’s data platform”
As it is frequent at the beginning of the year, I too will fall into the game of predictions for the coming year. With my 6 topics for 2018, here are the 6 points that I think will be 2018 on innovation in insurance:
I think the moment is good to launch complete offers around telematics embedded in cars, smart homes or wearables. When I think of complete offers, it does not just mean capturing user data. It is also, above all, and before all, providing services to these policyholders or using these tools to implement new prevention policies.
This may be the consequence of the previous point, but a little wider, a redesign of offers. It’s time to think about offering insurance products as the structuring element of the insurance value chain, from prevention, to disaster, to adding service. For example, the improvement of claims management will only pass a complementary course when products are designed to be managed quickly and simply.
I often talk here about decomposing the value chain with the setting up of experts at all levels, namely, risk bearers, distributors and managers, for the purely insurance part, but also service providers. ecosystems that will need to be mobilized intelligently. The advent of the platforms will aim to move towards this type of organization where everyone will find his place!
As a direct consequence of the previous point, if the same contract must concern multiple interlocutors, the notion of interface between them is essential. Maturity on these issues has greatly increased in recent years. Simple EDI flows (like those still used for third-party payment for example), we moved to advanced webservices but sometimes complicated to set up. Then, we now come to expose real complete services, through webservices or APIs to access the data without necessarily changing the technical architectures in a structuring way.
The needs in this segment are exploding, and it will be an intelligent response that avoids the pitfall of systemic risk! For me, here more than elsewhere, it means helping to prevent and reduce risks upstream to avoid the most frequent attacks. On the technological side, the weakest link is always first and foremost the human, it is about takins this into consideration! By the way, how do you manage your passwords?
A user experience at the heart of all steps
The last few years have been mostly devoted (except for the more advanced ones) to work around the efficiency of processes, and how to do it for less! It is now to be interested in doing better for the same price, or better for less expensive. Better means here better from the point of view of the customer, because the essential thing is to simplify his life, to eliminate irritants. It is therefore customer demand that must be at the center of future optimizations.
It goes without saying that Siltéa and I are able to accompany you on these 6 topics for 2018! Feel free to contact me .
And you? What do you think? Do you have others?
Insurance Innovators (an offshoot of Market Force, which I had already talked about here for their report under the same title ) has just published the future of insurance 2017 (Future of General Insurance Report 2017).
7 themes are discussed (for a better readability I separated into several pages):
- Innovation and Disruption
- A changing regulatory environment
- The future of underwriting and pricing
- Value-added services
- Touch Millenial Generation
- Insurance in the Age of Machine Intelligence
- Fraud in a connected world.
Written in partnership with the Chartered Insurance Institute , and sponsored by IBM, Sas and Smart Communications , this report is generic, but of quality. Market Force believes that insurers are poised to innovate and transform to keep pace with insurance companies, but the pace of transformation is still too slow. A tip: Act now! Continue reading “Insurance innovators – Future of insurance 2017”
Accenture publishes its last report dedicated to the transformation of insurance distribution . The ambition is Reimagining insurance distribution. The latest version of this report was from early 2016.
Digitization transforms insurance distribution
The report is based on a survey of 400 industry managers around the world. The first lesson is that the vast majority of actors are working or planning to work on a restructuration of the distribution model, including by leveraging the benefits of digital. Only 1 in 5 actors do not think about it.
Accenture brings out six trends:
- Digital channels
- User experiences improved by customer knowledge
- Changing the role of the agent
- Future of aggregators
- The role of ecosystems
- The Internet of Things.
Besides, Accenture gives insights on what they call the “living services”, all the services that the insurer can provide in addition to its customers based upon collected data in particular.
1. Digital channels
All stages of the distribution chain are affected by digitization and a search for omnichannel. Thus, this trend does not question traditional networks, but questions what should be the respective place and added value of each. Accenture also confirms the rise of selfcare, which has two objectives: satisfaction of customer demand and a desire to reduce distribution costs.
2. Customizing the customer experience
Insurers are clearly switching from a” product-oriented” posture to a” customer-oriented” one. ( Note: By the way, it will be necessary for Accenture to explain the difference between the concept of sales of products based on the needs and the notion of customer-oriented model, because I am not sure to understand… ).
This involves mastering the collection and use of data for:
- To estimate correctly the potential of each one
- Choosing the right channel for each customer
- Identify the best time to initiate a contact
- Choose the best offers and the right messages.
This involves the use of predictive models to adapt to a changing population.
3. Changing the role of the agent
Almost 2/3 of insurers work with their agents to ensure the best positioning in the value chain. It is about bringing them in when their added value is the most important. Another essential element with these populations, 79% of insurers rework the models of remuneration in a digital and omni-channel context.
Thus, the remuneration should aim to encourage a certain number of activities, around the customer relationship.
Finally, this type of questioning brings another trend, heavier and longer term. This involves reviewing the profiles sought for new recruits. ( Note: a legend in Figure 8 would not have been a luxury to ensure understanding … )
4. Future of aggregators
The aggregators confirm a dominant position and still growing. Respondents believe that they will be even more used, especially in the upstream phases of the distribution (search for information or tariff).
Therefore, the question is to choose the strategy to adopt against these actors: use the brand to generate commitment or use a dedicated brand or sell white label. The answer is very variable according to the geography and the penetration rates of the comparators. There is therefore no single answer. On the other hand, we still see a tendency to favor the use of a secondary brand for these channels. ( Note: One nuance, it does not seem relevant to me to treat in the same way the respondents who say they may be ready to do it within 3 years, and those who do not know. It affects seriously the result).
Finally, last step observed, the creation of proprietary aggregators. ( Note: I do not dwell on this point, too few details are given by the report on what is understood in this terminology, it is too vague to be exploitable! )
5. Ecosystems: end-to-end experiences
One point on which I agree with the conclusions of the report: the future of insurance goes beyond insurance. It is the emergence of service ecosystems that aim to improve the response to customer needs by offering new services or products. It’s about building partnerships and thinking more about what can generate engagement.
Note: This point is a really insufficiently treated.
6. The Internet of Things: The New Paradigm
Whereas the focus was previously on the embedded telematics (of which I speak regularly), connected objects now move the lines. In 1 year, investments have exploded and the number of services or associated products has been multiplied by 2 or 3. It affects all types, including smart homes, health or other wearables.
This allows a change of posture, from the role of indemnifier to the role of prevention, more positive. In addition, insurers can now offer their clients self-assessment of their risk, thanks to tools whose prices have fallen significantly.
Digital leaders show the way
Accenture reveals a difference between digital leaders on one side and followers on the other. Where the former seek to truly transform their profession, the latter are more willing to catch up.
By comparing the relative positions of each one, it makes it possible to better appreciate the differences between the most advanced actors and the others.
On the question of connected objects, we can also better measure the difference in taking into account the problem.
A recommendation: become a digital insurer
Accenture’s recommendations focus on four areas:
- Choose your business and distribution models, and stick to them!
- Define the desired position in ecosystems, models of cooperation or partnerships (yes!)
- Switch from a compensation mode to real-time protection
- Make innovation and customer focus the cornerstones of distribution strategies
- Seeking simplicity first and foremost for access, transactions or offers
- Emphasize the human contact of agents on advice, value-added and more complex customer relationships.
Conclusion of Reimagining insurance distribution: Transforming to Secure the Future
Conform to the standards of all reports of this kind, Accenture does not know how to close a report! To write:” The only thing we are sure of is that the insurance company of tomorrow will be different from today’s” is of an appalling banality …
In short, since the results are based on studies and surveys, it provides a confirmation / disregard of a number of concepts. In this sense, this report brings real interesting points. However, being too hand-to-mouth, swallowing the analysis and for all that depriving oneself of carrying convictions is very disappointing for this type of player on the market. If Accenture hopes reimagining insurance distribution will be that simple, they’re wrong: it will take a little more.
The strategy consulting firm Bain published in September its Customer behavior and loyalty in insurance, Global annual Report (Auto, Home, Health and Life). The study focuses on the international analysis (20 countries) of 172000 customers, their practice, their behavior and is particularly interested in link between customer’s loyalty and ecosystems.
More specifically, Bain’s goal is to analyze this last point in more detail. Indeed, the starting point is simple:
- In average, customers change insurance contract every 3 to 6 years
- More than half of the insured had no contact whatsoever with their insurer in the last 12 months.
Thus, how is it possible to leverage loyalty to attract or retain new policyholders.
It’s obviously about mastering the basics of customer relationship, which is not easy. However, the use of digital tools is not very useful when it comes to products for which the “touch points” with the insured are also not frequent. Bain shows a greater delight for the principle of ecosystems. For an insurer, this means to offer its customers products beyond the world of insurance. Those products are considered an extension to insurance products, and serve to complete the service provided. ( Note: in efficient language, Bain, we will avoid the periphrases of 3 lines and we will talk about “cross-selling”, albeit a little complex ).
Thus, the insurer must, to complement its offers, build its own ecosystem of partners to supply a global offer of additional services.
Shortly, here are the main services that can be provided.
The digital, a necessary condition …
Consumer expectations have been steadily rising around the world. The youngest, for example, no longer imagine any other user experience than that proposed by actors like Amazon, and this for all products. The feeling of consumer satisfaction is accentuated through mobile use. This is especially true in some countries like China, Malaysia or South Korea. However, digital is not everything. It appears that customer loyalty is not only a function of the digital channel. In reality, it is a multiple function, which relies on all the channels at the same time. Therefore, incumbents need to be able to satisfy both digital natives, who swear by the digital channel, and more traditional consumers who use all channels with often a preference for more conventional finalization.
Regarding digitization, the customization remains the main goal. Indeed, by systematically collecting the data, then applying algorithms and artificial intelligence, it is possible to simulate a more adjusted offer for the insured. The most complete form appears at Progressive, with the program” Name your price” , which is to offer the most appropriate insurance offer based on the price that the insured is willing to pay.
Nevertheless, the biggest threat to traditional insurers is even more complex. Giants like Alibaba work on complete financial services platforms (insurance, banking, payment, etc.). This does not stop in the tertiary sector, for example, Volkswagen or Tesla offer insurance offers coupled to their vehicles.
… but not enough!
In this fast-changing environment, major insurers have embarked on programs of deep transformation, such as Axa, which wants to change its positioning, from a payer status to a partner status. Those who position themselves at the center of partner ecosystems can do more than assessing risks, selling policies or handling claims! This is to provide the customer with a more complete experience with innovative solutions that will cover his lifestyle.
Thus, insurers can enter a virtuous circle: by providing more services, we obtain more commitments and more purchase from the insured, which provides new behavioral data that allow to emerge new needs.
It is thus the control of the interactions with the insured consumers that is the real determinant of the role that insurers will play tomorrow.
- Either they will be masters of the situation and will pilot one or more ecosystems
- either they will be marginalized and will only be service providers like others.
In addition, by positioning itself as the main supplier of a service ecosystem, the insurer has the opportunity to redefine its missions. Auto insurers, for example, no longer only cover motorists in the event of a claim. Thanks to on-board telematics boxes, they can offer additional services such as prevention or driver support. A comparable type of operation can obviously be observed also in health or for home insurance.
As this trend is just beginning and these operations take time to set up, the players who will be ahead of the game will consider taking advantage of a real leverage with their policyholders to promote loyalty.
Indeed, Bain studies show that ecosystems can improve fidelity. In addition, they can attract new policyholders and reduce price sensitivity. All insurers will not want such positioning. Indeed, this is a positioning on quality offers, and insurers seeking absolute price competitiveness will stay away.
The rest of the report is essentially based on a few key points and the results of the study conducted by Bain.
Personal note: If necessary, it is essential to refer now to the description and the method of calculation of the NPS ( here for example ), which will allow a better understanding of the following part.
Fundamentals of Fidelity: Creating Connections with the Customer
Points to remember:
- In the P & C (C & P) sector, there is a significant gap between leaders and laggards in the field of loyalty. This is valid almost everywhere in the world.
Personal note: The methodology used for the presentation of the figures is a little obscure. They calculate the Net Promoter Score of each insurer studied, then index the worst on 0 to ensure a possible comparison between all countries. Thus, Maif, who in France is leader, does not have an NPS of the order of 40, but has an NPS index of 40pts higher than the worst of the category. If the comparison principle can be interesting, it does not indicate anything about the raw NPS. Indeed, for the same gap of 40, if the NPS are 50 vs 90 it does not have the same meaning as 20 vs 60, and the report says nothing. 2 possible conclusions: either Bain considered this information with relative reliability, or, Bain wanted to keep this confidential information to better bill this to its customers.
- If the leaders do not change their positions, there are big changes in the middle of the table, with actors making catch-up movements.
- The more interactions between insurers and their policyholders, the more it seems to favor loyalty. The most glaring case is that of China: in 2017, the difference of NPS between insurers who had at least one contact with their insured and those who have not had is 59 percentage points! Clearly, if you are Chinese and have had contact with your insurer (it must have been positive, see next point), you are more likely to want to stay with your insurer, rather than go see the competition as if he were creating a kind of privileged relationship. For the record, this difference is 11 in France.
- There is a huge gap depending on whether the point of contact was positive or negative. The two extremes must read as follows:
- In Mexico, if you had an interaction that went well, then you will be extremely supportive (NPS = 89), whereas if you have not had it you will be a bit unfavorable (NPS = -27 ). Translation, we expect this to happen moderately, so we are very pleasantly surprised when it works well,
- In Japan, it’s the opposite. In case of favorable contact, the NPS is average (29), whereas in case of difficulty, the sentence is heavy (NPS = -94). Translation, excellence is a strong expectation, having quality is normal but not enough. On the other hand, not having it is unacceptable.
Delivering delight with digital: Making the experience unique
The points to remember are:
- In most countries, more than half of the customers are active on digital channels (active here means doing online research and having substantial interactions with suppliers).
- The use of mobile channels remains very low, especially in developed countries
- Although the uses are reduced, mobile channels seem to bring satisfaction, especially in Asia.
- Traditional channels have a hard time, and most policyholders still use them extensively. Digital use therefore complements these channels and not replace them.
- In most markets, policyholders who use only digital have lower scores than those who are more mixed. However, this phenomenon has been decreasing since 2014, according to Bain.
- The biggest challenge for insurers is to be able to offer digital enthusiasts truly personalized offers with relatively little data available.
Ecosystems: Insured people expect more than insurance from their insurer
The points to remember are:
- In all the countries studied, clients are open to their insurer offering additional services (beyond insurance). This phenomenon has been growing since 2016.
- The services acclaimed by business
- Ecosystems are just starting up and are not mature enough. Very few customers use more than 2 different ecosystems.
Increase insurance customers loyalty thanks to ecosystems
The key points are:
Offering a service ecosystem promotes loyalty
- Customers who use and love these ecosystems are the ones who give the best scores
- When expected, the absence of this type of service justifies departure for competition. This suggests that there may be an advantage for the first arrived to attract new customers.
- Customers are willing to pay more for quality service