There is no doubt that technological advances and rapidly evolving and upcoming social trends will dramatically change traditional sales channels in the insurance industry and empower consumers.
Customers’ expectations from both a consumer and business perspective are increasingly demanding simplicity, total transparency and efficiency in their transactions with businesses right across the insurance spectrum; including agents, advisers and carriers.
This has been propelled by the accelerating growth and development of online and mobile technology, which will continue to drive this change in customer expectations.
To prove the point, in October 2016, global mobile and tablet browsing accounted for 51.3 per cent versus the desktop’s 48.7 per cent, according to the latest data from web analytics firm StatCounter.
Added to this, recent US surveys have highlighted the fact that a significant proportion of the younger generation (aged between 18-25 years) say that they prefer to work directly with insurance carriers. This demand for direct interaction will continue across both the personal and individual lines of insurance.
One example of this ‘direct access’ trend is Lemonade in the USA. Lemonade is a property insurance company that offers an on-demand mobile service with affordable monthly subscription charges.
Using the company’s AI bot, it takes just 90 seconds to get insured. The service is available on iOS, Android and for desktop. They raised $13 million in seed funding in 2015 and intend to expand outside their original launch area of New York State.
Another example of this moving to the UK, is Trov, which is an Insurtech firm that aims to reinvent insurance for the mobile generation, offering an alternative solution for people who are reluctant to take out complicated insurance policies. Through the Trov app, users can access an on-demand insurance platform that generates real-time prices for different insurable items.
All of the above mentioned digital and technology changes will mean that more and more insurance will be intelligently ‘bought’ by customers as opposed to being ‘sold’ by agents, disrupting the traditional view that ‘Insurance is sold and not bought’.
This seismic shift will force insurers and agents to re-examine their roles in the insurance value chain and become more relevant to the end-customer (consumer or business).
One company that has created its own unique business model is BetterView in the US, which is also an Insurtech start-up that marries insurance with innovative engineering.
Using drones to capture aerial images, the company flags up potential problems for properties and then files a report for their clients. This means that clients know exactly what issues could affect them in the future, and can choose an insurance policy to address this. Again, the business model is about treating customers individually using specific data.
As an industry, we are also seeing the rise of micro insurance websites which facilitates small ticket “express checkout insurance products” (travel, critical illness, personal accident cover etc) that can be purchased immediately by consumers through a company’s website or through social media outlets. This is the same concept as buying a packet of mints at a store at the point of sale, falling in line once again with the whole drive to make insurance easy, understandable, and attainable by the masses.
Within the ‘social sphere’, So-sure UK, which is a phone insurance company, allows its users and their friends to connect and receive money back annually. So-sure represents ‘social insurance’, a new insurance concept that connects customers to their friends and who receive up to 80% cash back, every year, just as long as none of their friends breaks, loses or has their phone stolen.
We see an even more dramatic change coming with Artificial intelligence, which will become the new user interface of every digital insurer. Smart and simple interactions will deliver value at each connection with insurance customers, employees and partners.
From an Artificial Intelligence perspective a real world example of this is Spixii.ai in the UK which uses AI and machine-learning techniques to offer insurance policies. Via a conversation with an automated insurance agent (AKA a chatbot), the start-up aims to provide an easy, personalised experience for their customers.
In a period of significant change one thing is certain, to succeed in today’s ecosystem-driven digital economy, Insurance businesses must seize opportunities to rethink their businesses and rip up the old rules to be successful. At Takaful Emarat this is our mission.
Mohammad Alhawari, Managing Director & Executive Board Member, Takaful Emarat