A lot of traditional businesses are finding it difficult to cope with the rapidly changing business landscape. Things are changing so fast that companies that were massively successful a few years ago now find themselves struggling to stay afloat.
New technologies have created new buyer behaviors that businesses that have not quickly transited can’t just understand. Just a few years back taxis were a big deal. Today, Uber and other tech driven cab companies have totally turned that business upside down. This just shows how technology is changing the face of business.
Every aspect of the economy and every industry have been directly hit by this phenomenon rightly called disruptions because they really are disrupting the way things have been done. One can now stay anywhere in the world and book an Air BnB; hotels beware!
This disruption is not showing any signs of slowing down. If anything, it will get more aggressive with each passing day. How can businesses survive this onslaught?
Simple – Evolve or go Burst!
Our focus today is the insurance industry and the reality this industry’s players have to deal with if they will be able to flow with the tide and maintain their position of strength.
First, let’s as ask ourselves an important; how are new technologies developed? Do they just spring up?
The answer is simple – they are usually developed in response to a need or needs.
Given the answer above, we can therefore assert that any technologies that will be (or have been) developed for the insurance industry will be (or is) in response to an existing need. Can we identify any current needs that require attention?
Surely we can and we will. Let’s get to it. The Basis for a Technological Disruption in the Insurance Industry
There are a number of factors that have started to trigger technological disruptions in this industry. We will briefly look at a few of them.
A Changing Customer Base
This is an issue that B2C businesses are having to come to terms with and it is captured in one word – Millennials. First it was in the employment market that they had become the largest generation group taking over from baby boomers. These forced employers to begin to change the way they employ and manage employees.
So how does this affect the insurance industry and any other industry for that matter? To answer this question let us quickly look at some major traits of this generation group.
- Are tech Savvy.
- Need quick results.
- Do not just take your word for it.
- Love taking time going through their options (and they usually have a lot of those).
- Will easily switch allegiance if trust is broken.
- Are pragmatic and socially motivated.
Let’s make do with these traits. How do these traits interact with the traditional insurance transactions?
- Being tech savvy, they will easily be put off by all the paper work and physical meetings required to conclude transactions like the processing of claims.
- Their need for quick results will get them irritated at the time it usually takes to go through some traditional insurance processes.
- This generation does not trust corporations. Before doing business with an organization, they will likely read up on that organization and look for reviews from others who have dealt directly with said organization.
- They are used to having a lot of options so you cannot rush them into signing up for a policy. They will usually want to check their options.
- Remember that they don’t take your word for it and they have loads of options so when they do not get what you promised, they will quickly switch allegiance and ensure they let others know that you broke your word.
- They are not scared to take an organization on even if it’s for something totally unrelated to the organization’s actual business. For example, a millennial can refuse to do business with an organization in protest of the gender representation of its general staff or management staff.
The points raised above forces businesses operating today to structure their operations to accommodate this now dominant generation.
Internet of Things
This is another major cause for disruptions on a whole lot of levels. We now have driverless cars, smart homes, AI and the likes. If a driverless car were to be involved in a car accident, who will be liable? Certainly the car manufacturer. The same goes for a smart home and other such new technologies.
What this has done is change the face of liabilities and claims. It also provides new ways of evaluating and processing claims and also setting premiums.
For example, a car insurance policy holder can have his/her car tracked to monitor its use and even its maintenance record. The insurance company can easily detect lapses on the part of the holder that can nullify the insurer’s obligation or increase the holder’s premium.
The possibilities are immense and the industry must brace up to meet them head on as they quickly unfold.
In this age of information, no one does anything through guess work. Businesses know exactly how their target audience behave and so they design products that perfectly suit each one rather than having a blanket product for everyone.
This is especially true for this industry. With the increase in the use of big data analytics, insurers can now make use of these information to deal on a very personal level with each of their customers. This will include giving them personalized policies and premium rates.
All of the points we have discussed above may look scary and unreal for the unprepared. However, the truth is that some companies are already making the necessary adjustments to accommodate these changes.
Some insurers have adopted the use of an insurance company software that are helping them position themselves better for the task of serving this rapidly evolving market. Some of these software offers advanced and flexible features that help not just insurers but MGAs and brokers to step up their game.
Times are changing and they will keep changing a lot faster. Only those who can change as fast as or even pre-empt these changes will be the dominant forces in this emerging economy driven by technology and information.