Ahead of The Digital Insurer European Conference in London on 20th September 2017 http://europe2017.the-digital-insurer.com – FUTURE readers enter code INESEFUTURE for a 15% ticket discount – Hugh Terry, the founder of The Digital Insurer imagines insurance 20 years from now, extrapolated from current trends.
It is already clear that customer data will be the new gold or as The Economist recently called it, the new “fuel” running the digital economy. What is true generally throughout society will be even truer for insurance. Data is and will continue to be the source of competitive advantage by enabling client connectivity, consumer insights and new ways of pricing risks.
Technology will allow us all to manage and prevent more and more of the risks that matter to us personally. And this will be the key area of consumer interest ahead of the financial compensation that traditional insurance provides. For most lines of business risk provision alone will be commoditised and accessible via real time, digital exchanges. Core risks will reduce as digital delivers risk reduction, so costs of coverage will also fall significantly.
But risk management alone is not overwhelmingly compelling to consumers and so will be bundled with a whole range of services in digital ecosystem platforms, such as the connected car, the smart home and mobile health. By 2035 most people will have a wearable device designed to monitor and advise on personal health status. The medical evidence supporting preventative analytics will be overwhelming and the supporting medical devices to manage health will be proven. Our homes and mobile devices will together function as a personal healthcare clinic.
In addition, as technology reduces the cost of customer search and distribution, we will see increasing diversity of solutions beyond the “big four” of life, health, car and home insurance. These niche solutions will also be resold by specialist online platforms in much the same way as any retail product.
So by 2035, insurance will be firmly embedded into broader digital propositions that attract and engage consumers. The owners of these digital platforms will be able to deploy sophisticated and integrated marketing propositions and leverage high levels of connectivity with engaged consumers; their distribution economics will be far superior. Some will treat insurance as a profitable niche, while others will use insurance as a scale game. The universal availability of wallets and mobile devices will remove the problem of regular collection of premiums that are present in many countries around the world.
As insurance merges with risk prevention services, customer engagement will rise. A combination of artificial intelligence, chatbots and video on demand will allow the right mix of digital-first, but human-friendly, service to be delivered according to the precise needs of the customer. Purchase, claims and service experiences will be largely automated, integrated to the broader platform propositions and much more convenient.
We can already see some of the likely winners – Zhong An (embedded into e-commerce), PingAn (investments in multiple platforms), BIMA and MicroEnsure (mobility solution for developing economies), Alibaba’s Ant Financial services (digital financial services) and the UK aggregators (platforms for risk exchange). Many large digital brands are yet to decide on strategy, so further innovation and change is guaranteed. Banks that successfully transform to digital banking platforms will also be well placed.
What lessons can we learn and act on now? Existing insurers urgently need to partner with or create the ecosystems of the future and truly digital-first insurance companies need to be architected using modern technology stacks. Insurers that have not accessed or created digital platforms will either be consolidated or will have to make a living as lean, vanilla-branded insurance risk factories. We can look already to Asia, with its growth opportunities and generally more permissive approach to management of customer data, as the crucible for the execution of these new platforms.
Join us in London on 20th September for The Digital Insurer European Conference, to discuss these and other digital insurance issues affecting our industry today. See the full agenda and confirmed speakers here http://europe2017.the-digital-insurer.com/agenda/ and enter code INESEFUTURE for a 15% discount on virtual and physical tickets.