Blog: Digital drivers for insurance innovation

The average adult checks their mobile phone 150 times a day, according to Microsoft. The seeds of a mobile-first insurance business are germinating in current technology.

Telematics and the Internet of Things are fuelling innovation in car insurance. Data is used to understand customer behaviour and reward positive action. But home insurance provision also needs to be technologically savvy. Home management apps like Nest and home security systems need to be accommodated for, not only in policies but also in terms of what the homeowner may be seeking from their provider in five years' time - perhaps phone apps alerting to a fire or break-in.

To take advantage of digital connectivity and meet customer expectations, the insurance space needs to understand the full breadth of what digital means - it's much more than an app, a website, or a comparison service. The kind of speed and transparency afforded by digital interactions is fundamental for many customers, in particular in a sector which exists for people to rely on in times of need.

Obviously, the investment and organisational change required to bring insurance companies in line with other, more digitally developed sectors goes way beyond the cost of app build. However, while work goes on behind the scenes to embrace more digital change, there are easier ways to begin down a digital road, in a customer-centric way.

The data and customer insight at many insurers' fingertips can be fed into digital media communications to gain competitive advantage. For example, intelligent use of online media means that customers can be pinpointed and communicated with as they move around the online space - without needing to amend the organisation's IT infrastructure.

A roadside assistance provider could pinpoint drivers matching certain criteria making them more likely to require the service - older car, remote location, or inbound bad weather conditions. The brand could then send real-time, topical messages to these customers (‘will you be rescued in today's snow?'). This level of technical sophistication is connected to modern consumers' daily lives, without necessarily impacting an insurer's IT processes.

Moreover, pinpointing pockets of opportunity, perhaps for a product stream which may be less profitable or carry higher overheads, can quickly turn that service into a success without conducting price or policy detail overhauls. As with any sale, to capitalise on digital communications the company merely needs to be set up to respond appropriately to any people who are moved to act on that communication.

The insurance industry is regarded as being slow to embrace innovation. However, widespread changes do not need to be effected all in one go. Companies can act digitally in terms of how they speak to their customers, while bigger, broader plans are in development. The businesses which acknowledge this may build better customer relationships and even capture new customers in the process.

By Dan Thwaites, chief strategy officer, Tug