Here's to the future

Mobile technology future

Imagination is the only limitation to insurer innovation, argues Mark Allen, as he gives a personal prediction of how the industry could transform its technological offerings.

If, 10 years ago, someone had told you that you would happily buy and pay for a second-hand bicycle you hadn't actually seen, or tested, from someone you had never met and that all this would be done online, you would probably have laughed out loud at the idea.

 

Today, it is a different story. Ebay has emerged as one of the internet's outstanding success stories. More of us than ever before are buying and selling online and the UK reported its first Ebay millionaire in March this year. The growth of social networking sites and blogs, such as Facebook, My Space and Twitter, has also highlighted our willingness to interact and share detailed information about ourselves with complete strangers. The degree of trust we seem to have when it comes to online interactions is staggering.

On average, a million more households have gained internet connectivity year-on-year since 2004; figures from the Office of National Statistics confirm that 65% of UK households had access to the internet by the end of 2008. And the Digital Britain report published by Lord Carter last month highlighted the fact that a fast internet connection is now viewed as another utility" as essential a service as electricity, gas and water.

 

Opportunity exploitation

Translating this into the world of insurance, as a society we have become more and more comfortable with purchasing financial services online. The fact that we can buy more or less every type of personal lines insurance from our desktop or using a wireless connection from our laptop is, quite frankly, old news. With more than 76 million mobile phones now in circulation in the UK, insurers need to be looking to exploit opportunities in mobile internet access. And there is no reason why we shouldn't be investigating how we can interact with other technologies and industries to deliver a more complete customer experience in the future, rather than just focusing on the basic sale, fulfilment and claims functions.

For example, let me paint a picture to demonstrate what this could look like for motor insurers.

Monday morning and your online diary reminds you that you have a meeting 50 miles away. The reminder is 30 minutes earlier than expected as the live traffic update network has calculated your journey ETA taking into account current traffic flows. Your satellite navigation calculated your route by downloading your destination from the Outlook Calendar and, as a keen driver, you turn off the auto-pilot and decide to drive manually today. As you get in the car you notice that the scratch you picked up on the paintwork from the B&Q car park on Saturday has self-healed" the car's on-board systems send an update to the insurer systems to cancel the previous automatic 'claim occurred' message.

Approaching the first roundabout, you're pleased the crash avoidance radars are doing their job as you narrowly miss someone who decides to switch lanes without checking their mirror. As the traffic gets heavier the sat nav calculates an alternative route and you decide to take it; the person you are meeting gets an automatic e-mail alert showing your revised arrival time so you don't need to call ahead.

 

Fast-moving developments

In the evening, you lend your car to your 18-year-old son and the smart card key alerts the car to limit the top speed and horsepower available. The cornering speed limiter is also engaged as he is still within the newly introduced mandatory three-year period of controlled driving that has seen a 50% reduction in claims for the under-20s. The back office systems switch to record the pay-per-drive option you have chosen for your son's insurance. An alert on your Iwatch connects straight through to your insurer's web page, which automatically recognises you and your vehicle. You accept the voice recognition option and confirm your ID and how many miles you want to 'top up' for your son. Within seconds, confirmation of cover is confirmed and a beep on your Iwatch tells you that an e-mail has been received. You press another icon to switch to e-mail, which shows a message from your insurer attaching a new certificate. And, in the meantime, your son's smart card is updated to allow the newly insured vehicle to start.

A scene from Space 2025? Not necessarily. Technological developments are moving faster than ever and, while insurers have often been derided as the tortoise in the race to embrace new technology in the past, they're gradually catching up with the hares of Web 2.0 and the like.

But I would argue the industry needs to be thinking even further in advance. Web 3.0 is being touted as akin to having your own personal assistant. Search engines are gearing up to be far more intelligent about what and how they return results to net surfers. Instead of multiple searches to build up a complete solution, search engines will have built up a profile of the individual user's buying habits and preferences, and will tailor the results delivered accordingly.

When looking for a holiday, for example, one search would deliver responses on flights, accommodation, car rental, inoculations required and other general information relating to the trip and destination. Travel insurance would be a natural inclusion and so insurance companies would need to be well-placed to be in those results. Understanding how the use of search engines will evolve is going to become ever more important.

Lack of customer loyalty is a significant issue for all insurers, but particularly those in the motor sector. I truly believe that creating a more holistic approach to customer experience and tailoring the overall proposition to each individual customer will take the industry some way down the path towards improving customer retention.

 

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