Insurers operate today in a relatively mature market environment but Max Richter, managing director for insurance, Accenture UK and Ireland, argues that it offers limited opportunities for growth and relatively few new products coming onto the market
Insurers are increasingly finding themselves disintermediated by other players in the direct relationships with their end customers. If they continue to accept this as the status quo, insurers risk perpetuating their role as a commodity risk manager and capacity provider, operating increasingly in the background. This is clearly not a sustainable position. Insurers must find a way to move onto the front foot, and reinvigorate their growth.
One promising avenue to explore? Reinserting themselves into the lives of their customers. How? By offering services that can help their clients, commercial and retail alike, to actively manage the risks they face and avoid the necessity of making claims. Looking across at their banking counterparts, which in the UK have had a year of operating with open banking, shows the direction in which insurers may need to move.
Open insurance could be a key enabler of the change that insurers need to make to put themselves back on a path to growth. It requires the development of new forms of collaboration, with players from within and beyond the industry, that can share data and expertise in order to create new services to address clearly-defined customer needs. Those collaborations could see, for example, an insurer working with a company providing a customer-facing service to create the relevant insurance component offering added-value to the customer. Car manufacturers, for instance, are increasingly creating bundles that provide a one-stop, one-payment option that make it as simple and convenient as possible for consumers to own or lease a vehicle. Insurers could work with car manufacturers to provide the insurance element of those bundles.
There’s also the possibility of creating end-to-end propositions that combine risk management and insurance cover with other complementary services offered by specialist providers. Take directors’ and officers’ liability insurance, for example. Extending this to include expert security (such as kidnap and ransom) and protection services could offer a new way for corporations to manage the risks facing their senior personnel. Cybersecurity is another area where the combination of helping customers to understand and mitigate the risks they face and the ability to fix issues if a breach occurs could create a new value proposition. Likewise, in the retail space, the growth in the connected home market is opening new possibilities for insurers to bring together the relevant risk management and technology expertise from multiple players to offer homeowners a new and convenient way to protect their property and contents.
Finally, there are industry collaborations emerging between insurers that are aimed at finding new ways to harness technology to create greater efficiency across the value chain. B3i, the consortium investigating the use of blockchain, is one of a number of emerging collaborations in this space.
But, the common threads between all these different use cases – and many possible others – are the necessity of collaboration with others and the requirement to develop new models that have the customer at their centre. By developing a detailed understanding of what customers need, insurers can start to think about the complex and strategic collaborations required to support entire customer journeys with the right partners, skills and operating model.
Of course, that’s no easy task alongside keeping business as usual running at the same time. But insurers that maintain a strictly internal focus risk not only losing out on the opportunities that open insurance presents, but also finding themselves relegated to commodity services with fewer and fewer ways to connect directly to customers.
Zurich disappointed in new #discountrate. David Nichols, Ch Claims Officer: "The failure to change the discount rate to a balanced level will only serve to increase the cost and, therefore, affordability of certain types of insurance - especially for higher risk customers." pic.twitter.com/ac1CfBzfxX— Zurich Insurance UK (@ZurichInsUK) July 15, 2019
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