Disruption, Insurtech, Fintech, Blockchain, Ecosystem, Share of Wallet, etc – these buzzwords are in our daily business but it is still hard to identify real impacts on our work and how to cope with these challenges.
Focussing on the main insurance player in Europe and their activities there are some topics which are quite similar:
It´s such a kind of fix the basics. Key is to achieve financial stability and to handle all Solvency requirements. Capital strength is also basic to keep the existing business running as it is necessary for eg. Ratings or to stay relevant for industrial partners. No strong capital base and a good capital reputation will end up in being not relevant when customers look for insurance partners. Not all Insurtechs will provide this strength at the beginning and a lot of market player ignore the fact.
Sustainability in results
To enjoy your shareholder and future investors it is a need to deliver sustainable results. As well these are necessary to be able to investments. Only if the management, supervisory board and external partners see a sustainable business they will agree in internal and external investments.
Operating model simplification
Cost efficiency and premiums with a low cost ratio are an asset to achieve the targets mentioned above. To realise this in most cases a more digitalized and simpler operating model is appropriate. By process simplification it is necessary not to destroy too much similar in order not to lose key personal or to face any unexpected IT issues.
Simplification is also obvious as unprofitable businesses and old legacy books are sold to companies, handling exactly this business. This will be as well a future trend that new providers will show up which help to relieve businesses which are not in the interest of an insurance company.
Besides this – frankly spoken – not very fancy strategies, which are nor new or disruptive there are also some new behaviours coming up:
Value added services growth
To sell a pure product is not as fancy as to sell a product with a story. But even more fancy is to sell a story with an underlying product. It is more and more common that insurance companies try to add values to their typical business as lifestyle apps, premium accounts for music, household services as well. With this approach insurances can develop an USP and differentiate from others with products which are more or less exchangeable.
Innovation and Digitization
Yes – buzzwords, but insurers are transforming their internal structures by setting up innovative teams driving initiatives in a new way of working. As an example the start to think in stories instead of pure products and work in a more agile mode instead of waterfall-project organization. Digitization is mostly part of this innovative initiatives as it allows to reach new customer groups (GenY, Millennials) and quicker and more handy processes. Easy and faster, quote & buy are here the keywords with this these new propositions can be described.
Entrepreneurial culture and skills
New ways of working, un-common ways of development and thinking above/beyond the edge is absolutely relevant to be prepared for actual and future challenges. Many companies already started this transformation programs, establishing agile teams not only in IT, partnering with Insur-/Fintechs and new job profiles like UX/UI designer in an “old economy” are clear signals that a new culture enters the industry.
Exactly! For real enterprisers now new word and not really understandable for them as a trend. For some in the service sector it sounds real crazy!
But even bigger and older insurance companies spend many time, money and energy in optimizing internal structures, re-organisation, etc. Doing this they get lost of the customer focus by engaging more or less with themselves.
As the customers became more and more critical, due to digitization starting to compare their insurances and becoming less loyal to an insurer, companies lost many many customers. And the new player like comparing platforms pushed this as well.
To stop and turn back this effect the old economy proclamates customer orientation as the key initiative. As described above, products or propositions/stories are not more only calculated by actuaries; propositions/stories are now designed in interdisciplinary teams with support of UX/UI-designers thinking end-2-end from the customers needs. Personas are developed to understand customers and their behaviour, testing on the street and real design processes becoming more and more common.
In my view, the trends in insurance are comparable thru all the players. And all the described strategies will only work together; nor focussing on financial and operational efficieny and not only focussing on innovation/digitization will help to survive. But combining these strategies seems to be a successful way to tackle all actual and future callenges.