8insurance special issue
Disruption of the insurance value chain
Digital technology is disrupting almost every aspect of the insurance value chain . To survive digital disruption , insurance companies will need to understand and react to each of these changes by building products and services through a digital-ready business model .
SALES
SALES
Personalized digital advisory services will disrupt the role of human financial advisors . Omnichannel solutions enable customers to gain instant access to their information without an intermediary , AIbased chatbots can provide suitable guidance and advice , and new configurations of products and ecosystems can display a wider range of product offerings to customers . As a result , human advisors will be freed up to provide ever higher-levels of advice and guidance .
Responding to disruption
Insurance companies are already responding to these impending changes in the industry with business strategies designed to keep pace with digital disruption .
Simpler products .
To sell insurance products using digital channels rather than advisors , insurance companies are building products with simpler features and simpler terms . To allow salespeople to move up the value chain , insurers will need products that are capable of selling themselves .
SERVICING
SERVICING
Robotics and automation will disrupt manual processes , and digital delivery will disrupt paper-intensive communications . For example , instead of sending documentation via postal mail to the policyholder ’ s home address , insurers may send an automated , digitized confirmation immediately to the policyholder ’ s mobile app . This approach will speed up business processes while reducing back-office costs .
Simpler processes .
The typical lifecycle of entering into an insurance contract includes a multistage process involving information gathering , verifications , and backand-forth paperwork . Digital enablement makes it possible to compress the lifecycle of policy origination into a single click .
ACTUARIAL AND LOSS PREVENTION
ACTUARIAL AND LOSS PREVENTION
Technologies such as IoT and wearables are disrupting how insurance policies are priced and marketed . Insurers will evaluate customers ’ potential needs based on their observed behavior such as driving patterns , suggest a combination of appropriate policies , and then , based on IoT data and wearables data , offer personalized incentives designed to reduce losses .
Short-duration , eventdriven policies .
Instead of offering only products with coverage by the month
or the year covering a specific asset , insurance companies can provide coverage down to the minute , covering specific events . For example , an auto policy may provide differential coverage for the daily commute versus leisure travel , or for trips by other drivers in the family , or for interstate travel versus in-city driving .