THINKPIECE
T
he insurance industry
is facing a period of ac-
celerating change across
the entire spectrum of
its business activities.
At the same time, the
pace of technological
development in the
sector is moving rapidly.
With structural business
changes, a technologi-
cal revolution, digital innovation and new
ways of consumption, it can be said that the
traditional world of insurance is currently at
a crossroads.
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The
Insurance
Ecosystem
The world in which we are all living is
changing at an exponential pace. Aude
Maisondieu, Senior Manager at Accenture,
highlights the challenges arising as a result
of this within the insurance industry and
explores the role of the insurance ecosystem
in addressing these.
Issue 5 • March 2018 • The Insider
There are a number of trends impacting the
industry including: -
• risks being transformed by the advent of
new technologies including the Internet of
Things, connected and increasingly auton-
omous cars, cyber risks, changing customer
behaviours and man-made climate change;
• risk modelling and underwriting are being
transformed by new technologies including
big data, machine learning and API economy,
which increasingly allows for real time, per-
sonalised risk analysis and pricing;
• regulations becoming more and more com-
plex, imposing new constraints, for example,
solvency, regulation improvements like IFRS
and Insurance Distribution Directives.
Overall insurance markets are experiencing
a period of instability against a backdrop of
Brexit and struggling economies whilst the
needs of the population are evolving. New
competition is also emerging and threaten-
ing insurers margins and this coming from
diverse players such as insurtechs, but also car
manufacturers, established distributors such
as IKEA) and online giants including Apple
and Amazon who have access to hordes of
personal data.
This has led insurance markets to becoming
more commoditised with insurance compa-
nies competing with new services and risks.
Disruption is forcing insurers to review their
approach to the business.
THE VOICE OF THE CUSTOMER:
UNMET EXPECTATIONS
The challenges of a changing insur-
ance ecosystem are evident and at the same
time the market faces challenges satisfying
their customer. Listening to their customers
can be an eye-opening experience and the
following statements will be recognised by all
as a flavour of current customer sentiment:
“Car Insurance is too expensive, it’s a luxury. I
would prefer to take the risk and drive without
insurance.” The number of uninsured cars
on Irish roads has nearly doubled to over
150,000 in the space of five years.
“I am 23 years old. Insurance products are com-
plex and not adapted to my way of living, I’d
prefer to invest in a high-tech smartphone." The
Irish census in 2016 shows that a third of the
population (33.2%), is less than 25 years old.
"I have been retired for 10 years, my family
lives 200 km away. My private insurance
covers medical treatment but for ease of mind
I would like more health services." Over half a
million in the 65-and-older older age group
live in private households, an increase of
19.6% since 2011 in Ireland.
“I don’t have any contact with my insurer except
for underwriting a new policy or paying the
premium. The only time I had to contact my
insurance company, the claims process was too
long, not transparent and I had too many differ-
ent people on the phone. In the end, I felt I lost
out, I was not reimbursed, as expected. Insurance
contracts are purposely unclear.”
Against this backdrop it is therefore essential
that insurance companies focus more on the
customer in order to respond to customers’
fluid and rising expectations.
The main business challenges facing the
industry include profitability, fading customer
loyalty and increased difficulty in acquiring
new customers. A successful insurance com-
pany focusses on price, proactivity, immediacy,
prevention and personalised services. There
is also a real need to create a relationship as a
partner of trust.
DIGITAL INNOVATION: THE
TRANSFORMATION OPPORTUNITY
Gartner forecasts that 20.4 billion
connected "Things" will be in use in
2020 and expects Artificial Intelligence bots
to power 85% of customer service interactions
in the same year. In 2020, the number of
Issue 5 • March 2018 • The Insider
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