When the world changed in March 2020, some insurance companies reacted with ninja-like speed and digital decisiveness to change with it. Some of the largest chose 360Globalnet and – in one case – digitised their claims handling in less than eight weeks from kick-off to deployment. Other insurers still have options in front of them.
The one option that’s completely off the table, however, is to ‘do nothing’ whether for insurers or insurtechs. Insurers face a different competitive and customer landscape and those insurtechs that cannot help them bridge the gap between the current MO and the future will not survive.
Here are three primary challenges that insurers face as we emerge from the COVID era. They will decide who emerges strongly and who falls by the wayside.
1. Stand by your legacy? Tammy Wynette would never have charted with this title but some insurers with legacy systems will attempt to weather the pandemic storm by just standing by them, tweaking and making do. This is folly. The drive to digital is everywhere and Coronavirus has added rocket fuel to its acceleration. Proprietary systems - especially those incapable of cloud-based, location-agnostic deployment - will simply push up expense ratios as insurers pour money into expensive development to adapt to a changed world.
2. Fulfilling changed expectations. When we order goods online, it triggers a chain of digital customer relationship management. Texts, emails, confirmations, nudges that your parcel arrives today, notifications that it has been delivered. Consumers expectations are now set by those experiences. When they make a claim, they expect the same service on steroids with rapid notifications of what is going on and when. The customer who has to chase the progress of their own claim is massively more likely to leave at next renewal. Digital is now fundamental to retention.
3. Changing the relationship of Costs and NPS. Pre-digital operating costs and Net Promoter Score (ie customer satisfaction) were two levers that moved in opposing directions. If you cut costs, service suffered and satisfaction dropped. To increase satisfaction, more staff who are better trained pushed up costs. The economics of the insurance industry and claims environment now mean that costs will come under unprecedented pressure. Thankfully, it IS possible to increase satisfaction and NPS simultaneously. The key is to base digital services on a no-code platform. No-code simply means business users amend and deploy digital services without incurring IT costs and delays. Systems that guide customer journeys and automate journeys and supply chains can be changed from the desktop.
It is clear that general insurers can retain customers through pricing. However, if claims costs are rising and costs rise too, that becomes increasingly difficult. COVID-19 has changed the world but it has also changed the way that insurers need to look at legacy systems, IT choices and customer expectations in the digital world.
For those opting for a no-code turbo-charge of their claims systems, the future looks somewhat brighter because digital delivery no longer need suck costs from the business.
Paul Stanley, chief executive of 360Globalnet, said the pandemic has fast-tracked technology, but only those with “pace and agility” and the ability to pivot will survive. “What everyone has to look for now is step change. This pandemic has pushed insurers to take decisions now; they have been operating in a rather benign environment for so many years,” he said. “For insurtechs, those that have money will keep going. When the time comes to refinance, they will struggle. Anyone that makes insurers more money, makes them more efficient, gets them more customers, the obvious things, will survive.”