Insurance Technology: Go Digital or Go Home
The news is out. Insurers who want to grow are going digital.
A 2014 survey by Accenture suggests that digital startups related to the insurance industry are prime takeover targets by carriers, and in fact, this type of acquisition is emerging as a key strategy for insurance carriers to jump-start their digital capabilities, Insurance & Technology reports.
This news might be surprising given that insurance is a conservative industry, not generally known for innovation. In the words of one article by Deloitte University Press, “… there are those who would argue that the link between insurance and innovation is so tenuous as to be nearly nonexistent. In the words of the old cliché, innovation and insurance are only found together in the dictionary.” However, despite these stereotypes the same article goes on to prove that innovation has always been crucial to success within the industry.
That’s true now more than ever, as businesses seeking to deliver new value by harnessing digital technology – Accenture calls them “digital transformers” – small companies with big ideas to help them unlock the potential for digital. This is an area where, historically, insurers have been weak. “Only 22% [of C-level insurance execs] said investments made by their organization are focused on driving truly disruptive innovations,” Insurance & Technology reports.
How can a smaller insurer go digital without breaking the bank? By deploying insurance telematics.
Speaking of truly disruptive innovations, usage-based insurance brings “the potential to upend the stable model that has dominated the industry for more than 50 years,” according to a white paper by A.T. Kearney, entitled, “Telematics the Game Changer – Reinventing Auto Insurance.” Here’s how:
- It reinforces relationships with customers, enhancing retention. Drivers who get usage based insurance through smartphones, for example, enjoy frequent touch-points with their providers, strengthening their relationship to the brand.
- It makes claims processing more efficient. With a smartphone at the scene, drivers can begin the claims process more quickly by contacting their provider without delay; they can also take photos of any damage.
- It builds a better profit model. Ultimately, usage based insurance improves a company’s profitability, as better drivers self-select for this type of insurance. And, with built-in incentives, it can improve driver behavior over time.
Digital innovation not only sets a trend for the industry, but protects your company’s position within it. With a profitable business, greater efficiency, minimized claims and a strategy for retaining your best customers, your organization can be disruptive in the best possible way.
Usage-based insurance is just one example of the innovation you need for survival at a time when big companies are looking to acquire smaller ones. Put usage based insurance at the core of your strategy, and take advantage of the benefits it brings. To learn more about our UBI pilot program, available to select insurers, contact us.