Insurance, like all commodity markets, is constantly changing. With the advent of fintech, IoT, AI and machine learning, emerging technologies have affected the way consumers live their lives on a day-to-day basis. This shift in the way consumers use their devices has led to a simultaneous evolution in their insurance needs, creating a demand for change at a rapid pace.
The onset of digitization, if approached strategically, has created an opportunity for insurance providers to acquire new customers, lead the market and drive brand recognition. Here are three straightforward ways traditional insurance providers can ensure their business stays ahead of the curve by leveraging digital as a meaningful channel.
‘Know your customer’ is a term often reserved for financial services compliance but we think it applies to a much broader market. If you know who you are talking to – REALLY know them – you can create a stronger, long-term relationship. Deliver a more personal, engaging experience to customers through social media, newsletters or emails. Help them manage their relationship with you as well by using these channels to prompt them before a policy expires, reach out to them on their birthdays, or better their children’s birthdays. Use this type of marketing to create personal relationships outside of your current customer base. Be yourself – insurance isn’t known for being a ‘friendly’ industry. This means there is an incredible opportunity for those who are comfortable with being clear and personable. Integrate these traits into your marketing and you will attract a larger base of ‘followers’ – millennials are a great example of an underinsured market who respond positively to this approach.
How do you get to know your customers intimately? Use advanced analytics to obtain a comprehensive 360-degree view of client behavior. This will allow you to anticipate their needs and offer the right products in real time. For example, some life and health insurance companies are offering services based on their clients’ use of wearable activity trackers, like Fitbit. By analyzing the collected data, they can predict risks and even afford discounts based on lifestyle choices.
Digitization is expanding the breadth of new opportunities for insurance providers. The surfeit of data now available is providing improved insight into markets that have traditionally been difficult to serve. For example, cyber insurance has emerged in the last few years and is rapidly being adopted due to the ever increasing rate of cyberattacks. There are two primary markets that need to be served here, the first is enterprise companies. Major companies need to protect customer data and financials. The second is consumers. They are concerned about their bank accounts, online profiles and IoT devices being invaded. As we increasingly connect our smart devices, personal data and privacy become targets for cyberattacks. In 2017, hackers are ‘kidnapping’ data and holding it for ransom, and the costs to recover that data are climbing for enterprises and consumers alike.
Smart homes, started by the advent of products like Nest are growing at a rapid pace. Drop cams, home security, entertainment systems, and even home appliances like washing machines are all online. These technological advancements are setting the stage for new insurance opportunities, especially in loss prevention and mitigation. For example, Amazon Alexa or Dot, Siri or Google Home will soon be alerting homeowners of unusual activities in and around the home. These IoT applications have the ability to provide insurance carriers with data on the risk profiles of certain policyholders and serve as an invaluable resource for mitigating homeowner risk.
The bottom line is that there are multiple opportunities for providers to make smarter business decisions and deliver greater ROI to customers in today’s digital environment.
Understanding the opportunities and making them your own is the sweet spot of value. Go get ‘em.