Ceri Austin 
Insurance companies are going to offer unique products and services designed to capture and retain customers across the industry – offering policies and value propositions that are tailored to their customers’ personal values and lifestyles, even as they age into retirement.
To accomplish this, they must continue to pursue digital transformation, customer-centric strategies and resilience, while learning how to test new third-party sourcing models for complex work in the face of persistent uncertainty.
Risk Management
In an era of hyperinflation, very low interest rates and expanding loss ratios, these insurance companies, embedded in an external environment of intense stretch, must adopt more advanced technology to control and repricing their risk exposures. A risk-prone environment, characterised by hyperinflation and very low interest rates, stretches the insurers in both the internal and external environments. To cope, there must be a combination of better advanced technology adoption in insurance, but also a mental change, of controlling risks, to prevention.
From underwriting to claims processing to analytics, more and more insurers are following the trend, treating Gen AI technologies as part of what we might call the value chain. Increasingly, many companies have been using them as a complementary talent to humans rather than a replacement. This is a radical shift if we consider the approach to knowledge management of the old. People used to learn and develop through apprenticeship and traditional approaches to talent management.
As long as the economy continues to struggle, demand for insurance will remain robust. And despite inflation and recession risk this year, it is likely that rates start to have some stability as customers purchase policies with renewed confidence in the economy and insurers commit to sustainability commitments that will serve as a springboard for innovation and transformation of the industry.
Digital Transformation
As risks are growing exponentially, the insurance sector is no longer able to merely react to existing risks, but is increasingly looking for more preventative approaches. This entails different technologies, styles of leadership and new strategic approaches to their existing business models.
A good digital platform can allow insurers to deliver straight-through customer experiences while maximising operational efficiencies and innovation. By using smarter identity fraud solutions, the quality of data can be maintained while privacy on policyholder finances and health records is maintained.
Insures have to restructure their data operations to enable enterprise data strategies where large unstructured data sets along with third-party sources can be integrated, managed and governed for faster generation of insights. Secondly, RPA and digitisation of documents can save manual effort and provide cost and productivity boost.
Customer Experience
An excellent and enjoyable CX has become a prerequisite for insurers – a deficient CX could result in the loss of client loyalty and opportunities in terms of cross-selling.
Technology also makes this easier than ever: with the help of actuaries and data-driven approaches to underwriting, insurers can craft policies to meet and exceed their customers’ ever-evolving risk profile and preferences: hyper-personalised policies will make customers happier, create better relationships, and increase retention and, ultimately, Customer Lifetime Value (CLTV).
They are responding particularly well to communications that avoid framing insurable risks as betting against another party and instead present the mitigation and wellness angle, through behavioural science nudges to encourage the use of eco-friendly products or lifestyle choices that allow the policyholder to avoid premium hikes, or leveraging data (insight) to detect customers who may be high risk to communicate with proactively to avoid poor choices that drive up claims probabilities; or ensuring a seamless digital experience so that insurers are there for today’s demanding customer, leading to improved retention rates, lowered claims costs and heightened profitability.
Sustainability
In the face of increasingly erratic climate change and economic disruption, insurers have moved from financial safety nets to forward-looking guardians who actively reduce risks and safeguard policyholders’ futures. This shift has reshaped the very identity and purpose of the industry.
For instance, some insurers provide credits or premium discounts to homeowners who earn certification, such as Leadership in Energy and Environmental Design (LEED) certification from the US Green Building Council. Others have designed policies that cover both conventional household perils and certain specified sustainability risk exposures.
Insurance carriers, for instance, have begun to test different types of sourcing models for highly specialised functions, such as underwriting and claims that often required a great deal of expertise and experience – and thus freed up their time from non-value-added interactions to focus more on value-added customer interactions, as well as innovative strategic initiatives that are designed to accelerate revenue growth. The trend may also lead to more and more interactions between the customers and carriers – built on trust and relevant experiences.
