Read any article on digital insurance and it seems to me that it is all about the insurers!
Big data, fraud reduction, improved risk ratios, cross product customer engagement are common themes in the trade and advisor “blogsphere”.
Whilst these are undoubtedly areas where the insurance operating model can be improved and indeed transformed by the use of new technology, they all seem to miss the real consumer opportunity – one which has dogged the industry since before computerisation – consumers see insurance as a grudge purchase - one which will almost certainly not deliver when the crunch event happens.
Worse still the current plethora of ‘bundled’ insurance products, often acquired by consumers as result of other purchases of goods or services such as ‘premium’ bank current accounts, can often mean that the same asset or activity can be covered multiple times – but only if the loss occurs in certain prescribed conditions. This again causes consumer dissatisfaction with the industry as a whole and drives unwanted consumer behaviours at the point of claim.
The fundamental business model transformative development that has occurred over the past 10 years has been delivered by the consumerisation of IT and the acceptance, indeed whole-hearted embracement - of the idea that technology can add real value to day to day activities of ordinary people – not just to the providers of goods and services.
In my view the real digital opportunity for insurers is to use the new technology that is in consumers’ hands – think the new generation of Augmented Reality headsets or indeed the Pokemon phone craze – and the willingness of consumers to use this technology to really explain how a proposed insurance policy works and to clearly identify what is and isn’t covered under the terms of any given policy.
Indeed with advances in image recognition and connectivity there is every reason why technology (in this case possibly an ‘App’) in the hands of consumers could be used to record every room in a home, including its contents to give a truly tailored policy to the needs of a client – maybe even including the ability to specify different coverages for different rooms or articles. Of course there is the opportunity for intelligent devices to interact directly with such an application – maybe this could be an early win for manufacturers incorporating Internet of Things (IoT) connectivity into their products.
This could happen at any point in the lifecycle of consumer engagement, particularly when a consumer acquires new assets – another great opportunity for Insurers or brokers to be more than an annual contact.
The cost of such tailoring would have been prohibitive in the past but with today’s technology this could now be an automated task. Landlord surveyors currently use video inventories. I rented out a flat a few years back and the agent created a video inventory, rather than a paper inventory, of condition which was then used to confirm the condition changes at the end of the lease.
In a more advanced state CGI’s experience in using HoloLens technology from Microsoft suggests to me that this is an area ripe for consumer focussed insurer innovation.