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October 15, 2014

Redefining The Insurance Industry

Posted by Ravi Kumar S. (View Profile | View All Posts) at 5:40 AM

What's ahead for insurance? [Source: http://www.youtube.com/watch?v=rqBCtakf5Nw]

The founders of the insurance company Oscar have an interesting slogan: "We didn't start this company because we love health insurance. Quite the opposite, in fact." Spend some time learning about this start-up and the state of the insurance industry in general, and it becomes quite clear what the founders of Oscar mean.

If ever there were an industry that was suspicious of innovation and penalized creativity, it's the insurance business. Take a look at your next insurance bill. Do you even remotely understand it? Is it obvious as to how you can file a claim? Is there anything clear and easy-to-understand about the entire business? The answer, I gather, is no to all of these questions. So when three young entrepreneurs founded Oscar, they wanted an insurance company that was, as one of them describes it, like your family doctor. A company that is reassuring and takes the time to know its customers. You see, because insurance is so profitable without barely any effort or know-how, it is one of the last domains that is moving away from brand centricity to customer centricity. Retail, financial services, and pharmaceutical companies have embraced this movement.

To put it mildly: there is no other choice. Today, we are living in a connected world. The line between real and virtual world is blurring rapidly, thanks to new technologies like vehicle telematics, smart wearables and internet of things (IoT). I have a feeling that this is just the beginning. The industry would continue to witness rapid and disruptive innovations. For example, connected cars will give way to driverless cars, usage-based insurance will make way for behavior-based insurance, workforce will be replaced by crowd source, customers will become collaborators and the list goes on. With enormous amount of data being generated on real time, the focus is shifting from data collection to data analysis. Many insurers are adopting an enterprise-wide data-centric approach and are implementing advanced analytics and modern big data tools to extract meaningful insights for making key decisions.

And the customer is a key driver for all these changes. The truth is that the world has changed. In today's digital age, customers have all the information they want at their fingertips. This is playing a big role in insurers' overall strategy. Several insurers are using social collaboration tools to connect with the customers and engage with them effectively, across the insurance lifecycle. Insurers are also providing increased customer self-service capability and focusing on improving customer experience at every touch point.

Think about it: Innovative start-ups like Oscar are just going to march ahead if insurance behemoths don't become more responsive to the needs and expectations of their customer base. The good news is that the rapid expansion of digital technologies, coupled with the advantage of cloud services and big data technologies are offering limitless opportunities to insurers to transform their business model and redefine customer relationship. As new players are leveraging these technologies to take massive strides, it is essential for the traditional players to sense the changing trend and realign themselves to stay relevant.

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