The process of choosing new technology has traditionally involved selection centred on a functional and technical scoring exercise. However to select the best technology partner, insurers should look beyond core features and functions and aspire to innovations like digitalisation.
Clinton Brown, business development manager for SSP Africa, says although digitalisation could be viewed as just a current buzz word in the industry, it is nevertheless real, and companies that don’t evolve and adapt their strategies will cease to be competitive.
“Being ‘digital’ should encompass many assets, and technology buyers should consider these when looking at changing systems,” advises Brown. “Evolving technologies such as big data, social media and telematics should be considered, as well as the impact on distribution and product innovation.”
Insurance customers demand the ability to research and purchase their insurance using many different devices (laptop, tablet, smartphone etc.), each of which uses specific browsers (Chrome, Safari, Firefox etc.) and has its own specific sizing requirements. As a result, the focus has moved from e-commerce to user experience platforms (UXPs).
“The technology should support responsive design where the user experience is automatically tailored to each device,” explains Brown.
For many CEOs, Customer Experience Management (CEM) has become a priority area of investment for business improvement in relation to technology. CEM solutions deliver unique customer experiences by using scoring algorithms to define key outcomes. Vital in identifying appropriate customer segments for targeting, they give a wide range of business users access to the customer insights needed to make speedy data-led decisions.
Big data
“The term ‘Big Data’ means very little on its own,” comments Brown. “It’s the insights derived from the data that allow insurers to make more informed underwriting decisions, improve the accuracy of pricing, customer segmentation and market/product direction. But many insurers and brokers are struggling to make meaningful use of any data and others simply can’t access it at all.”
Data enrichment enables insurers to provide a superior insurance purchasing process, not only in terms of risk management but also to simplify the purchasing process. In the UK, vehicle insurers are already automatically augmenting risk data with credit information, driving history and claims information. When this is combined with usage-based driving scores, the amount of data available continues to increase, which is why it’s important that insurers choose a solution that can retrieve this information dynamically.
Social media
Brown says the insurance industry is getting to grips with social media and the effect it has on brand. “Consumers use social media to spread their views on how claims were handled. As a result, there is so much insurance-related data to be found on Twitter, Facebook, Google and other social media channels. The question is, how can insurers access it and use it meaningfully?”
Existing business intelligence and dashboard reporting has always looked at structured data retrieved from local databases. However, the future winners will be those able to use tools that look at both structured and unstructured data to drive innovative strategies and tailor products to suit customer behaviours.
Telematics
Telematics has been credited with curing a multitude of evils, including fraud prevention, loss reduction and risk mitigation. Although still evolving, insurers need to understand and implement this technology to make the most of the benefits it can deliver. There are many options in the market, including the use of both hard-wired devices and mobile apps, and these will develop as investment based on market demands continues. Telematics and usage-based insurance (UBI) are here to stay and technology needs to keep pace with its journey.
Distribution
“Distribution as a topic is not new and has been around for some time,” says Brown. “But in this ever-connected world, the blurred lines between intermediary and insurer will only continue to complicate the question. Again some vendors claim to resolve this by ‘plumbing’ portals or websites on top of their existing policy administration platforms, but this is only a short-term solution.”
Brown continues to explain that the best distribution solutions allow for a multitude of options including trading platforms, real-time rating via quotation hubs, etc.
Product innovation
Linked to distribution is product manufacturing. Speed-to-market is crucial when launching new insurance products, but many other factors have to be considered. Brown says insurers should ascertain whether or not the technology supports a “build once, distribute to many” approach. Does the product build process support a decreasing reliance on developers to make product and rating changes? Is it possible to copy and clone existing products to create schemes? Can proposed product changes be prototyped and tested quickly?
“Connecting the insurance value chain remains significant as underwriters demand growth, access to distribution, better risk selection, increased efficiency and closer alliances with their intermediaries,” Brown comments.
The process for purchasing new technology is no longer about the IT manager or CIO overseeing the production of a comparative checklist. Nor should it be solely based on whether the system can or cannot support multi-currency or out of sequence endorsements, followed by a long drawn out haggle on price. Typically what is forgotten is the requirement for a real trusted advisor to work alongside the insurer to help develop technology strategies that add real value to the overall and future success of their business.
“Lastly, some believe that the traditional role of the CIO is dying out and will be replaced by the newly created Chief Digital Officer, Chief Customer Officer, Chief Innovation Officer and other digital positions. Either way, the best decisions should now be made based on strong business strategies that deliver value,” concludes Brown.
