All industries are experiencing some form of disruption, and the insurance industry is no exception. The good news is that insurers are turning their experiences (and even unexpected crises) into valued lessons. Insurers now recognize a critical component for their success ― interconnected companies and ecosystems allow insurers to stay on pace with current industry best practices and meet new customer demands.
The introduction of innovative disruptors and technologies also presents insurers with new challenges. Carriers need to deliver more data, services, and capabilities to support and enhance their processing and decision-making functions to meet customer demands. An ecosystem of connected partners makes this possible.
What is happening in the new era of interconnected companies?In the last several years, digital partnerships have been disrupting the market and accelerating transformation within the insurance industry, from Lemonade and Bestow to Chubb and Nubank, and the many cases of ecosystem plays, such as Zhong An, AXA XL and RGA.
Many successful mergers have occurred, and M&A activity is currently heating up, from Prudential acquiring Insurtech Assurance IQ to American Family acquiring Insurtech Bold Penguin and USAA acquiring Insurtech Noblr. This partnership and M&A activity further pressures insurers to adapt or risk losing customers to faster-moving competitors.
Roundtable Takeaways: Lessons for insurers navigating the new era
As part of a recent roundtable discussion, I recently spoke with Dev Ganguly, COO of Jackson; Juan Mazzini, Sr. Analyst of Celent; and Rose Hall, VP of Innovation at AXA XL. We examined insight from NTT DATA's 5th edition of the Insurtech Global Outlook 2021 report, which emphasizes emerging opportunities for insurers navigating an era of hyperconnected companies.
Here are four areas worth noting:
1. Better customer experiences require meaningful connections.
"I think if somebody asked me what the meaning of life is, I would say connection. It's human connection; it's business connection; it's connecting the customers to their insurers. The ability to self-serve ― for customers to look things up and do things on their own and have that quicker. To have fewer touchpoints but get the same result from it [the customer experience]."
Rose Hall, VP of Innovation at AXA XL
In 2022, customers will rule the market. Customer demands are evolving as quickly as the pace of digital acceleration ― at lightning speed. As a result, customers have new expectations and insurers are forced to respond. Insurers must provide instantaneous, convenient, and seamless experiences or become obsolete. As Rose Hall eloquently pointed out, customer experience is all about connection. Insurers need data to build 360-degree views of their customers and develop personas that allow for hyper-personalized experiences.
A robust ecosystem allows carriers to reinvent the customer experience and differentiate themselves in the eyes of their customers. When insurers can deliver what their customer wants, when they want it, in the manner that they want it, the customer will feel connected to their carrier. Establishing meaningful connections and owning the customer journey will make or break an insurer's ability to attract and retain consumers.
2. Insurers must embrace new distribution models.
"I think we're starting to see unconventional partnerships or unconventional ways to put those partnerships to work. Some companies are becoming ― or are considering becoming ― a utility company where they manufacture the product, and someone else distributes it. And then you have a situation where some manufacture and distribute."
Juan Mazzini, Sr. Analyst of Celent
Partnerships enable insurers to accomplish more of their goals with fewer resources. For example, the right strategic partner will allow insurers to go to market faster while simultaneously cutting technology debt that previously went to ineffective legacy platforms. Juan Mazzini highlights the prevalence of 'The Amazonification' of distribution models when companies distribute their products and services while also providing customers with access to third-party products and services.
This model prioritizes the customer's outcome above all else and makes sense in a market governed by customer satisfaction. Insurers must get creative with their distribution models to keep up in the era of hyper-connectivity.
3. Connecting your data is a superpower.
"We have a lot of data trapped in our administrative platforms and our back-end systems. We need to liberate that data to leverage it within our ecosystem partners or leverage that internally for us to make better decisions, or to provide better advisory or customer experience."
Dev Ganguly, COO of Jackson
Insurers have so much data that they don't know what to do. In addition to challenges with a data surplus, carriers using legacy platforms risk creating data silos that separate information. Dev Ganguly urges insurers to adopt intelligent ecosystems to liberate data and turn raw data into valuable insights.
The company that can effectively leverage data is also the company that can build accurate personas, map customer journeys, and prioritize the right technologies. Connecting all available data in one place allows insurers to discover patterns and use newfound business insights to inform future-focused strategies.
4. You get what you give.
As I said during our recent roundtable discussion, "It comes down to the outcome. How do you deliver? What are you delivering? And how do you enable that so the people consuming it actually understand the value? This ecosystem has to deliver value to the consumer."
In my last 25+ years of experience in transforming and growing businesses, I've learned that you get what you give. Insurers must assess the value that they're providing to their customers. With increasing competition and digital-first insurtechs occupying space in the market, old and new carriers must focus on one primary goal ― to use connections to provide more value.
The right partnerships open new doors for insurers. Instead of thinking about business objectives first, insurers are thinking about customer objectives. Implementing an ecosystem to enhance customer experiences results in cost reduction, greater efficiency, and employee satisfaction. Providing value is a win-win-win for insurers, customers, and teams.
Watch the full on-demand roundtable talk: The New Era of Interconnected Companies, and feel free to email me with your reaction. I'd love to understand what you see at your company and in the industry.
Post Date: 1/26/2022