What will the insurance industry look like in five years?
Probably very different. Rapid shifts in technology and customer expectations make the insurance industry a perfect candidate for being disrupted. Why? Because new entrants to the insurance market don’t have any issues with legacy computer systems, a problem that is plaguing the traditional insurance industry. New entrants will seek to employ technology to automate many of the traditionally time consuming back-office tasks. This in turn will free up resources for the insurer to focus on designing creative new ways to engage their customers and radically improve the customer experience similar to what companies like Uber and Airbnb are doing in the taxi and hospitality business. Traditional insurers will need to radically rethink their businesses in the face of these changes to stay relevant in the future.
One of the drivers behind the success of companies like Google and Facebook is their ability to provide great services to their users at little to no cost. This has only been possible due to their relentless push to adopt technology to automate all of the back-end processes needed for their services to run allowing them to service many people at scale. In this respect, these successful technology companies are very similar to the disruptive insurance companies that will begin to emerge in the coming years. Insurance companies will use technology to service their customers at a competitive cost thereby allowing insurance to be accessible to a much larger group of people.
What does automation in the insurance industry entail? Insurers will constantly monitor their customers and implement new products at high speed accordingly with the aim of continuously improving the service. Customer information is processed in real time. Risk management is guided in a fully automated way. Reports are constructed without human interference. There is a single source of truth for all data preventing inconsistencies. The result is a fully transparent organization whereby all relevant information related to customer satisfaction, financials, risk management etc. can be accessed in real time.
Rethinking the customer experience; in the future insurance will no longer be a commodity. Instead, insurance will be a process in a larger service platform consisting of a community of outstanding companies surrounding the customer with all the services that he/she needs. Such a service would proactively help the customer prevent accidents. In case an accident does happen then the insurer will actively help the customer get back on their feet. The mission: deliver superb customer experience!
How long will it take before the first automated insurer is on the market? Probably less than two years. How long will it take to integrate companies into a service community? Probably less than five years. How big is the threat for the traditional insurance industry? Huge!