How technology is changing insurance

The turn of the year is an opportunity to publish various reports and analyses concerning forecasts in different areas, including IT and technologies. One would say “modern technologies”, but since the pace of changes is so quick “modern” is immediately becoming “standard”.

Generally tracking innovations should be a very interesting and pleasant task. We are constantly flooded with information about new technologies, innovative ideas, cutting-edge software and new generation tools. We regularly hear about new ways to strengthen contact with customers. Many of such news have been recently published not only in business and technology press, but also in the insurance media. Thus, insurers who are looking for new methods of running their businesses cannot complain about the lack of information on the latest technological achievements. The problem is not its shortage, but its abundance. The real challenge is to select the most effective solution for our business – the one that our customers, employees and partners would all benefit from. However, not every “innovation” guarantees the success. Not every industry has customers who are ready for changes, and not in all cases changes result in the desired effects.

A good example is a huge success of online banking and the growing popularity of its mobile version as opposed to a small share of the direct channel in the insurance business (except the case of UK motor insurance of course). A few years ago I was convinced that online banking users would go for online insurance offers shortly. Direct insurance bravely entered the market. It stimulated competition and reduced prices of policies (mainly in motor insurance). It took over quite a lot of customers open to new channels of communication with the insurer. But it did not reach the critical mass needed to maintain effective performance. Direct insurers had to start cooperation with intermediaries working in the “real world” and thanks to them they are doing pretty well now.

It is also hard to notice any greater success of mobile applications for insurance customers. The mobile channel has proved to be even more deceptive than the online one.  Smartphone or tablet users seem to change their interests very quickly. They usually use several apps (mostly email apps and apps providing access to news services, social media, search engines and games). The applications run rarely or those less attractive are progressively uninstalled. To be honest – who contacts the insurance company a few times per month? Who looks at the policy except for its renewal or in case of loss? Does this mean we should not engage in mobile projects? We should but nobody says it is easy. A smart way is to adjust sales applications with some additional, not always strictly insurance features. The application should not only be “cool”, but it must offer “something” that will attract customers and remind them of insurance, especially of a particular insurance brand. There are already some examples of such applications on the market.

Nowadays, insurers are looking for new technology efficient applications and better ways to reach customers. Innovation allows them to shine only for a moment as it quickly fades away among rapidly changing trends. In the end, there is always a CFO who asks about the results, sales  volume, collected premiums, the new product line or channel performance, and ROI of the undertaking. The effectiveness of customer communication and relationships are important, but the innovation performance must be calculated, which technology enthusiasts often forget about.

Mobility is not a specific fact or state. Mobility and mobile technologies represent transformation, which can be observed on a daily basis. Conferences such as Consumer Electronics Show (CES) or Mobile World Congress (MWC) bring a number of new tools and technologies that aim at changing our world. Insurers should pay attention to works on Smart Home or combining a smartphone with a car (car connectivity apps). They should also look into the idea of using drones (risk and loss assessment) or 3D printing (reconstructing of damaged elements) for insurance purposes. The question is not whether we will see claim adjusters equipped with Google Glass, but how soon it happens. The device does not have to be, of course, of that particular brand as the market already suggests a number of alternatives. Wearables, i.e. clothing and accessories incorporating computer and advanced electronic technologies are growing extremely fast. Smart watches or bands transmitting data about the user’s health or behavior provide powerful capabilities not only in care and treatment, prevention, or underwriting areas.

Author: Mariusz Janczewski – Business Development Manager, Comarch SA
The article was published in ‘Dziennik Ubezpieczeniowy’ no 2446, on March 10th 2014.