It’s clear the insurance sector is facing a revolution. It began in the 1990s with the introduction of Usage-Based Insurance (UBI). Even though widespread adoption was not quickly realized, it was the first big shift the industry saw in decades. When a mature and famously conservative market starts to undergo change, the instinct is to hold tight, not march toward new technologies or processes. This means telematics and using the data collected was not truly explored or used to improve products, pricing, and offerings, until recently. And only then, because of another externality, COVID-19.
Once the pandemic took hold, consumers started questioning the need to pay the same amount for insurance when they were not driving nearly as often. At that point, the barriers to offering UBI came down fast and insurers started seeking ways to satisfy the changing demands of consumers. While the expectation was quick adoption of UBI solutions, what in fact happened was a re-engineering of how the insurance sector does business. The first step needed to be how carriers interacted with agents and brokers. As if building from the ground up, insurers had to find new ways to conduct day-to-day business activities that keep the lights on.
The past two years have seen an acceleration of trends that were already in flight. If technology has fueled changes in consumer behavior, then the global pandemic threw gasoline on it. The hyper-personalized, ready-when-you-are Netflix experience has become the standard expectation for everything – even insurance. This is pushing insurers to move more quickly than their previous standard of cautious evolution.
In response to the accelerated pace, carriers are seeking ways to enhance their legacy systems. The end goal is marrying deep knowledge and expertise with customized, personalized products designed to reach the right market segments quickly and profitably. A key step forward will be deploying advanced analytical tools, business processes and technological infrastructure to respond swiftly to market changes with new and refreshed products and prices that attract and keep their target customers. This will provide improved understanding of customers’ goals and offer the capability to quickly and efficiently develop the right insurance offer to meet their needs, at precisely the right time.
According to a recent article from Jeffrey Glazer Better Analytics = Better Decisions published in InsuranceThoughtLeadership.com, today’s technology offers instantaneous access to better, more comprehensive data. He goes on to explain that harnessing the power of analytics can help insurance industry professionals avoid the missed opportunities throughout the insurance lifecycle that have limited customer acquisition and retention.
Understanding which business and technology capabilities will move the needle on developing products that are accurate, personalized, and hit the market at the right time is just beginning to be understood. This topic has been researched by SMA – Strategy Meets Action in their latest perspective to be published later this month.
Be sure to join our webinar, Dynamic Product Actualization on February 22, 2022, to hear more about the requirements for success. Mark Breading, Partner, Carrier Transformation at SMA, will provide his research findings. Aaron Wright, who spent 20+ years as pricing leader for insurers like USAA and Farmers Insurance will provide the practitioners perspective on how these capabilities can transform the insurance industry.
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