Digital can bring out the human side of insurance
I’ve always believed that there’s no such thing as technology being able to replace the passion of human enterprise. Over the years, I’ve seen too many business and IT leaders drop expensive technology solutions on top of dysfunctional or calcified organizations, somehow expecting the bits and bytes to rub out the dysfunction. Of course, that doesn’t happen. Instead, technology amplifies or speeds up the dysfunction.
Perhaps more so than other industries, insurance is an innately human enterprise. Many business models are built on networks of agents that commit their careers to providing hands-on, personal assistance to policyholders. Some companies have eliminated the agency layer to connect more directly with customers over the internet, and now via mobile. But the human element is an asset that the industry can’t afford to abandon, especially at a time when disruptors are attempting to come in from all directions.
The human side of insurance may only grow with the arrival of digital channels. This seeming contradictory trend was explored in a recent Accenture report, which observes that the capacity to deliver products and services in the digital age will be enabled and empowered by what the report’s authors call “design for humans.”
“AI, machine learning, the internet of things, intelligent automation and similar tech trends passed an inflection point in the last few years,” they note. “Our tools are now able to learn from us. The gap between effective human and machine cooperation is rapidly shrinking. Combined with the snowballing quantities of data now continually amassing around each customer, these smart tools will give firms the chance to build products and services that account for individual behavior on a new level. Everything in insurance is about to become bespoke.”
The bottom line is that insurers need to recognize that products and services need to be individualized down to the individual level – and technology is making such customization a reality. This is already happening with telematics devices in cars to shape policyholders’ insurance rates. As we go on, Accenture states, “it is easy to imagine “design for humans” pay-as-you-go insurance available in a few years. This would use smart sensors to detect when an insurable asset is in use and then price and place coverage based on factors like the time of day, location, the customer’s claims record and the real-time status of the asset. Insurers could also easily partner with a company like Mobileye, which provides a collision avoidance solution, to use a vision sensor to keep an eye on the road and warn drivers of danger.”
Supported by the Internet of Things technology, highly customized products can be extended to home and health monitoring. Earlier this year, a survey of 101 insurance executives by NTT DATA found that 87% believe IoT will improve customer relationships, 83% see it as an opportunity to attract new customers, and 74% see IoT as having a significant influence on products and services. Already, 77% were ramping up IoT initiatives, with customer service and technology use cases at the outset.
The bottom line is that rather than commoditizing and mechanizing things, digital technology opens the door to truly building a lifelong relationship with customers.