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Digital disruptors of the insurance business model

Where digitalization has already disrupted numerous sectors, insurance is becoming the latest business to be transformed. The consumer market is diversifying, client needs are changing and new start-ups are eager to claim their share on various domains - from price comparison to completely new business models. These different consumer groups demand tailored products which fulfill their needs, through their preferred communication channels.

In order to cope with this diversification many insurers adopt digital strategies, focusing on communication through social media, direct online sales channels and creating mobile websites and apps to reach their prospects.

However as the possibilities of ‘digital' are almost endless, there are as many digital strategies and they vary greatly in their focus areas. Some of them present the strategy as ways to orchestrate their communication with customers, functioning like an extension on the existing business model. Other strategies present technical views on how to incorporate new technology like social media, analytics and cloud solutions. This indistinctness alone will make it hard for insurers to fully reap the benefits of digitalization.

In order for a digital strategy to reach its full potential it should not be limited to serve as an extension to the existing business model. Digitalization can be effectively used to reach your customers, to get to know your customers' needs and to build efficient processes to meet these needs. However this can only be achieved when it is fully incorporated in your business model. This is where digital strategies can add true value, but often meet their limits because of a perceived lack of urgency within the organization.

To provide a more realistic understanding on the value digital strategies can have on insurer's business models, practical insights will be presented. These insights are categorized in three important aspects of digital strategies: Digitalization can provide a big impact on (1) operational efficiency, lead to more efficient (2) communication and utilizes (3) big data. Proven initiatives about the latest innovations in various countries are given to make the impact of digitalization more tangible - what could be on your doorstep in the foreseeable future?

Operational efficiency

When it comes to operational efficiency interesting market differences can be determined. In figure 1 the average operational costs of P&C insurers are ranked per country as a % of their Gross Written Premium (a lower % is more efficient).

In order to see how digitalization contributes to this success two interesting organizations will be highlighted.
<see the full PDF version for further reading>

Communication channels

While cross channel communication is often hailed as the ultimate online solution, IT-budget is not infinite. Key to success is to know your customer needs and focus on their channel of choice. With new challenges and digital possibilities come new initiatives that focus on specific audiences. For instance the ongoing closure of physical branches and the adoption of provision bans forces organizations in various countries to find new ways to add value to their customer / agent experience.

<see the full PDF version for further reading>

Big Data

One advantage traditional insurers have over new start-ups is their often enormous amount of data. The problem is that most insurers have not yet figured out how they can use this to their advantage. Many Dutch insurers haven't gotten much further than trying to exploit gender, area code or age differences in car insurance claim behaviour. Surely dozens of variables on millions of customers can yield more interesting results.
<see the full PDF version for further reading>

Download the full article on the digital disruptors of the insurance business model here.


Sia Partners

1 comment
Rosix le 02/17/2016 pm29 14h23

There is no ONE insurance cpnaomy that is right for everyone everyone is rated individually and all companies have different likes and dis-likes , different credit tiers, different business models, and many other factors that can vary your rate and a QUOTE is ONLY a quote until the policy is issued.Typically, insurance rates will vary from State to State and can even vary by ZIPCODE! It also will depend on the type of car/truck, coverages, limits of liability, and driving record. Some companies run credit scores and MOST run a motor vehicle report and CLUE (Comprehensive Loss Underwriting Exchange) report to see about undisclosed accident involvement. A lot of these reports might get a BETTER finding with your SSN BUT we CAN get this info WITHOUT your SSN.The best thing to do is call a LOCAL independent agent or broker. Don't go across town, or to some other city look for someone CLOSE. Just look in the phone book for the PIA or Big I (Trusted Choice) logos and you will find a professional licensed agent that will be able to help you solve your insurance problems, and give you rate comparisons of several different companies. An independent insurance agent will normally have a dozen different companies and if he cannot help you, he should be networked with other local agents that can. In my agency, we have companies that do NOT run a credit score and welcome drivers with less than perfect driving records and specialize in youthful operators!Most of the replies on this site say go to this on-line carrier or that on-line carrier or that 1-800 number but I'm sure that when you do, you will find some impersonal computer user with a script to work from and you won't be able to talk with the same person every time you have a problem!Good luck, drive RESPONSIBLY and I hope this helps!

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