When it comes to the need for security and fraud checks on the one hand, and the drive for personalised insurance cover and a frictionless experience on the other hand, the end consumer tends to be caught in the middle.
The European Commission recently published its Eurobarometer survey presenting consumer opinions on the impact of digitisation and automation. The study of 28,000 people found that whilst confidence is high around the impact of digitisation in society, there was a lot less confidence in the necessary skills of the future and a lack of trust in networks related to security, cyber-security, data ethics and privacy.
75% of respondents said they believe the most recent digital technologies have a positive impact on the economy, 67% on their quality of life, and 64% on the society.
76% of people use who use Internet every day say the impact of these technologies on their quality of life has been positive, compared to 38% who never use the Internet.
69% of people said they want to see a faster and reliable Internet, to encourage more use of digital technologies. 72% of people said they believe AI and robots steal jobs. Meanwhile 44% of people in work think their current job could at least partly be done by a robot or artificial intelligence. But negatively, 32% of people said that they do not generally trust stories published on online social networks.
Just 22% of people said they would be comfortable being driven in a self-driving car in traffic. Another 35% of people only open emails from known sources and 61% said that security and privacy features play a role when deciding to make a purchase online.
Numerous studies from Accenture, Consumer Intelligence, and the consumer research we’ve undertaken at LexisNexis Risk Solutions show that customers are open to more automation in services such as insurance applications, form filling and claims. But at the same time – and despite the excellent processes that GDPR has introduced – there are lingering consumer concerns about how their data is being used and around privacy in general.
Another report from BIBA has called for better signposting in the online space, to help consumers and business customers get access to the right insurance for their needs.
With the Treating Customers Fairly principles, connecting a customer to the right protection is one of the core responsibilities of an insurance provider. In this context, at LexisNexis Risk Solutions we’ve been having some deep level conversations with clients about how to use data to identify a person (or a business in the commercial e-trade space) and direct them to the right type of cover. Our LexisNexis® solutions help insurance providers battle fraudulent use of identities, helping insurance providers to synchronise identities and multiple records that can accrue from different lines of business or difference insurance brands, different disconnects and errors that can build up over time.
Normalising business addresses, matching to business owners or business managers is a long-standing challenge, for example when an organisation has different locations and different risks.
But the deeper challenge – to deliver the most appropriate insurance cover to the customer at the right time, in the right digital channel, well-priced and according to their risk needs – is an important goal to keep in sight. It is an ongoing journey of benchmarking insurance customers against the protection that is right for them, ultimately building micro-policies or add-on policies for a customer according to their needs in as near to real-time as possible.
Innovation with technology and data is thriving
For well over a decade at LexisNexis Risk Solutions, we’ve been helping to deliver into insurance vital data needs at point of quote, for risk-based decisioning on personalized products and this is essential for driving profitability and efficiency for insurers, brokers, and MGAs.
Technology innovation isn’t just surviving. It’s thriving even in this rather weird pandemic year. A recent report from Celent, published to coincide with Innovation Insight Week concluded: “The financial institutions that have been most successful over the past 12 months are using or are preparing to deploy technology to maintain customer trust, relevance, and intimacy. And they’re doing so at speed. This year we’re seeing accelerated time-to-market, rapid new technology deployment, solutions that build customer trust, and more.”
Celent’s Innovation Insight Week events launched in 2007 (the same year as the iPhone) and at that time the average implementation timeframe for financial technology projects was over 30.0 months. By 2021 this timeframe had reduced to just 10.2 months for the top 80% of submissions the research firm looked at.
Many advances and consumer needs are driving this acceleration. In insurance there’s the growth of mobile sign-up and pay-as-you-go, short-term insurance policies as well as the need for speed in the e-trade commercial and SME insurance market as well. Data analytics capabilities, with a focus on artificial intelligence and machine learning (AI and ML) are starting to improve both the customer experience and risk mitigation. Better data and enriched data are enhancing the best practices for risk management through data platforms and contributory databases, helping to solve the challenges of greater speed, and organisational challenges that arose with COVID-19 and the work from home environment in insurance.
Celent’s report expressed the challenges as follows: “Insurers are reaching for new technologies, with rapidly growing use of collaboration tools (for use with customers, internal stakeholders, brokers and partners), video communications, consumer messaging apps, chatbots and virtual assistants, and other emerging technologies.”
Pandemic propels shift to new types of insurance cover
Just as these trends have helped drive the current accelerated innovation, most insurers and other financial institutions expect the effect of COVID to be a factor for the whole of 2021. In Celent’s survey globally, 63% of financial firms expect the pandemic to be an issue for the whole of the year. Only 34% said they expect to reach pre-COVID levels of profitability or better in 2021.
What at first seemed a provisional solution to a contingency has consolidated into a shift that will require long-term planning and investment. Insurance providers have already started this journey. But there is a lot of uncertainty about the services, products and structures they should automate and put in place to make their investment successful.
Perhaps those uncertainties are the reason why insurance companies have been embracing digitisation at different speeds, with some not even focused on it, as we found out in our survey of UK commercial insurance providers ‘A Digital Divide’. The pandemic, however, left companies with no choice but adopt whatever technology could help them deliver the services contracted to customers as smoothly as possible.
The Celent study concluded that that, no matter where an individual insurance company is on the road to digitisation, insurance providers are making similar technology investments. At some point in time down the road the whole industry is going face the same challenges: the transition from legacy to digitised systems, better leverage of customer engagement, the automation of processes such as form filling, claims and reimbursement, protection against cyber threats and finally, the need to use more AI and data to drive decisions.
Where is your company in this race? Just taking off? On pole-position? In the back of the grid? If digital disruption wasn’t already in the everyday vernacular of insurance, the pandemic has made sure it is now.
Follow the link to the LexisNexis Risk Solutions website to find out more about how we support insurance providers.