In this piece Associate Partner Chris Main shows insurers the way towards totally bespoke customer services. Head to our Profit Finder product page to discover the next step. 

Few industries have emerged from the last year with a spotless copybook, but the insurance industry has taken a particularly bad rap. Whether keeping customers on hold, ignoring cancellation requests or charging hefty fees for those cancellations, the industry has had a punishing year reputationally, mostly stemming from an inability to listen and respond to customer needs.

This state of affairs calls for bold steps to regain consumer trust and differentiate themselves from a homogenous and reputationally damaged market. The way to do this is with personalisation in every area of insurance: personalised customer services and premiums enabled by bespoke, agile technology for insurers.

Beyond sales mentality: towards more personalised services

Priorities are shifting on both sides of the insurer/insuree coin. For insurers, customer loyalty is becoming recognised as just as valuable than one-off sales, and with good reason: research from CallMiner last year revealed that consumers switching to another insurance provider costs brands almost $3 billion in the U.S. alone. The FCA’s reports that long-standing consumers have been overpaying by £1.2bn a year – more than new customers in many cases – is an example of how firms have been neglecting the importance of loyalty.

For customers, on the other hand, cheap premiums aren’t the be-all-end-all anymore. It’s long been perceived that the easiest and quickest way to grow in insurance is to undercut your peers and reduce prices, but the effect this can have on customer experience – and the gaps in cover that could disadvantage policyholders – have come into sharper focus.

In the old world, the bog-standard annual policy with its relative fixed coverage terms was necessary because of the high cost of policy initiation; the admin costs of shorter and more dynamic contracts were prohibitive. In the digital world, this is no longer the case and we are beginning to see a more ‘just in time’ approach to insurance.

“The temptation is to cutdown on cover”, said the deputy president of the Chartered Insurance Institute. But in order to win back the faith of customers, this is now a temptation that must be resisted in favour of more personalised offerings. Factors such as hybrid working and the gig economy mean that risk profiles for individuals and businesses are changing so frequently that flexible, customer-centric, on-demand and usage-based insurance cover will increasingly become more popular as a route to mitigate risk.

Take online travel insurance as an example: each person’s unique travel plans are now reflected in last-minute contracts via short online forms and ad hoc premiums.

In motor insurance, too, the use of telematics, which feed information about driver behaviour back to the insurer, is a first step towards a more granular approach, whereby premiums are determined by when, where and how you drive as opposed to a single annual premium based on more general criteria.

Want to offer bespoke services? Get bespoke with technology

For brokers to be able to design and market innovative insurance propositions using more sophisticated data algorithms, they will need to use completely different technology. Instead of the monolithic end-to-end approach, a platform approach is required in which smaller applications (micro services) can be developed using agile techniques and added to the platform as required. A modern platform will be based on cloud technology – but much more is required than the ‘out of the box’ offerings from the likes of Microsoft Azure and Amazon Web Services.

  • Modern native cloud applications can exchange information between them using APIs (Application Programming Interface) which removes the need for one giant application that does everything.
  • This means that a platform can be designed using the most suitable components in terms of scale, complexity, and resilience. A number of applications will be needed at the enterprise level – for example finance and accounting and CRM. But applications to support individual insurance products can be developed as they are needed and will not dictate any revision of other applications.
  • Some components can be bought from Insure-tech providers ‘off the shelf’ – but others supporting more innovative or niche products can be developed bespoke.

Bespoke or custom software development has fallen out of favour in recent years – because for old-style integrated applications this resulted in all maintenance and development costs being supported by a single user. Another major barrier has been the issue of data migration. If changing between old style core systems, companies were faced with keeping the old system running to access legacy data – which would obliterate any potential savings – or attempting to migrate legacy data into a new data model – which generated prohibitive capital costs.

While it is important to retain access to legacy data, the old database can now be replicated field for field into a new lower cost repository. In the same way that micro service apps can be developed to support new products, so apps can be developed to execute whatever processes are still required with regard to legacy data. There is no need to retain the legacy app or undertake costly data conversion.

According to research by PWC, roughly 70 percent of insurers’ IT budgets goes towards maintaining legacy technology, which has stopped them from being able to keep up with the rapid tech changes of the past decade. But these bespoke cloud-based solutions can now enable firms to break free of their legacy systems and differentiate themselves with newly flexible personalised services. Micro services open the way to developing innovative products which are not available to competitors. In this way, brokers can build a modern technology platform that can scale and develop to mirror the way the insurance business is changing and will continue to change in the future.

Overcome legacy problems with a new breed of tech consultancy

These legacy factors have stopped insurers from being as agile and flexible as they need to be – until now. Bespoke and agile cloud-based technology now allows for a more granular and on-demand approach to customer services. None of this is as easy as it may sound, but it is absolutely necessary: the cost of remaining on legacy technology will soon become too prohibitive for a firm’s ability to innovate.

Yet adapting to more personalised services and more bespoke technology stacks while overcoming legacy problems is a challenge that most firms lack the user-centric design expertise or technological capabilities to achieve. Insurers would be foolhardy to attempt this feat alone, and the smartest players are enlisting outside perspectives for guidance. A new Insurtech Insights survey of insurance professionals revealed 66 per cent are already partnering with non-insurance businesses and a further 26 per cent are planning to do so.

At Emergence, we offer bespoke, uniquely holistic and human-centric guidance to technology-led transformation in insurance. Working with our technology partners, we can map out the components you will need for a modern platform and facilitate agile development of any unique components. We’ll design your roadmap into a world where overheads are lower and your technology drives your future, rather than constrains it.

The bespoke insurance services Emergence offer encompass technology solutions and the people-focused and strategic consulting to successfully deliver them. These include:

 

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