Blockchain disruption: Insurance companies must smarten up to keep up
The insurance market is being disrupted by a rise in alternative ways of sourcing insurance which continue to emerge and are being embraced by customers.
That's according to Accenture’s recently released report, The Voice of the Customer: Identifying Disruptive Opportunities in Insurance Distribution.
The report identifies that a growing number of insurance customers are willing to consider alternative distribution models such as buying their insurance from an online service provider like Google or Amazon (29%) rather than traditional insurance companies.
Moreover, the report outlines how the development in blockchain technology is contributing to the reshaping of the insurance market.
Rebuilding the ecosystem
According to the report, one of the biggest developments blockchain could bring to the traditional insurance market is the ability to streamline the payment of claims and the administration of insurance.
These new capabilities enabled by blockchain are reshaping the insurance market, forcing traditional providers to seriously consider how they can achieve a sustainable differentiation as they compete with new entrants.
Smart contracts developed on blockchains could streamline the payment of claims and the administration of insurance.
For example, car manufacturers that build sensors into their vehicles could identify damage resulting from a collision and trigger a claim payment using smart contract information kept on a blockchain.
Those same car manufacturers could bundle insurance into the car buying experience and display driver coaching and safety information inside the vehicles themselves.
In general, the report states that companies that are well positioned on the data value chain have a strong opportunity to leverage big data and real-time analytics to offer customers more personalised and dynamic products and services.
Moreover, companies could obtain a sense of differentiation to retain customers by establishing distribution partnerships with companies that can offer greater degrees of digital capability, automation and intelligent solutions.
However, the report explains ecosystem partners must believe they are both providing and receiving substantial value from participating.
Insurers will need to forge new partnerships to deliver this, such as with emergency services, manufacturers of smart devices, or even fitness brands.
Enhancing computer-generated customer service
With the disruption in the market, new trends are emerging that insurers should take advantage of, the report says.
With 74% of respondents very or somewhat willing to receive computer-generated advice about the type of insurance coverage to purchase, insurers can gain a competitive edge by taking advantage of consumers’ willingness to use digital-only advice.
The willingness to accept digital-only advice opens the doors for the use of machine learning and cognitive computing technology to provide computer advice with a greater degree of personalisation than was possible before.
The report found that customer interactions that are powered by digital, big data, mobile and analytics can lead to greater customer loyalty and value, if the engagement is customised and personalised.
The report explains that insurers can use data—digital, social, behavioural, or information provided by the customer—to target and acquire customers digitally and provide them with an outstanding customer experience.
Carriers could opt to digitally replicate the advice that an agent would provide, offering decision support, transparency into the method by which recommendations are generated, and a means of executing their choices.