The insurance industry is no longer as predictable as it was in the past. Things are quickly evolving as concerns around climate change interact with inflation and quickly-changing technology. Client expectations are also changing due to shifts during the COVID-19 pandemic, including better online user experiences. To be successful in this industry, it’s critical to get super focused, adapt to the times, and pivot when necessary.
Know Thyself
While the competition in this industry can seem intimidating, the truth is that there’s plenty of room for everyone to thrive. Insurers need to know their zone of genius and focus their efforts on that area. According to the professional services network PricewaterhouseCoopers (PwC), there are five key strategies to choose from:
- Digitization, data, and integration
- Brand and distribution
- Superior, innovative products
- Strategic partnerships
- Effective structuring
The secret is first to “know thyself.” What is your company’s greatest strength? Once that’s sorted out, commit to investing time, effort, and capital into that area. To fully commit means creating SMART goals, having a plan of action, and checking in regularly to assess progress.
SMART stands for Specific, Measurable, Attainable, Relevant, and Time-Bound. If you don’t have a clear destination, you won’t know if you’re on the right path. To have vague goals is to remain mediocre and allow others who have focused momentum to sprint ahead.
Take Committed Action
Once you’ve determined your company’s best area of focus, take committed action. Here are some ideas for doing so in each of the five areas:
Data & Integration
According to PwC surveys conducted in 2018 and 2021, customer expectations have massively changed when it comes to the online experience:
- Consumer expectation of 24 / 7 / 365 online support has increased by 45%.
- A preference for submitting claims via mobile phone is up by 77%.
- The likelihood of a consumer switching carriers due to a poor digital experience has increased by 80%.
To be successful in data and integration, focus on optimizing your online presence. Seek out the best in technology to create a user-friendly experience for the consumer. This means focusing on simplicity, clarity, and accessibility for the average person. It should include everything from getting a quote to submitting a claim.
If the primary focus is your website, make sure it’s optimized for desktops, tablets, and smartphones. An app is another crucial way to serve clients since there’s a new interest in submitting claims via smartphone.
Brand & Distribution
Focusing on brand and distribution means creating an “integrated ecosystem” and offering customers products beyond insurance. This can be accomplished through partnerships with other companies and by creating a niche in the industry.
Facebook, for example, has gone far beyond just a way to connect to friends and family through linked profile pages. It now has a messaging service, an online marketplace to buy and sell, a dating app, event promotion, and even a fundraising option. Consider ways your company can embrace the ecosystem model.
According to McKinsey & Company, “Ecosystems will account for 30 percent of global revenues by 2025.” That’s in just two years. McKinsey also points out that the ecosystems most relevant to the insurance industry are mobility, housing, health, wealth protection, and business-to-business (B2B) services.
They will likely displace many traditional industries in the next five to ten years. So, if “brand & distribution” is your area, now is the time to act.
Superior & Innovative Products
The best and most innovative products address the deepest needs of the customer. Customers will be most apt to buy when they feel a company understands them better than any other brand. Look for any unmet needs, new risks, or underserved segments of the market. Then find what best addresses those needs or risks and provide the best solution.
Creating new product categories will ultimately be more profitable than just adding new features to existing products. The best new products address stakeholders’ environmental, social, and governance (ESG) concerns and employers who may want to offer additional benefits to their employees, like college savings and elder care.
That means understanding client motivations and values. When people feel “seen” by a particular company, they will become raving fans and customers for life.
Strategic Partnerships
Build your customer base through collaboration. Offer products and services to other insurance carriers and distributors and make deals. There may be other businesses to collaborate with as well. Some insurance carriers invest in technology like insurtech or participate in ecosystems, as mentioned above.
Strategic partnerships can help reduce expenses and increase revenue through efficiency. Insurtech can also help a company track data and find new opportunities. It can also improve the user experience — for agents and end customers.
The most important thing is to ensure all partnerships align with your values, goals, and strategic plan. Find the right insurtech partners by attending conferences, networking with venture capital investors in tech, and staying current on new technologies, product trends, and business models.
Keep in mind these technology companies are often startups that quickly gain momentum without a proven track record. Be sure to thoroughly vet any potential business partner by asking about their business model, investors and capital, structure and governance, security, and history of working with other insurers.
It’s also important to first confirm your company has the technical ability to interface with their technology. Builtin.com lists 45 Insurtech Companies Making Coverage Simpler.
Effective Structuring
Some companies excel in their structuring. Focusing on efficient operations makes it possible to compete on consumer pricing. It also frees up funds for investing in other areas. Insurtech may be able to help with efficiency and keeping costs down.
Thriving in an Unpredictable Market
The world may seem unpredictable right now, but there are more opportunities now than ever before. It’s just a matter of identifying an area of strength and allocating time, effort, and funds to make it worldclass. Using the best in technology can help with efficiency, reach, and customer satisfaction. The investment in state-of-the-art tech could easily pay for itself by helping your company acquire new clients and keep the ones you have.