Insurers are struggling to reinvent their businesses in the face of disruptive technological, demographic and economic change – and drastic changes are needed if the sector is to put itself on track.
That is the verdict of a new report from KPMG International with Mary Trussell, KPMG global lead partner for insurance innovation and change, commenting that insurers have been trying to transform their organisations for decades – but little has actually changed.
“If insurers are to truly ‘reinvent’ their business and position themselves for success in a world of disruptive innovation – they will need to make more fundamental changes to their business and operating models than ever before,” she said.
So what are the changes the report suggests?
The first is that customers must be placed first with the report suggesting many insurers are focused on the implications of regulatory policy and perhaps not applying enough attention to the transforming preferences and needs of customers.
“We’d suggest that customers should be the inspiration for insurers’ efforts to reinvent themselves,” said Mary Trussell. “In a highly regulated sector, treating changes in regulation as a springboard to enhance the business for customers rather than something to be endured distinguishes players at the top of their game. The data suggests that many insurers may not yet have their eyes on the ultimate prize.”
However, when reached for comment, Amanda Blanc, CEO of
AXA UK and Ireland, General Insurance, outlined her belief that regulatory reform and meeting the needs of consumers actually go hand-in-hand.
“There are significant demands from the regulator but these are aimed at improving our industry for customers,” she said. “The report suggests that regulatory pressures compete with customer pressures but they aren’t exclusive. They are essentially the same thing.
“We believe that if we place an equal emphasis on regulation and changing our culture and operations to satisfy customers, the pressure from the regulator will ease as customer experience improves. It is a fine balancing act but not one we have the luxury of making a choice about.
“As an example, last year we started showing last year’s premium on renewal notices for our direct customers. This allows customers to easily compare their new premium with old. The reason we did it was because it was clear from customers and the media that this was something that customers wanted. The regulator was also very clear that it wants to see greater transparency around pricing.
“The industry took the stance that it wanted to wait for the FCA to pass new regulation to force everyone to do it. However, we recognised that it was coming, customers wanted it so why not just go and get ahead of what the regulator wants?”
In addition, the report suggested that insurance executives are increasingly looking at technology as a catalyst for change with 47 per cent outlining that new mobile platforms and apps were forcing change in their business; 45 per cent believing the same about social media; and 41 per cent agreeing with the statement about data and analytics.
“In some cases, technology can act as a catalyst as the introduction of telematics did for usage based insurance but you can’t let technology drive the bus, but you also don’t want it to overtake you,” commented Mary Trussell.
Around a third of the survey’s respondents noted they were looking at organisations outside the insurance sector to find inspiration to help them reinvent themselves – with the report suggesting that insurers need to be open to new ideas and approaches: including to talent from other sectors that can help them boost their effectiveness.
“What’s important,” noted Gary Reader, “is to find ways to compete with other leading organizations vying for consumers' attention, not just other insurers.”
Do you agree with the suggestions of the report? Leave a comment below with your thoughts.
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