Approximately 5 minutes reading time

The insurance market has undergone major changes over the past decade. After the financial crisis in 2008, the profitability of organizations came under pressure and, at the same time, consumer behaviour changed dramatically. This gave rise to the need for organisations to increase their focus on cost-efficiency and customer-orientation.

At the start of this century, the insurance market was a lot less complex. Many private individuals and companies were more often served by an intermediary than at present. The expertise of the intermediary was seen, by the insurers themselves, as crucial in the entire process of marketing, orientation, decision making, underwriting, relationship management and claims handling. The speed at which the advice was given and at which the policy could be finalised was especially important. At the beginning of this century, our perception of speed was just different. Responding within two (working) days was quite fast, but what we didn't know then was that it would soon be possible to take out insurance in a matter of minutes rather than of days.

Technology is the Key

Today's insurance market is completely different. Since 2014 there has been an enormous consolidation in the intermediary market, and as a result, the number of intermediary companies has fallen sharply. At the same time, the younger generation no longer insures itself through an intermediary, but directly with the insurer itself. Upscaling, insurtech initiatives, new products, new and changing legislation and regulations, stricter supervision, critical and impatient consumers, pressure on returns and the explosive development of technology are the order of the day.

Direct contact with the end user through digital channels has become the norm. And, these channels are becoming increasingly sophisticated. Only with technology can you achieve the product range, speed, customer-friendliness and the price level needed to survive. What’s more, technology is essential in gaining clearer insight, a more comprehensive customer overview and for achieving greater efficiency, compliance and innovation.

In short, technology is not just a tool for gaining competitive advantage; it is the key to optimising the efficiency of the business, reducing costs and increasing customer satisfaction.

Data is the Holy Grail

In order to achieve a cost-efficient organisation, clear insight is essential. Which business processes take unnecessarily long? How long does it take to process the average claim? Which claims can best be left to an experienced claims handler and which to a junior? Which processes can be run STP and which still require human intervention? These are pretty basic questions and yet they are quite difficult to answer.

The proper recording and use of data is not in the DNA of the insurance industry. This is because, for a long time, data was not a determining factor for profitability; it was always a by-product. Nowadays it is an important, strategic business tool. Previously, data was not recorded centrally, making it difficult to create a complete picture, but in the complex and dynamic world we now inhabit, things need to change. And, we can certainly start by doing things differently.

The ability to bring data together via a digital platform and then analyse it with good Business Intelligence already exists. Basic management information, which is essential for a cost-efficient organisation, can now be deployed more easily and effectively. In short, tools for gaining greater insight are readily available and are becoming increasingly user-friendly. The future for an effective and efficient organisation is already here.

Making it Personal

Besides the challenge of a cost-efficient organisation, there is that other challenge: Creating a customer-oriented organisation. The more you know about the customer, the better you can serve them. By using data, insurance products can be made increasingly personal; no longer 'one size fits all' but very precisely tailored to the needs and circumstances of the customer. In the future, this will be possible through usage-based insurance. To get there, it is important to first answer questions such as: What is the customer worth? How long, on average, does a customer remain a customer? Which product has a high chance of success in a cross- or up-sell promotion?

Keeping Customers Informed

By using data, you can offer your policyholders information quickly, according to their circumstances and in real time. For example, it won’t be long before you will be able to offer your customer instant advice as soon as he or she crosses a national border without any travel insurance. This can be tailored to wherever the customer is at that moment, the country or even the city, and the means of transport they are using to travel. This way, you can also help someone with up-to-date information about the country in question - think of local corona measures and updates or specific safety advice for travellers.

Active and Direct Help

By using data, you can also actively support your policyholders. For example, in the case of illness or an accident, you can offer local medical assistance in a language that they understand. This will be an enormous help for many travellers. You also do this by arranging immediate assistance after a car accident – organising replacement transport and repairs, including the direct transport of the damaged car to a reliable repairer, and providing instant updates about the process. Another development is the real-time collection of information about driving behaviour, or about the existing condition of a house or business premises (fire and water damage prevention). There are many more opportunities to serve customers and build customer loyalty through service, all based on data.

Clearly these developments do not only benefit the customer. The use of such data-driven systems also contributes to a significant reduction in the cost of processing claims.

Marketing, Distribution and Selection

Another powerful use for data relates to marketing, distribution and customer selection. Here too, the potential is huge. Think of integrating sales systems, 'embedding' travel insurance in airline ticket purchasing or holiday home booking processes, or creating links with suppliers of specific information aimed at combating fraud, thereby tracking down (potential) fraudsters. The opportunities are endless.

Optimal Connectivity without System Changes

There are opportunities to achieve a cost-efficient and customer-oriented organization. Of course, you don’t have to embrace everything at once, and so you can make choices based on your own business strategy and risk perception. Nevertheless, to optimize your business processes and stay competitive, you do need optimal solutions for linking data internally and externally. The tools to create greater efficiency and customer-orientation already exist; they just need to be provided with good data from the systems. The need to change is growing and at the same time we can say: "The future in which data can be put to optimal use, is now."