The acceleration in digital transformation and digital adoption across all industries has raised customer expectations over the last few years. The way customers want to pay for or access services has changed for good, so insurers, just like all those in financial services, have to meet those expectations to stay competitive.
by James Turnbull, Chief Digital Officer at Reassured
Consumers were already getting used to a smarter, more personalised service thanks to the rise in technology, but the pandemic, with its need for arm’s length interactions, fast-tracked the need for service providers to offer that service.
It’s apparent that greater adoption of fintech and innovation in the insurance industry is needed, both to keep up with changing customer expectations and ensure that the customer always remains the first priority.
How does the insurance sector measure up?
There are plenty of industries where embracing and benefitting from fintech is the norm, but arguably insurance is not yet one of them, having lagged behind its counterparts when it comes to embracing new technologies and adapting to changing customer needs. This includes the way in which we can now buy most products and interact with service providers so quickly and seamlessly online.
The stereotypical view of insurance may well be that of a traditional, paper-heavy industry that’s not known to keep pace with technology, but that doesn’t have to be the case. Figures from PWC demonstrate that almost half of the industry globally claims to have fintech as an integral part of corporate strategy. However, only 28% of industry players look at partnering with fintech organisations, and only around 14% actually participate in fintech ventures or incubator programmes.
But with many insurers beginning to introduce online platforms offering a “buy now” option for their products, it is clear that a shift is beginning to take place. Insurance brokers need technology to maintain their competitive edge, and if they don’t embrace fintech to better meet customer needs, they will lose out to those that do. Moreover, the rise of challenger banks has also put increasing pressure on traditional institutions in the financial services sector, who now need to strategise how they can compete and retain their market share.
Using FinTech to meet customer needs
The goal of insurers is to broaden the pool of people that have access to protection, and fintech is the only way to achieve that in today’s digital world. The way the industry sells insurance should be the result of how the customer wants to access these products, not the other way around.
Some customers are looking for advice to make sure they get the best product, and there is tech out there that can ensure they get directed to this channel, should it be best for them. Other customers just want a simple out-of-the-box policy that they can buy quickly and easily, with at least some elements of self-service.
Technology can help, giving customers, access to a tailored comparison of life insurance products based on their answers to a single set of underwriting questions, and then offering an efficient and straightforward “buy now” capability.
Giving customers the choice that best suits them offers the flexibility that consumers need and gives insurers a real opportunity to increase revenue and even diversify further still.
And that’s just the start. Creating an omnichannel approach using fintech is key to responding to changing customer needs and ensuring these needs are put first. Digital technology makes life easier for consumers, and they often have their own preferred method of dealing with service providers. Access to a basic website is no longer enough, people expect live online help, mobile apps, and more. Moreover, the adoption of fintech at policy level can enable insurers to use app technology to collect data (for example, vehicle or health insurance).
What’s next for fintech and the insurance industry?
The most successful insurers will be those that offer the fastest, most efficient customer journey all the way from the initial quote to full cover. If customers are able to choose and buy their insurance online, they don’t want it to take upwards of 60 clicks to get to the final, fully underwritten decision.
Insurers will need to offer a full omnichannel approach to meet customer demand for a connected experience across multiple channels. Consumers are used to being able to choose their preferred method, or methods, of interaction with retailers and service providers. They’re also used to being able to switch channels and continue the conversation or process seamlessly, without having to start again from the beginning.
There is still a long way to go, but there’s no doubt that the role of fintech in the insurance sector will continue to grow. Fostering a truly omnichannel approach to the way consumers buy insurance provides a vital way forward for the industry, and, ultimately, it will ensure more people are better protected.