2021 Predictions: For insurers, the future is agile

The recent purchase of Debenhams by Boohoo was an unusual turn of events, and one that holds some valuable lessons for insurers. The news underlines the continuing shift towards online platforms, which has accelerated since COVID-19. It also emphasises that brands offering a smoother digital customer journey have an edge. Lockdown has also inflated consumer expectations, with many customers increasingly reliant on a seamless virtual service outside of working hours.

All this shows that insurers should adapt in several ways. By accelerating personalisation, focusing on value and becoming more agile, they can position themselves for success in a digital-first world.

We’ve all become familiar with the Netflix 'you might also like' feature since lockdown began. Here, the tech giant is responding to a fundamental consumer need: a desire to be served exactly what they want, easily and conveniently. This principle is now crucial to every industry, whether entertainment, gaming or online retail.

The insurance sector has lagged behind in this area over the last few years. But more in the industry are now realising the importance of giving clients more choice. By investing in modular products and drawing on the power of data, insurers can respond to this consumer desire for more tailored products. This will build healthier relationships and protect their customer base.

Research suggests that during economic downturns, clients tend to prioritise value and reduce their spending. For insurers, this means they will need to assess their product portfolios and ask themselves if they could be doing more to provide value. For example, initiatives could involve charging people less for motor insurance if they drove fewer miles during the national lockdown. This doesn’t just provide customers with the value they need right now but signals a clear commitment to supporting customers through thick and thin.

COVID-19 and the rise in online shopping has also emphasised the need for insurers to be more agile. It has highlighted that the ability to respond to new customer needs rapidly can even make or break a business. Lockdowns have shown just how quickly consumer behaviour can change. For example, while online shopping was already growing rapidly before the pandemic, it was understood to have surged by 129% following the first national restrictions in March 2020.

Businesses that had not invested in becoming more agile, embracing the technology and organisational structure that would allow them to pivot, struggled to adjust to customer demand. The crisis has exposed a need for insurers to get closer to consumer behaviour and quickly adapt product offerings. This should involve flexing products according to changing customer needs. This is particularly important in the small business insurance space, where people tend to be more entrepreneurial. In the current climate, SME owners will be figuring out how to adapt to the new market and may require greater flexibility in their insurance.

If insurers can take the lessons from the success of online retail and its emphasis on agility, personalisation and value, they can position themselves for success this year. They can strengthen relationships with customers - now and in the long-run - and contribute to more positive perceptions of the insurance sector as fair, transparent and committed to protecting the consumer.

    Share Story:

Recent Stories

Financial institutions were early adopters of cyber security and insurance. Are they still on top of the game?
Managing huge amounts of sensitive data online makes financial institutions a prime target for hackers. As such, the sector was an early cohort for insurers in creating cyber cover. Since then, the market has evolved almost beyond recognition. It continues to challenge itself to this day, complying with rigorous regulatory demands and implementing avant-garde enhancements to keep abreast of the ever-changing risks. Published June 2021

Manufacturing: An industry at risk amid great technological change
Of the many sectors of business, manufacturing companies are among the most at risk from cyber threats. How has the sector evolved to make it so vulnerable and what does the task of managing cyber exposure in a manufacturing company look like? CIR’s latest podcast with Tokio Marine HCC sought to answer all these questions and more. Published April 2021