sigma 1/2020: Data-driven insurance: ready for the next frontier?
Led by digitally based technologies, the face of insurance is changing rapidly. The first of our sigma editions published in 2020 set out to explain what this means for the industry and to present a potential roadmap for progress.
The digital age has brought an explosion of heterogeneous data from different sources and platforms, which can be used to broaden the reach and boundaries of insurability. As the insurance value chain becomes more digitally connected and disaggregated at the same time, re/insurers will be able to gain better insights into customer segments and partners.
In the short term, consumers of digital insurance offerings will likely continue to be young, educated people with higher levels of income. Being able to choose from a vast amount of newly developed apps, they will raise expectations on how such products are delivered. Over time, innovative digital insurance options will then become increasingly available for all customer groups, making income and education less relevant factors for purchasing decisions.
Based on advanced analytics capabilities, insurers will be able to develop a detailed and more granular understanding of different customer needs and preferences, and thus offer flexible, optimised protection offerings. This will go hand in hand with two further important developments: moving from a traditional product-focused sales approach to one that is geared to customers’ broader life-time needs, and optimising interaction across a diverse range of customer touch points.
As a result, consumers will be able to interact via digital channels and to access relevant protection products and services. According to sigma, ongoing incremental adoption of digital technologies will thus broaden the scope, accessibility and cost-effectiveness of insurance, helping to close the protection gap.