Innovation in insurance is making a shift from being product-centric to customer-centric
The entry of digital native companies and InsurTechs along with advancements in data science, predictive analytics, artificial intelligence, machine learning and hyperautomation are changing the way insurers look at innovation today
A leading US insurer recently announced its plans to acquire an InsurTech company to provide Usage-based Insurance (UBI) to customers. The insurer, known for its extremely customer-centric approach, plans to leverage the InsurTech company’s expertise in usage and behavioral elements in order to deliver hyper-personalized service to customers.
To me, this is an example of how innovation in insurance has made a shift from being product-centric to customer-centric. The premise for customer-centric innovation hinges on delivering exceptional Customer Experience (CX) that is similar to retail and banking industries. This is the reason we are seeing concerted efforts from insurance players to orchestrate customer journeys and drive hyper-personalization leveraging technologies such as hyperautomation, Artificial Intelligence (AI) and Machine Learning (ML).
So, how are companies making this ‘outside-in’ shift to customer-centric innovation? Let me illustrate by looking at the requirements of an individual customer. What kind of insurance product does this individual need? Health insurance is almost a common denominator across all age groups. But beyond that, will this individual need life, auto or home insurance? In an outside-in approach, an insurance company will proactively analyze its consumers’ requirements in line with various choices they make such as buying a house, getting married or having children. The company can then offer the relevant product at the right time by keeping pace with a customer’s journey leveraging data and analytics. Some digital native insurers are already leveraging data science and analytics to identify gaps, and offer personalized products along with advisory services. Enterprising auto insurance companies are beginning to offer pay-per-mile car insurance, while digitally savvy insurers are leveraging underwriting and claims solutions backed by AI and ML to offer accurate premiums and swift resolutions.
What is unique to all these companies? All of them are continuously and proactively looking beyond products to create empathetic customer relationship management. One leading life and home insurance company, headquartered in the US, has been leveraging AI and behavioral economics to overcome the eternal conflict of claims vs. bottom line, and driving transparency across customer-facing operations. The company’s innovation, underpinned by a game-changing technology perspective, has been built with the customer as the focal point.
The past 18+ months have been challenging for all industries and the insurance sector was no outlier to this disruption. Digital transformation, that was long overdue, swept across the industry with speed leading to widespread automation and optimization of core processes. In the road ahead, insurers need to proactively demonstrate customer focus — be it in re-imagining products and solutions, hyper-personalizing engagements, driving self-service distribution and support, smart underwriting or simplified and speedier claims settlement.
But while the industry pursues digital-led transformations, I believe that growth will be driven by innovations that are customer-centric and not product-centric. CX, driven by an equal blend of data-powered consulting and empathetic customer relationship management, will elevate insurers from the role of risk managers to innovators.
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27 February 2022
03 December 2021