There’s no question the Affordable Care Act is disrupting the insurance industry. But for all of the pros and cons surrounding this controversial piece of legislation, turns out far greater threats are eating into the profits of traditional insurers.
According to a recent survey from The Economist Intelligence Unit, longstanding insurance entities are struggling because other industries, bolstered by new tech innovations, are now able to offer more compelling products and coverage.
Industry pundits discussed this hot topic during a recent SAP Radio Broadcast, “The Future of Insurance in the Age of Customer Intimacy.”
Re-thinking Tech Strategy
Anthony O’Donnell of Insurance Innovation Reporter, believes traditional insurance providers will have to let go of the past and embrace the future in order to remain competitive - especially when it comes to technology infrastructure.
“You have to do what works and that can be a painful transition," said O'Donnell. "It can mean letting go of things you believed were the way to go.”
Karen Furtado, Partner, Strategy Meets Action believes letting go of paper-based methodologies while taking advantage of big data and analytics, are important steps in driving competitive advantage.
“The way products are delivered - and the competition - has changed,” said Furtado. “The industry has underestimated the influence of insurance aggregators such as Google and Amazon in our markets. I guarantee in ten years, the use of data and analytics will transform the way we make decisions in insurance."
Hugh Anderson, senior principal in SAP’s insurance industry, value engineering practice, cautions that insurance companies can't lose sight of what's really important as they re-think their business and IT infrastructures.
“In the world of technology, you’ve got to stay ahead of the curve, not just keep up with it,” said Anderson. “As a policy is created, as a bill is produced, as a claim is processed, as an aggregator tries to take your business– what’s important is that regardless of how technology is changing things, people still need insurance.”
Connecting With Customers
Now that insurers are dealing with consumers who are more tech savvy then they are, it’s the perfect time to get the front office re-aligned, according to O’Donnell.
“The difficulty is that the back office is not well matched to the front office. That’s why there’s a huge potential for industry and external competition to do a better job of reaching customers and potentially owning the customer relationship,” said O'Donnell.
Furtado agrees the consumerization of IT has created a disconnect with consumers - coupled with a lack of compelling products in the market to attract people. But she also believes great opportunities remain to re-connect, and cites the car insurance industry as a model to follow.
“When we introduce new products like Pay-As-You-Drive and shared vehicles, and I start to pay for what I use, I think people will get more connected with the insurance experience,” said Furtado. “We’re just at the start of offering what will be more intriguing products to the general consumer base.”
According to SAP’s Anderson, consumers not only want great products, they expect whoever they’re doing business with to know and remember them across all touch points.
“The opportunity for insurers is to address these touch points from a different point of view and really get in the mind and the patterns of the individual or the business that’s on the other side of that interaction,” said Anderson. “If you still know them a year later, that’s what creates loyalty.”
To learn more about the future of insurance, listen to this SAP Radio broadcast in its entirety here.
This story also appeared on SAP Business Trends
