The Force Is Awakened: What Will Disruption Deliver in 2016 to Insurance Customers

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You and I, and the brotherhood of all consumers, enter 2016 firmly in control of our buying destinies. Since Forrester announced it was the ‘age of the customer’ in 2011, our rise has been meteoric. We are a force awakened; our expectations are high and we are emboldened by our new disruptive power.

And while we may not be rebel Jedi … we can probably all agree that “this is a new day, a new beginning.”

So what will that power bring to the insurance customers among us in 2016, the year now called by some, the “Year of the Connected Customer”? And what will be the implications for insurers, and specifically, the insurance core systems that support us, their policyholders?

Insurers for the large part have had a rocky start on the path to customer-centeredness.  The traditional policy-centered, siloed nature of the industry’s products and distribution models combined with the sheer complexity of systems supporting customers, have proven to be a handicap. 

In fact, according to analyst firm SMA, only 20% of insurers claim a single view of their customers and only 8% can present a real-time, single view across all channels.

But, look for efforts by insurers to create a singular customer-facing culture and to unify technology to support seamless customer engagement to begin to show results in 2016. It will be a good thing too, because it will be just in time for the next phase of disruption wrought by the connected-customer revolution.

Is revolution too strong a word? Not if you look at the numbers.

According to CP Consulting's latest research, 48% of UK consumers aged 25 to 44 are planning to buy at least one Connected Home product over the next 12 month. iControl estimates that  54% of all US consumers plan to do the same.  McKinsey research recently reported that nearly a third of auto customers are now willing to pay for connected services in a subscription-based model, up from 21% a year ago. And Gartner projected that in 2016 the install base of devices will total 7.8 billion units (including wearables, phones, tablets and PCs). 

As said by Shmi Skywalker, “You can’t stop change any more than you can stop the suns from setting” … and this is enough momentum to compel some pundits to call 2016 an inflexion point for the connected customer. The best way to look at that number is to understand that behind every connected device is a person and connected customers will collectively generate trillions of transactions.

So what are the implications for insurers?  

If Qui-Gon Jinn is right that “focus determines your reality”, where should insurers employ their troops to capture the hearts and minds of connected consumers?

The role of insurers and their relevance to customers will need to morph significantly from product provider to personal risk manager and asset protector.

The revolution is underway in commercial lines, but in an increasingly commoditized personal lines market, unlimited opportunities for differentiated products and risk mitigation services are only now but fast emerging.

Insurers will be plunged into the connected world of the Internet of Things (IoT) where data is flowing in from myriad sources, such as home devices and wearables. 

In this connected world, insurers will have enormous opportunities to deploy apps to customers that will help to mitigate risk or simply add convenience to the policyholder’s life.

Suddenly, insurers will have daily transactions with customers, not just a few times a year.  Interactions will not be limited to a renewal letter, a bill or an even less frequent claim. The engagement will be more pro-active and the touchpoints will be different.

And while not all data will be processed as a transaction by a core system, a good deal of it will.

In this new reality, core systems will need to manage customer preferences and communications and track the status of each. Core systems will be the key technology—the mothership—for insurance connected customer capabilities, and only systems based on a modern architecture will be able to support these advanced requirements.

So is the connected advantage just around the corner or in a galaxy far, far away?

Without a more holistic view of the customer and a unified approach to sales, marketing and policy, billing and claims servicing, most insurers will not be able to fully leverage the benefits of connected customer capabilities. The tools for customer engagement are lacking.  As noted previously, only 20% of insurers have achieved a single view their customers, but the single view is a vital first building block for successful digital customer engagement.

Bringing this discussion back to you and I—the empowered and aspiring connected customer, what is our best bet for 2016?

I believe it will be with insurers that are well on their way to breaking down the silos between front and back offices, acquisition and post-sale operations, and distribution channels. Those that:

  • Have enabled every front line employee and automated system to conduct informed interactions with us.
  • Have a single view of our relationship; and provide us the same.
  • Currently or will soon bundle value-add, connected products into our policies and manage them as they do all our transactions in a real-time, omni-channel environment.

And in that world, the connected force will always be with us. Welcome to 2016!