The increasing use of big data in the digital age has brought sweeping changes to many aspects of life, from retail to data storage to logistics.
Many of these changes have been accelerated by the COVID-19 pandemic, which has forced a lot of daily life to migrate online. The insurance industry has not been immune from these seismic shifts.
Insurance companies now have apps and other digital tools to extend customer service options without overextending corporate resources. Insurers are taking advantage of artificial intelligence, predictive analytics, and machine learning.
For customers, this can make the claims process easier and more efficient. As the pandemic is hopefully winding down, the insurance industry, like others, is taking stock of the changes and trends over the last 18 months.
Mauricio Vianna, CEO of global consulting firm MJV Technology and Innovation, has extensive experience working with corporations and digital innovations.
His company advises the world's largest corporations, many of them on the Fortune 500 list, about business transformation, data strategy, and design thinking.
Vianna has led his company's innovation in insurance, spearheading their new insurance hub initiative. He recently participated in a question-and-answer session regarding big data and digital transformation in the insurance industry.
What Are the Significant Ways the Insurance Industry Has Evolved in the Last Few Years?
Insurers that have been in the market a long time have wanted to make sure startups and "insurtechs" don't intrude on their turf; however, the trends in the last three to five years show startups as significant threats to traditional insurance.
Traditional insurance companies have been behind digital transformation and had to make up for time lost to inaction.
The main market change has been digital transformation. Companies that embraced it have been pushed by competition to occupy a space they had not yet been able to settle.
A big reason for the shift has been the concept of "ecosystems associated with health and wealth," explains Vianna.
This shift means health is no longer an isolated concern; it is now a question of financial, emotional, and physical wellbeing.
This change in focus is important because this new ecosystem views "customers as a whole," escaping the narrow band of traditional insurance myopathy.
How Is Tech Disrupting Insurance?
The main contribution of technology is information integration and the availability of platforms and applications for the insured.
Technology, specifically "data-crossing," can help insurance companies better understand who consumers are and what their habits are.
Additionally, platforms and their evolution help companies identify consumer consumption habits and offer services based on consumers' life cycles.
"Technology makes it possible to get to know consumers better," says Vianna. This relationship is all about "ecosystems, platforms, and applications."
What Do Insurance Companies Need to Prioritize to Remain Competitive?
In this new competition, Vianna asserts that whichever company "knows the client better" and provides "a better journey" wins.
Corporate clients and individuals are becoming more accustomed to an increasingly digital world, and their expectations align accordingly.
Insurance claim returns still take time despite the technology and "phenomenal platforms and catering services," and the process is still heavily bureaucratic.
In Vianna's opinion, the best journey has to be about simplifying and making the process "less bureaucratic and more agile." A company that can do that can "annihilate the competition."
In the insurance market, some companies have been operating for years, many decades even. They are very traditional companies, and at one point, it made sense for insurance companies to have a very serious staid image.
This image was central to insurance branding - marketing the company as "serious and traditional, therefore reliable," as Vianna puts it.
This strategy is no longer viable, especially for younger generations just starting to make insurance acquisitions.
New generations are changing the market because they don't see the need to "buy insurance as a whole;" instead, their rationale is more practical.
When looking at insurance, younger people are asking, "Why spend money on something I can never use?"
They question the usefulness and value of traditional insurance. Vianna characterizes their demands as being for something "more immediate and related."
What Do Insurance Companies Need to Implement to Adapt for the Future of the Industry?
Traditional insurance in older insurance companies is very complexly bureaucratic. Making use of it is a slow process with several stages.
Though these companies try to provide quick answers, they often can't because they are just too big to be nimble. Additionally, they have too many employees and take a "safeguarding" attitude toward large risks.
In contrast, startups are smaller, more agile, and employ faster methodologies. They are better suited to what Vianna calls a "very immediatist society" that wants to solve problems quickly.
The large insurance companies are in a dynamic market where consumers are demanding more. In Vianna's opinion, the biggest adaptation these companies need to make is to "be able to respond more often" and make things less bureaucratic.
"What's most important is seeming trustworthy to customers," Vianna explains, and complex, traditional bureaucracy simply is not.
Traditional insurers have customer relationship management tools that offer access to thousands of databases but still lack quality client information. They also lack a unified vision of their clients, which all companies in every field should strive to achieve.
In other words, these big companies don't know who their customers are. Not knowing makes it difficult to cross-sell products because companies don't know if their consumers buy other products from their portfolio.
It is ever more essential for insurance companies to develop a "unique view" of their customers because, as Vianna explains, it shows "a much more trustworthy image and more accurately fulfills customer needs."
The processes of traditional insurance companies are complex, bureaucratic, and off-putting to consumers who have embraced digital technology and want problems solved quickly.
Large traditional insurance companies have to innovate to stay competitive with more nimble startups and "insurtechs" that have embraced technology.
They must leverage big data and their digital transformation to know their customers better and offer more of what they need.