They are therefore facing major transformation challenges in a wide range of areas, such as creating new products and services, adapting distribution networks, optimising operational models and controlling costs, going digital, grasping the opportunities created by big data and connected objects, managing the age pyramid and the necessary evolution of business lines.
The customer experience must inevitably be digital and will have to “reinvent itself”
Customers have new demands in terms of transparency and immediacy. They also want a more personalised relationship. These demands require a review of the tools and processes in a “seamless” approach, but also a major change of role and perspective in regards to customer relationship management, not only in branches, but also across CRC and even at back-office level. The implementation of a multi-access model, supported by the use of big data, will be one of the main projects over the coming years. The response to the challenges lies in innovation, which is playing an increasingly important role at insurance companies, with the use of laboratories, and Open Innovation, Design Thinking and Lean Startup type approaches.
The necessary transformation of physical networks
In a retail market where contract rotation is increasing and well-informed consumers increasingly consider casualty insurance as a convenience product, Insurance companies need more than ever to refocus their physical networks on delivering expertise and a close-to-the-customer service. This involves establishing a relationship, advice, acquisition of the customer environment, support in managing claims and prevention, etc. All the customer relationship phases need to be rethought. Moreover, change management needs to be organised within networks: review of the scope of delegation, dematerialisation of exchanges, deployment of mobile tools and connections, use of telephone support offered by companies, presence on social networks (LinkedIn, Viadéo, Twitter, etc.). This will inevitably involve a full review of cost sharing and remuneration models. These transformations also need to be addressed in the light of the upcoming Distribution Directive (IDD) which is intended to increase the duty of information regarding products and the transparency of the remuneration of referral agents.
Life insurance: a competitive sector under pressure
Faced with low bond yields and with 80% of portfolios still invested in euro, the profitability of traditional life insurers is threatened. Even though inflows into unit-linked life insurance increased significantly in 2015, the ongoing low interest rate environment and increasingly fierce “online” competition with “0% entry charges” are leading all insurance companies to revisit their model. Offering more attractive products, developing more fluid customer experiences and tools, boosting operational efficiency and controlling management costs are the main challenges being addressed by our clients.
Claims management: reconciling competitiveness and customer retention
Claims management, which is a key moment in the insurer-insured relationship, involves two major challenges. The first is obviously to ensure that the customer is satisfied and increase customer loyalty. From the process of making an insurance claim to its settlement, the customer experience must be seamless and information transparent and immediate. In an area where customer expectations are high, digital and ongoing service improvement are no longer an option and several actions are now indispensable: the integration of the assistance/payout processes, online claims, one-step processing, tele-expertise, creation of mobile “newsfeeds”, simplification of technical rules, etc. Beyond the objective of customer satisfaction, the aim is also to enhance customer knowledge, with a view to optimising advisory and rebound marketing opportunities.
The second challenge is to control claims expenses, which are a key factor in the price competitiveness of insurance companies. If, in this area, the coordination and monitoring of the effectiveness of networks remains fundamental, other efficiency levers also need to be implemented: for example, the rigorous management of recourse rights in the case of material damage and the development of case management and life project support capabilities in cases of serious bodily injury. The use of claims data, with a big data approach, can also help to enhance pricing models, improve fraud prevention and achieve the optimal mix of compensation solutions.
Complementary health insurance: a sector undergoing a major transformation
The complementary health insurance sector is approaching saturation point in terms of equipment, and competition is fierce between players
Once the ANI enters into force, the end of designation clauses and the reform of responsible contracts, the more widespread application of the third-party payment system in 2017 will further change the operating rules of the complementary health insurance market.
Connected health is opening up new opportunities in terms of marketing, offerings and business models: it is the opportunity to develop innovative support services, based on a preventive rather than a simply remedial approach, a direct opportunity to support at-home care providers.
There will be further restructuring in this sector, with mergers in various forms between health-insurance mutuals and social welfare groups: special partnerships, affiliation-substitution, technical groupings, creation of mutual insurance arms, etc.
Connected objects and data: new opportunities for insurance companies
The multiplication of electronic sensors across all objects of everyday life is opening up new areas of exploration in terms of customer knowledge and risk management. Connected cars, connected homes, e-health and, tomorrow, the connected factory will provide insurance companies with many opportunities to develop new value added products and services (“pay how you drive” in auto insurance, preventive health and home insurance, etc.). Marketing and technical departments have started working on innovative approaches to pricing, prevention and service, with notions of ultra-segmentation and usage-based insurance which call into question the traditional models. The insurance company’s value added and its ability to deliver are key issues that need to be taken into consideration when assessing make-or-buy options.
FinTechs and InsurTechs: a threat or an opportunity?
The multiplication of FinTechs in the areas of savings (robo advisors, social trading, etc.) and InsurTechs (Fluo, Inspeer, Shift, MetroMile, Oscar, Easy-Verres, UmanLife, etc.) is a new challenge facing insurance companies, since these startups are reinventing the insurance codes, whether in the case of casualty insurance, health insurance or retirement savings.
Will they “drain” part of the insurance sector’s customers? Are they only a threat for part of the value chain? Or are they, on the contrary, an opportunity for the major insurance players? By establishing partnerships or creating joint ventures, some startups could play a significant role in speeding up the sector’s transformations in areas such as the application of the advisory duty of insurers, claims management, controls management and fraud prevention.