The insurance industry is facing a shake-up. The traditional model using specialist agents who communicate with their customers around the time insurance premiums are to be renewed and offer generalist solutions is being disrupted.
- Consumer needs and demands are changing. Independent online research sources enable consumers to buy online, compare alternative offers and enhance self-service choices. Insurers will need to offer more personalized products that take account of individual circumstances and provide more transparency in their pricing.
- Sites such as Friendsurance enable friends to pool their premiums and is an example of how social networks are bypassing traditional insurance companies. As these grow they will impact incumbents.
- Car manufacturers are looking to add value to their offerings and through technology will have the ability to offer tailored insurance based on a driver’s history rather than industry wide statistics. Just as they bundle in car servicing they have the ability to bundle in insurance as an overall car package.
- As more car sharing takes place and the number of low frequency drivers increases premiums can be restructured to cover “pay as you use”.
- Many new competitors will be pure play online companies as we now see with specialized travel insurance companies like 1Cover. There will be many specialized market niches for them to attack.
Incumbent insurance companies will need to build a cultural capability around customer and competitor foresight – a capability that is attuned to future customer needs and future competitive threats. This will require a cultural agility that enables them to innovate and act before customer changes and new competitor models break the floodgates and seriously erode their businesses and their future.
Is your company being disrupted or a disruptor?
You can read more about what you must do to build customer and competitor foresight in The Customer Culture Imperative.