How digital transformation has shaken up the UK Insurance industry
As it has with many other sectors of the economy, digital transformation has shaken up the UK insurance industry, with providers, small and large alike, increasingly personalising policies and adopting more agile and faster product rollouts. The powerful role of analytics is leading to more purposeful and efficient tracking of market patterns and trends.
The growth of the circular (sharing) economy has meant an increase in risk for many start-ups and small businesses, and the more innovative providers are offering coverage which policyholders can activate or deactivate as and when required, rather than having to take out a longer-term policy.
A recent survey of life insurance policyholders concluded that 90 per cent preferred being able to self-manage their policies digitally and this trend was reflected at the 2019 British Insurance Awards, where digital insurance distributor, BGL, was lauded for having recognised the widespread desire among customers for self-service when managing their policies.
Given that much of the insurance industry is gradually transferring from very cumbersome legacy software systems, the company has kept ahead of the pack by developing a wholly digital service that can service both high-frequency transactions (such as renewals) and new service enquiries. It has been widely regarded as being one of the best examples in the industry of a coherent “Enterprise digital transformation programme”.
“There’s an app for that…”
Many UK insurance companies have had apps for some time, but there are smaller entrants to the market who are leveraging the power of AI and acting as your personal insurance ‘concierge’. One such company is Brolly, whose boss expressed a desire to make insurance ‘cool’ and easy to manage when it launched in late 2017.
The service rests on an AI assistant that searches for competitive rates and premiums, scans the market for new products, assesses risk and acts as a hub for managing an individual’s portfolio of insurance coverage. Brolly wants to shake off the image of the insurance industry as a money-grabbing monolith, interested in extracting premiums at high rates and focusing less on customer services. Brolly’s app gathers together various types of insurance, for example, phone, travel, car and home contents. It allows for customer ‘curation’ and is the first (and, so far, only) platform offering this service in the UK.
AI and IoT
The Internet of Things means everything from household helps to phones, fridges and hi-fi systems are connected to the internet. Therefore, the volume of data available to insurance providers makes the IoT, linked to the use of AI, an immensely powerful support for customers and staff alike, across several platforms. Sophisticated machine learning analytics will only speed ahead from now on, allowing companies to offer more customised products and services as well as delivering resolutions to claims far quicker than at present.
A good example is when an American insurer, Lemonade (part of the German Allianz group) was able to settle a claim in just three seconds at the end of last year. Using a chatbot, it cross-referenced a claim with the policy in question, instantaneously ran 18 anti-fraud algorithms and deposited the claim quantity in the customer’s account.
The insurance industry has never been at such risk of fraudulent claims in its history. Historically, companies have largely addressed this problem individually, but with the emergence of massive databases of information, more and more cross-company collaboration is seen as the intelligent industry response to this threat.
As of earlier this year, 11 market-leading insurers have signed up to the Insurance Fraud Intelligence Hub (IFiHUB). Names like Ageas, Allianz, AXA, Markerstudy, Mulsanne Insurance and RSA are among the initial group using this gigantic information source to detect and prevent fraud.
The director of the IFB (Insurance Fraud Bureau), Ben Fletcher sums up the principal reason why this is a significant move; “(Information has) historically been shared inconsistently and therefore inefficiently. By developing a single platform for insurers to share intelligence in real-time, IFiHUB is a real game-changer.”