Many non-insurance companies, such as Google and Amazon are shaking up the insurance market by entering the market to offer insurance products to their existing customer base.
Over the past few years, this trend has been spreading across the globe. Four years ago, Vodafone began to offer insurance products on the mobile phones it sold to its existing customer base in South Africa. Just last month, the company announced it would also be offering customers the opportunity to purchase Funeral Cover directly from them. This is in direct competition with existing Funeral Cover providers in South Africa. In New Zealand, the supermarket chain Countdown has begun to offer personal lines insurance products to their existing customer base, in direct competition with local insurers.
What does this mean for Insurance Providers?
Firstly, these new market entrants have a large existing customer base. Customers are more likely to trust a provider they are familiar with, especially when it comes to an important purchase such as insurance. The ease in which customers interact with these brands will more than likely transfer into the claims process. For example, Vodafone customers can simply pay for their insurance products weekly or monthly, while recharging their cell phone plan, making it easier than purchasing from an insurance provider.
These providers are also already accustomed to providing excellent customer service. When purchasing an insurance policy, the claimant usually dreads the day they may have to make a claim. The claims process can be difficult and take a long time. According to the Capgemini World Insurance Report 2016, customers value these new insurance providers more than traditional insurance providers, due to satisfactory interactions they may have had with them in the past. These retail firms and technology companies tend to already have reputations for providing great customer service.
Traditional insurance companies have built in-house legacy systems to meet their specific business needs. They build new features in-house offering themselves a competitive advantage in the market. But, these new market entrants are digitally native. They have built their businesses quickly using software solutions that have been built specifically to serve their product offerings. They focus on their core competency – which is offering customers what they want, through the channels they want, when they want – rather than focusing on developing an internal IT team to build a solution from the ground up.
What Can Traditional Insurance Providers do?
- The first thing to do is to evaluate the current claims process. Is it efficient? How long does it take for a claim to be processed? How are these claims initiated?
- Consider options for improving the current claims process. What are your team’s goals? Is new functionality required? Can a vendor provide the software to support this new functionality? Does the claims system simply need an overhaul, or is a total replacement necessary?
- Get Company Buy-In. Clearly define the project goals and objective. Do your managers support improving the claims process? What data can be gathered to support a claims system upgrade? Are your supervisors and administrators open to implementing improved processes?
- Evaluate a number of software vendors. Each software vendor can offer your business a solution, but which solution will support your goals and objectives by best meeting your needs?