In 2020 we saw that a virus has the potential to change the world. COVID 19 has changed the way we live, meet, interact and the way we work, travel and communicate. Millions of people lived through the lockdown, connected through virtual platforms. Video communication became a part of life for businesses and families. This virtual conference and meeting became an integral part as this help to maintain social distancing.
People are stressed and in the hope of getting the vaccine for COVID-19 at the end of 2020. Suddenly before Christmas celebration, the world got the news of a mutant variant of the coronavirus. The situation represents that businesses should stay prepared for different financial and operational challenges.
Why is this news important for insurers?
Both business and humans are interconnected; We can not separate them. In 2020 Insurers got impacted with the pandemic as it changed the business operation. In 2021 what will be the challenges and opportunities an insurer can face?
We discuss with FECUND experts about the opportunities and challenges insurance business players will get in the coming years.
Pandemic forced insurers to adopt digital business structure. While implementing the digital business, many insurers faced the challenge of understanding and upgrading business. According to FECUND experts, insurers who understand the strategic method like milestone planning were successful with digitization in 2020.
What step does the insurer need to take in 2021?
Innovation + technology
Insurers should think about the new technology and ideas which will attract customers. It doesn’t matter if businesses are targeting new, mid or old generation, customers always want innovation which makes their life easy. Insurers have the opportunity to provide technology and innovation to customers in 2021.
Opportunities for insurers
1. Data-driven insurance
Insurance is a data-driven industry. Insurers are using technologies like IoT, social media to collect the data of the customers. The data helps customize and manage policies which make customers pay fair prices according to their needs. Understanding how to use data makes the business work best.
2. AI And ML
Artificial intelligence(AI) and machine learning(ML) create the best experience for the customer. Both the technology customize UX for the policyholder. Understanding the customer need and behaviour and creating the custom result which fulfills requirements will be made through AI and ML.
3. Cloud computing
In 2021, cloud computing is on the rise, continuing to rise as insurers heavily depend on data-driven technology. SaaS is the technology in cloud computing used by IT companies to deliver new applications and software. Insurance companies are dependent upon SaaS technology. Cloud computing helps to check customer data at any place, anytime, anywhere; brokers can get access to data and help customers solve issues.
Virtual reality(VR) and augmented reality(AR) change the way people consume information. VR creates a simulated environment by using computer technology. The effect VR gives is a 3D form; the person feels he/she is inside the experience. Augmented reality is where people use a smartphone or smart glasses to project information into items. Extended reality is a combination of VR and AR. The combination of the digital and physical create the best experience for the customer. In 2021, many insurers will consider extended reality.
The blockchain seems complicated, and in future it can be, but its core concept is simple. A blockchain is just a form of a database. IN 2021, insurers will increase the use of blockchain as this helps to secure the industry.
Insurers should know that providing the best value and attention to existing customers is way more important than adding new customers as an extra number. Every opportunity comes with challenges.
Challenges for Insurers.
1. Increased customer expectation
Due to 2020 pandemic customer expectations from insurers are increased. They want more customized products as per their need. They expect fast service and digitization in the business.
2. Customer retention
It is challenging to keep customers happy, and for the insurance industry with huge competition, it is not easy to maintain customers satisfied. The cost of customer retention is less than the cost of new customer acquisition. The insurance industry is adopting new technology which will create a burden on insurers to keep updating their customers and upgrading business.
In old times, it was not easy to enter the insurance market. It needed data, wealth and connections to establish a business. But in the digital era, it is easy for anyone to enter the market. Insurtech are the new competitors for insurance leaders. To sustain in 2021, insurers should keep upgrading their businesses.
Legacy modernization comes with challenges, but it is crucial. Modernization or digitization of business keeps business updated. While upgrading business insurers can face challenges like skill shortage, application knowledge, branding issues, modernization cost, quality issue, performance and stability.
5. Customer experience
Digital experience or user experience (UX) is where insurers should keep their eye on. A slightest irritation can make customers go crazy. Patience in digital platforms is very less. People can only remember bad experiences and not good experiences. A customer with a bad experience is more aggressive and expressive.
2021 comes with new challenges and opportunity, and both can be in favour of the insurer. Insurance companies need to take a strategic approach in business to succeed in the new year.