There are a few major trends changing the way auto insurance will be bought and sold in 2016. Smartphone telematics, direct selling, ride sharing and connected cars top the list. Scary? A little. The fact is a little discomfort is required for all major advancements.
What to watch for in 2016
In 2016, we expect insurers to be looking for new ways to harness the power of direct selling, while working to retain the strengths of the agency network model. We also expect insurers to invest significant attention into meeting customer expectations around mobile access and services.
We’re not alone on those expectations. “Digital technologies, such as social media, analytics and telematics, will continue to transform the market landscape, recalibrating customer expectations and opening new ways to reach and acquire clients,” said Shaun Crawford at Insurance Thought Leadership.
As developments in digital tech erode the advantages of scale that established insurers have historically enjoyed, everyone – large and small – will need to explore flexible pricing models and new distribution channels, Crawford said. And given the speed at which customer expectations are changing, they’re going to have to think fast.
How best to prepare? Be early on the adoption curve. The secret is to lay the groundwork for transformation now, from investing in back-office systems to building the foundation for new products and services to attract new market segments – such asmillennials, senior drivers, low-income drivers and migrant drivers.
Meanwhile, don’t neglect the power of analytics to drive underwriting results. Expect insurance telematics to bear an impact on all aspects of the business, from client acquisition to claims and servicing. It’s time to redefine the customer experience, shifting focus from products alone to services as well.
Of course, disruption is never exactly easy – especially in an industry known for its conservative posture. But now of all times, it’s imperative to shift to a forward-leaning stance. Otherwise, newcomers are bound to shoulder into the game, absorbing risk “that was once the exclusive territory of insurers” and “siphoning off premium that ordinarily flowed to insurers,” said Crawford.
All told, we expect 2016 to be a year of continuing transformation, in which the insurers who remain competitive will be those who are willing to engage in significant rethinking.