2002 – the age before internet-based aggregators. There were a handful of sites that, based on a few pieces of information you provided them, offered prices from a limited selection of insurance providers. You then had to contact those providers to see if you could get the same or similar price and buy over the phone.
In the past 15 years, aggregators have ushered in an era of mass consumerisation of the personal lines insurance market. You can now get 60 or 70 quotes in a matter of 4 or 5 minutes and buy them direct from the insurer online (if you choose) just minutes later.
The perfect market?
Of course this model of consumerisation is based on price, with other factors relegated to relative obscurity but, by-and-large the consumer clearly feels pretty well-served by being able to shop around every year and buy the best deal in minutes.
The story for the suppliers to the market is somewhat different, however, with margins being squeezed hard and customers moving freely from one insurer to another year-after-year. Some would say that it was the wake-up call that a bloated, fat insurance market deserved and in many respects that has to be right. The arrival of statutory regulation has also driven corporate behaviour in a much more consumer-focused direction, and with interest rates at historical lows across most of the developed world, investment returns have been squeezed as well.
These factors have all combined to force a transition from consumerisation to digitalisation – a strange mix of insurer investment in trying to take some degree of control back from the aggregators, side-by-side with pure tech companies releasing highly sophisticated and technologically-advanced applications, both with the aim of driving greater efficiency.
Evolution is overdue
Digitalisation in insurance is not yet widespread or commonplace but it is coming, and when it arrives it will be revolutionary. The advent of aggregator sites 15 years ago could be seen as being the very first step towards digitalisation i.e. they turned what was a phone or paper-based quote research process into a digital one, but generally that digital experience still stops pretty soon post-sale. Just how far aggregators can and will transform to accommodate a fully digitalised process is an interesting topic for debate in itself as, for now, they are encumbered by having to serve a vast array of disparate insurer technologies with one common interface.
Digitalisation is represented in many forms, most commonly labelled as insurtech but, just like Apple did with its Apple Watch, the principle takes existing (perhaps age-old) technology and “upgrades” it to the most up-to-date version of what it can possibly be and do. Just as displaying the time and date is now just one of an almost limitless number of tasks the Apple Watch can perform, the process of buying insurance, maintaining or paying for a policy or making a claim is being transformed by digitalisation.
That process has largely only become possible through the mainstream adoption of smart phones and tablets, which is why many insurtech platforms are squarely-focused on those devices for their means of communication. That’s not to say that the desktop is dead, but it does mean at its most basic that your “online” customer experience needs to work just as well across all devices and perhaps even better on handheld ones rather than relegating them to an afterthought.
Just as with the Apple Watch though, we will see several iterations in the evolution of digitalisation and how the end consumer is best-served. Although many will contend that the Apple Watch is the best version of a smart watch currently available, the smart watch experience is not for everyone. What holds it back? Many factors will influence someone’s individual choice as to what they wear on their wrist, but having to charge it every night and the limited range of styles (as well as its eye-watering price) will mean that it remains an exclusive product until further revolutions in technology enable smart watches to become as “invisible” and economically viable as any other wristwatch.
Demand-led evolution, always
We’ve argued the same elsewhere with insurtech, and it’s a fundamental principle behind Arun Bay – any and all interactions with the consumer need to be created to serve a burning customer need. If you agree with us that all businesses ultimately exist to serve an end consumer, and that consumer need is therefore the critical factor in ensuring any company’s reason for being, pursuing any goal just for the sake of it is ultimately fruitless. Unless your goal is absolutely aligned with what the consumer wants and needs, your business will fail.
That’s why, when we work with you, we work from “good business sense” up. If the consumer is at the forefront of your thinking, then everything you do needs to make good business sense, and you can then decide whether and to what extent insurtech, digitalisation or any other developing technology best serves your customers and clients.
The terms “digitalisation” and “digitisation” are increasingly used interchangeably in the media, but we see them as being quite different.
We use the word “digitalisation” here to mean the integration of digital technologies into everyday life.
“Digitisation” on the other hand is the process of turning something that is analog i.e. something you can touch and feel, into something that can be read on a screen or manipulated by electronics.
Publishers and libraries, for example, have “digitised” millions of books by scanning them in so they can be read and exchanged online, but Amazon (and others) have “digitalised” the experience of reading by making digitised books available to be read on an electronic reader in the palm of your hand.