The SIR Spring Research Summit in Chicago, IL from March 4-6 was an intimate conference. Approximately 45 insurance research professionals assembled to discuss strategic research best practices and insurance industry trends. Most sessions were interactive and involved attendee participation – both through structured activities and more informal conversations to understand competitor tactics and mindsets.
Like last year, discussions highlighted the accelerating rate of change – both in insurance and all other industries:
The keynote speech addressed how it now takes much less time to adopt emerging technologies. While it took 35 years for the telephone to become mainstream, it took only 10 years for the internet, and significantly less time for mass adoption of the iPhone. Explosive data availability has given market intelligence professionals more information at their fingertips than ever before. Mainstream technologies that were once considered emerging technologies, such as text analytics, big data analytics, and social media analytics, are used to make sense of this information. But, there’s still a long way to go to effectively harness data. It’s still too early to tell which developing technologies will be game changers. Blockchain, virtual reality, and wearables all have that potential. Companies must continue to evaluate and incorporate these technologies to maintain competitive advantage.
Consumers demand enhanced technology for insurance carrier interactions:
Consumers desire simplified interactions and customized policies based on unique needs and risk factors. Marketing messaging has shifted to reflect this desire for increasingly personalized interactions, incorporating “custom” messaging at the forefront. We expect several changes based on these preferences, including:
- Increased use of telematics to evaluate risk: it is possible this becomes the primary driver of insurance pricing.
- Usage-based policies to reflect insurance use: city dwellers and WWII generation policyholders want to see pricing that reflects the infrequency with which they drive.
- Enhanced omni-channel experience: consumers desire to move between channels and devices intuitively without a disruption in the experience. Insurers have yet to effectively incorporate this model.
- Improved mobile app interactions: mobile app use has particularly gained traction within the health insurance space; in one year, the use of health insurer mobile apps increased from 9% to 25%.
Insurtech continues to be both a threat and an opportunity:
Insurtech investments have increased from $140M in 2011 to over $2.2B in 2017. Companies like Lemonade and Blend may currently lack the name recognition of more traditional P&C insurance carriers. However, their key advantage is that they are not bogged down with clunky legacy technologies. They use APIs to make the purchase process more seamless. The quotation process has gone from 30 minutes on the phone with an agent to 1-5 minutes online. Furthermore, several insurtechs offer more coverage and free water leak sensors.
Over a third of consumers indicated that they would purchase insurance from a start-up backed by an established insurance company, giving traditional carriers a chance to modernize their technology and processes.
Insurance carriers must adapt to change, or risk irrelevancy:
With impending market and industry-wide changes, the SIR Spring Workshop covered several key research skills to help the SIR community build strategies and gain competitive advantage. Examples include:
- STEEP(I) framework helps improve proactiveness and internal planning processes, often influencing product changes, innovation, and M&A decisions. Companies use this framework to incorporate “what if” questions about external factors:
- Social/demographic, Technology, Environmental, Economic, Political, Industry
- Financial statement assessment is used to draw conclusions about competitor activities and strategies. Companies can measure whether competitors’ premiums have increased in particular states over time and evaluate overall risk.
- War games use “role playing” and Four Corners Analysis to map out expected behaviors and responses of competitors given possible future scenarios. This process helps to identify internal blind spots, align leadership on the competitive landscape, and identify opportunities with two key questions:
- What could competitors/key market players do?
- How can we plan to outmaneuver them?
A robust research and planning approach will be needed to protect even the largest of insurance players. They must recognize the changes within the consumer marketplace and proactively address shifting preferences.