The insurance market is losing ground to insurtech startups and must focus on digital business to stay competitive.
In its UK Insurance Underwriting Digitisation Study 2017, research firm LexisNexis revealed the opinions of 107 insurance professionals, most of whom spend more than 80 per cent of their time pricing and underwriting policies.
The study examined the views of personal lines motor and home insurers on issues such as whether digitisation will create stronger business opportunities, and how their organisations are embracing new technology.
- Just 4 per cent of personal lines insurers say their businesses are entirely or almost entirely digital, while 92 per cent recognise that digitisation has allowed new insurance providers to emerge and disrupt the market
- 31 per cent of motor insurers and 25 per cent of home insurers are using mostly manual underwriting processes
- 78 per cent believe digitisation is valuable for improved speed to market for new products
- 64 per cent consider policy history data as an important way to improve the customer journey
The need for speed
Automation scores highest in applications, with 73 per cent of motor insurers and 81 per cent of home insurers saying they have a digital application process. Quoting has the lowest level of digitisation, at 27 per cent, followed by claims at 38 per cent.
Motor insurers and home insurers who still use manual processing for quoting, applications and claims are at a clear disadvantage when faced with insurtech competitors, who can offer greater speed and accuracy. The study says: “Whether it’s social broking or P2P companies, 92 per cent of insurers believe that digitisation has allowed new types of insurance to emerge and disrupt the market.”
Speed to market and customer retention are seen as key benefits of digital technology, with smartphones, connected cars and smart homes providing new ways for insurers to interact with customers and widen their services.
GDPR and the threat of switching
The study acknowledges the risks and challenges that insurers must confront as they digititise their businesses. The introduction of General Data Protection Regulation (GDPR) in 2018 will place restrictions on certain types of profiling, and increase the need for data transparency and availability. There is also the threat that digitisation will enable consumers to switch between insurers more easily, with 51 per cent of motor insurers and 42 per cent of home insurers registering concern.
Improving the customer journey with RDT
RDT enables insurers to digitise their businesses and manage data more effectively across all points of the customer journey. It bridges the gap between traditional insurance and insurtech startups, addressing the opportunities and challenges identified in the study. In particular, RDT’s centralised rating platform Equator, and its policy administration system Landscape, provide insurers with the insight and control to manage applications, quotes and claims with greater speed and accuracy.