Digitalisation transforms insurance for consumers and suppliers – Swiss Re

Digital transformation empowers consumers to be more informed and independent than ever and equips insurers with tools to cater to customers’ current and future needs. This leads to the development of new data-driven business models, impacting the entire insurance value chain, according to Swiss Re's latest sigma study, Data-driven insurance: ready for the next frontier?

It says that while consumer-supplier touchpoints will become predominantly digital, human interaction will continue to play a role: through consumer feedback and analysis, insurers will be able to identify where in-person engagement is most effective. To date, insurers in emerging markets lead the way in optimising the potential offered by digitalisation, as in many of these markets the starting point is digital rather than analogue.

The availability of internet-enabled devices and universal connectivity has changed consumer behaviours and expectations, particularly among younger generations. Empowered with digitally-facilitated information, consumers expect rapid access to information, transparency, and more personalised purchase experiences relevant to their lifestyles.

“As a result of digitalisation, insurers now have direct connection to their customers,” said Jeffrey Bohn, chief research & innovation officer at Swiss Re Institute. “With the availability of granular data, insurers can better segment customers enabling them to develop new tailored products and services, and refine existing ones in real time. This benefits customers and insurers alike.”

The report says that with the growing granularity of insights into customer behaviours, the role of insurance is evolving from indemnification of losses to a broader consultative service on risk prevention and mitigation covering both private and commercial clients’ changing needs over time.

For example, digital data sources signal changes in an individual’s life circumstances such as marriage, a new home or job. In response, insurers can direct personalised guidance to the client on predictive and prescriptive next-step risk mitigation actions.

More and more, insurers will operate in an environment where they have continuous access to different data sources including from connected objects and platform providers, and behavioural insights from consumer and environmental data. This will see the evolution of new-data driven business models taking insurers beyond their existing value chain, the report says. True leverage will come from partnerships with key data suppliers.

“Innovation will continue to transform the insurance industry,” says Thierry Léger, chief executive officer of Swiss Re Life Capital. “Changing risk environments, shifts in customer attitudes and accelerating advances in technology will be the key drivers of the next few years. We will need to leverage insights from our data and partnerships to upgrade our business practices.”

The report also predicts that emerging markets will lead the way with mobile and multi-channel offerings extending the reach of insurance.