In a Danish newspaper I recently read an article written by a 7th grade boy, Gustav Boenæs. Gustav would like an “online bike helmet.” He asks for “training to ensure that I do not become an Internet victim, and that I do not get behavioral problems on the Net.” The interesting thing is that Gustav already is ahead – his mindset reflects today’s use and needs on the Internet and the advanced thinking of the “zero-generation.”
In the same way, I see that several major players in the Nordic insurance market are well underway in adapting to the digital world.
The population in Nordic countries is well advanced and desires digital interaction with insurers. A very large proportion of the population in Scandinavia has smartphones, which are used to browse the Web. Usage is even higher if you look at citizens aged 16 to 54 years.
This younger demographic will almost certainly communicate with insurers via smartphone or other digital device, both when they need a new insurance policy and when they have a claim. According to Bain’s Global Digital Insurance Benchmarking Report 2015, 79% of consumers will access insurance companies digitally within the next 5 years. The younger people are also likely to have an insurance policy, which just applies during some hours, for instance when they want to skydive, paraglide or dive in the sea, activities not covered by a general insurance policy.
During 2016, I was invited to various events to discuss disruption in the insurance industry. Tryg is one example of the disruption I’ve seen, bringing together entrepreneurial companies — both FinTech and InsurTech — to create an innovative environment and to “develop future insurance solutions together with them,” says Head of Innovation, Michael Juhler-Nøttrup.
From these new, innovative ideas and thoughts, we will discover quite a lot more in the time to come. It seems like new InsurTech and FinTech ideas have not seen much commercial success — yet — but I foresee that these smaller entrepreneurs are about to become companies. Then they can either be a threat or an opportunity.
What does CSC predict for 2017?
Robotics will gain further market share, and many insurance companies are piloting robotic activities at the moment. It is one of the areas where we should not be “scared”. The work performed by robots can free up employees to do more advanced customer- relationship building, which have be a large business upside. Based on a Blue Prism practice in CSC, we have identified 14 pre-defined processes to be performed by robots in the Life and Pension area, which, relatively easily, can be established and are already established at U.S. insurers.
Only a few companies in the Nordic region have embarked on the “Usage Based Insurance” train. It’s a known concept in other countries, and an area primed for growth here.
At the same time Internet of Things will be further expanded. All “things” will have an Internet sensor and will be part of a network with other “things.” The aim is to create new and more intelligent processes and thereby create value for the users. Today, more than 5 billion units are connected to the Internet. Insurers have huge potential to utilize these connections in the full value chain and provide more value to their customers.
Another area is “the thinking house” which Velux will invest in. According to an article in Berlingske, Velux will create an app that can manage the alarm, the heat, light, windows, curtains and a lot of other things via the app on your smartphone. Over time, the app will learn your preferences for air and lighting.
The house will have sensors to make sure to ventilate when it is needed. If there is something wrong, smoke detectors with sensors and small cameras can detect whether to call for emergency help — before it is too late. This will impact customer engagement with insurers in a big way. Not only can the dialogue be digital, but the insurance product also needs to be developed.
The need to constantly be on top of the game regarding cost levels will, in my opinion, drive companies to reach agreements on Business Process Outsourcing leaving insurers to concentrate on value-adding business. This summer CSC agreed to a major deal with Metlife to administer nearly 7 million policies for the insurer, comprised of selected retail, life and annuity closed block business.
We have all seen or heard of Lemonade, the relatively new insurance company with a completely digitalized customer engagement. How much commercial success they actually have, I do not know, but I think we will see new attempts to disrupt insurance by companies like this coming into the market at a certain area to take a bite of the cake.
The future is here – and we should all be prepared for the insurance industry to be driven by consumer behaviour and convenience going forward. These will become the main factors for customer satisfaction.
I would be delighted to discuss further with you any of these topics in the year to come.
I wish you all the best for 2017.
Liselotte Munk Poulsen is Industry General Manager at CSC’s Nordic insurance business. With more than 20 years of experience working with the Insurance industry, Liselotte holds a solid track record and has built a solid performing insurance software company with a substantial consultant business. Through a holistic end-to-end perspective of the global insurance industry, Liselotte enables her knowledge to provide value to the Nordic insurance industry. On daily basis Liselotte drives CSC’s Nordic insurance business, leading a team with deep insight into P&C and L&P. The clear objective is to leverage global capabilities that for decades has been developed and utilized by more than 1,900 insurance companies worldwide into the Nordic region.