Would the readers of the first edition of Versicherungswirtschaft Magazine ever have imagined that future readers would be able to read the publication on their smart phone? Technology is changing the way we interact and behave as consumers. It impacts our purchasing behaviour but has also an impact on the way business functions. The ubiquitous digitalisation is challenging old patterns, also transforming the traditional business models of insurance companies. The enterprise-centric business models that worked in the past are now being challenged by a growing number of new entrants, who often enter the market through cooperation agreements with established insurers. This strategy works for both new and old players alike. New entrants can benefit from the knowledge and resources of experienced providers, who in turn benefit from the entrepreneurial mind-set and agility to adapt of the newcomers. This evolving market therefore requires providers to rethink their strategies, in particular the products that consumers need and the most appropriate channels for insurance companies to reach consumers. In an ever-changing landscape, one thing is certain: What worked in the past, does not necessarily work in the future.
New technology can revolutionise customer experience
Consumers and providers are both seeing benefits from digitalisation. It acts both as an enabler of fundamental innovation and as a disruptive force. The entire insurance value chain is already and will be further impacted by digitalisation, from insurers to intermediaries, distributors and service providers.
The use of big data and telematics, comparison websites and automated advice tools influence the interface with consumers. The increasing amount of personal data available and the power of data analytics will inevitably change insurance underwriting models.
However, with this come risks. Collecting and managing large stores of personal information from consumers, claimants and beneficiaries, means that insurers are increasingly exposed to cyber risks with serious implications also for customers. For this reason, Eiopa considers adequate monitoring of cyber risks as extremely important. Furthermore supervisors need to be particularly attentive about silent and accumulated exposure in the (re)insurers’ portfolio in view of potential threats to financial stability.
These changes definitely bring some risks that require the close attention of regulators and supervisors but equally bring…