Thu. Feb 2nd, 2023

The insurance industry finds itself in the midst of changes of unprecedented scope and speed. As technology and strategy continue to evolve, business as usual is no longer an option, but nor is a piecemeal or haphazard approach; the insurance industry will only retain the confidence and loyalty of customers via a total digital transformation.

At the same time, the insurance industry needs to avoid the pitfall of adopting every new technology without a clear and informed strategic vision. Consumers will not fall for techy gimmicks, certainly not when they pertain to decisions as consequential as insurance.

Distribution is one area where changes are resulting in a totally new landscape owing little to methodologies of the past. Product and insurance are increasingly being packaged together for the sake of the customer, leading to a journey characterized as intuitive and frictionless. The automotive industry is at the vanguard of this revolution. From legacy automakers like Ford and Volvo to next-gen disrupters like Tesla, partnerships are being created to offer insurance as part of the car buying experience. Strategic out-of-the-box thinking has allowed each automaker to leverage its powerful customer base for distribution of a new insurance product that suits its unique product line and corporate image.

New markets also demand new products and services, and insurers will need to create new partnerships in order to make them a reality. In this way we see software, home security, and home repair services, to take just three recent examples, partnering with insurers to offer total packages in new markets.

Changes in consumer behavior are a source of both opportunity and risk for those bold enough to make use of them. A notable example is the growing comfort on behalf of consumers with their data being shared with trusted recipients. This trend has led to connected insurance, whereby insurers are able to develop coverage and risk management that are far more personalized than would have been possible previously.


Data collected from connected devices allow insurers to tailor their offerings – and even offer insurance on a pay-per-use basis – to meet an amazingly broad spectrum of customer needs and budgets. Furthermore, IoT allows monitoring and warning to further manage risk.

Finally, connected insurance allows for far more frictionless customer self-service. The customers are able to take control of their journeys, saving significant amounts of time and money.

Products are all about the insurer. Solutions are all about the customer. The forward-thinking insurance company needs to pivot to the latter outlook.

Not only do different customers have different needs, but those needs are at the front of their minds when they are shopping for insurance. With the proliferation of options and capabilities, customers are increasingly unwilling to consider insurance products that insufficiently consider them. An insurer that comes to them with solutions tailored to their situation and needs will win their business and loyalty.

The technologies that make all this possible may not yet be directly attainable for all insurers in-house, but there are without a doubt technology companies ready to supply all those needs today.

Technology affects the business model

Before deciding what sort of digital path to take, an insurer must first identify its core competencies in order to build upon them. Technology can then be brought to bear in the most effective way to maximize the value both of the technology and of the company as a whole

Identifying core competency should not be confused with stagnation, of course. Digital transformation can result in very new ways of doing business. One of the most revolutionary is DTC (direct-to-consumer, or business-to-consumer), in which insurance is sold online by the insurer directly to consumers. This process is often mediated by insurance aggregators that provide information about several insurers in one place, allowing consumers to shop around without leaving.

This is the inverse of the example previously mentioned, which illustrates the same point about technology-driven business model change, in which car companies offer their own insurance packages as part of the sales process.

None of these changes will result in long-term benefit to the company making them without strategic decision-making regarding what exactly is needed and how the adopted technology will bring it about.

New technologies have resulted in new insurance opportunities for incumbents and insurtech alike. Providing digital experiences and solutions to customers is no longer just one option among others; it is critical for any insurer that wishes to avoid falling behind. These solutions must be deployed carefully and intelligently to win and retain the customer’s loyalty and trust.

9As revolutionary and challenging as these changes are and will continue to be, the ultimate result will be to the benefit of all parties.

Alex Zukerman is the Chief Strategy Officer at Sapiens, a software company based in Holon, Israel.



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