Outsiders Provide Next Challenge for Insurers
Robert Regis Hyle | March 24, 2014
One of our goals when we launched the ITA Pro magazine and website was to look beyond what was happening today and spend some time examining the goals and directions of the insurance industry and the technologists that help guide it over the next few years.
It’s an impossible task to correctly predict the future, but enough has changed in the past decade that the industry finally agrees that no one can continue operating as they have in the past if they want to compete in the future.
One change that likely will have the greatest impact on insurance and pretty much any customer-facing industry is the use of data to predict trends, so it should be no surprise that insurers have to be aware of what top information gatherers are doing in their respective industries.
An important point of discussion is whether companies with rich customer data such as Amazon.com would someday decide that the data is available to allow them to enter the insurance market with straight-forward insurance products such as personal auto and some simple life insurance products.
It seems obvious that Amazon and others could do a good job of guiding their customers on insurance-buying decisions. The saving grace for insurers is the belief that outsiders may be resistant to licensing their own products because of the draconian nature of insurance regulation.
How ironic it is that the area that insurers feel is outdated and complicated may very well be what keeps the wolves from picking off some of the easiest and most profitable business. High impact data companies will certainly think twice before jumping into a business that involves as much regulation as insurance has.
The industry is not off the hook, though. The models of data collection and customer information that sharp online retailers have used can provide great insight for an insurer willing to partner with one of these outsiders.
Regulatory matters would stay with the insurance partner and the other complicating insurance factor—an established method of handling claims—would also remain with the insurer.
As usual, it seems likely that the companies that might take advantage of such partnerships are national players that already spend fortunes on marketing themselves. The mid-tier, as usual, would have to find ways to continue making themselves relevant.
The key for them, as for all businesses today, is to keep an eye out for partnerships, particularly non-traditional types. The insurance world will change because there is opportunity to do something different. We should embrace that rather than fear it.
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