We continue to see rapid evolution in how customers buy, what they want and when and, at the same time, constant pressure to reduce the cost of services and products. Over 85% of people buy online yet, from a recent McKinsey report, only 22% of insurers have established personalised online and mobile service and, it is separately reported, that only 15% of customers are satisfied with their online Insurance offering today.

Traditionally, the Insurance sector has offered a range of standard products to consumers.

More recently, there has been a drive to put the customer first and in control of their business with customised products & pricing, branded offerings and digitised service.

However, despite 85% of insurers stating their key strategic priority is “customer engagement and retention”, market research tells that this is simply not hitting home — only 16% of customers say they would stay with their current provider or buy another product from them.

We’ve seen a dramatic rise in customer digital buying from retailers, energy providers and, in insurance, the rise of aggrega-tors. This has driven Insurers to respond with their own digital offerings, but to what effect? In simple terms increased price comparison but little improvement in penetration or recognised service improvement.

As a result, GWP is stagnating or falling (Life GWP fell from £12bn in 2010 to c £8.5bn in 2016) yet significant parts of the UK remain uninsured;

So how do we look to change this?

We are seeing a fundamental shift from push (if you build it they will come model)to demand based. Let’s consider three different consumers:

Millennials (18-35’s) are now faced with a daunting challenge of finding work and trying to buy a house with an expectation of buying what they need “on-demand” and via a mobile device. In practice this means being able to cover laptops, travel, sporting injuries, cars for when they drive and get rewards and incentives. They are also increasingly health conscious and used to wearables and technology. On demand, easy to buy and pay per use is key.

Middle age families are increasingly challenged by limited budgets. Household income is typically £40-60k with, at least, 50% spent on living costs and child care and, from the remainder, annual car and house insurance costs up to £2k and health cover for a family absorbs £2-3k. So, whilst on the face of it, the challenge is one of affordability, there are significant opportunities to enable households to re-focus their budgets on insurance 
if products and services are more easily available to buy in packages, are relevant to their specific needs at their life stage and reward retention and claim reduction.

The silver haired generation are living longer and looking to enjoy an active retirement, yet they also struggle with getting insurance that is available and relevant to their needs. Examples include overseas travel, specific health cover eg hip, knee replacement and long-term care.

Understanding what customers will demand & how they will buy is a key starting point for future insurance provision.

However, we need to understand how (and if) we can create an effective model which enables this AND is profitable for insurers. This is not a pipedream as there are already examples we can learn from…

Providing financial services in Africa, Asia and India seems a daunting experience, requiring huge infrastructure, connectivity and pricing at a cost point that is impossible to achieve ... but the reality is that it is already here.

Mobile phone companies such as DataWind, Grameenphone and Vodaphone have established largescale mobile phone service with handsets at $10’s and running costs <30c per day. As a result, nearly 300m people earning <$10-20 per day now have mobile connection.

Leveraging this, MPesa has established a mobile banking service with payments and loans to over 30% of all Kenyans, again at low cost. As a result, new companies are now offering scalable and targeted insurance products and customer services in the same way...

…And now, linking this with drone technology via companies like QuadCopter, farmers have a service covering weather tracking, crop mapping linked to insurance cover and supply of new parts for a claim.

This integration of services (mobile, banking and insurance) with technology to deliver a new service fast, flexibly and at a cost the Rising billion can afford and sets a new bar for customer enable-ment and product delivery for our insurance sector. 

If we understand the customer of the future’s needs and how they will buy, our challenge becomes creating relevant services and prod-ucts which enable this, are scalable and are affordable and priced flexibly to needs and timescales that consumers want and need.

Such services are likely to focus on four key areas:

• flexibility & cost;
• trusted advice & recommendation;
• need to buy now v long-term security;
• ease to buy and make a claim.

To enable this there are clear implications for our Insurance models and key tools that will be necessary in the future.