From reactive to proactive – can insurance transform? Part 1

According to the World Insurance Report, “business-as-usual within the insurance industry is coming to an end”, and as consumer demands and market dynamics continue to evolve at great speed, the ability to a adopt a proactive approach will become even more vital for insurance players.

How has this situation evolved? Basically, it’s because traditional insurance is reactive – an event occurs, and the insured party makes a claim – and this approach does not meet the experience expectations of consumers today.

The claims process is long and tiring and it consistently leaves consumers resentful and angry due to the massive amount of bureaucracy involved; the disputes concerning actual compensation; and the time it takes to actually receive compensation. Often, consumers give up the fight, conceding to the insurers.

Today’s digital and customer-centric era demands a change, and to attract and retain customers the insurance industry has to adapt accordingly. Some insurers are already moving from a traditional reactive insurance experience to a predictive and proactive one; a new type of insurance offering based on parametric capabilities, AI, machine learning, big data, analytics, etc.

This enables defining the probability of something happening and automatically compensating the consumer if it happens, thereby eliminating the exhausting claims process. Even if the types of insurance products remain traditional, the customer experience and claims process need to transform and become up-to-date and millennial-ready.

Consider flight delay insurance. In the reactive approach, if a flight is delayed, consumers need to inform the insurer of the delay after landing, and then have to start the long claim process of providing documents to prove they were on the flight, that the flight was late, etc. On the other hand, imagine the same product in a proactive approach: the insurer knows the plane was delayed (even before the consumer), and thus can provide immediate compensation and further assistance, which prevents consumer frustration and creates a sense of trust and loyalty.

Sounds like a pipedream? It’s not. Some insurers are already transforming from reactive to proactive, embracing a new approach, changing the role of insurance and fundamentally strengthening the relationship between insurers and consumers.

How are they achieving this? See part 2 of this blog next week.

About the Author
Eyal Gluska’s entire career has been focused on creating innovative services and business models that generate new business opportunities for leading organizations around the world. As co-CEO of Setoo, he wants to disrupt the insurance industry with AI and state-of-the-art machine learning technologies, automating human-intensive operations to transform the way insurance products are created and delivered.