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A business strategy for the digital age: How to keep one step ahead of the disruptors targeting insurance

Graham Jackson, Insurance Consulting Practice, PwC Graham Jackson, Insurance Consulting Practice, PwC

If you want to see what lies in store for insurance in today’s digital age, then Silicon Valley would be a good place to start. What struck me most on a recent visit was the level of innovation; entrepreneurs and the cash-rich are amassing big funds for a targeted assault on the traditional financial services model. Some see insurance as the sector ripest for disruption as the possibilities opened up by digital remain largely unatpped. But I think that existing players should see this as an opportunity for profitable growth rather than a threat.

What my visit to Silicon Valley confirmed is that the real digital story isn’t about technology, it’s about business disruption. And as I and some of my colleagues explored in a recent seminar hosted by the Association of British Insurers (ABI), this transformation is built upon four key issues:

  • Customer engagement
  • Data and trust
  • Operational efficiency
  • Dealing with disruption


Insurance is something people clearly need, but don’t desire in the same way as a holiday or the latest piece of technology. This has always made engagement difficult. Things are now changing. Technology can be used to nourish engagement. Using car insurance as an example, there are now pay-as-you-drive sensors that can help insurers calculate a more accurate estimate. Safe drivers benefit from a reduction in their car insurance, while those who aren’t so safe will receive a higher quote. Similarly, wearable health sensors promoted by a new-generation of health and life cover can advocate a healthier lifestyle and in some cases alert policyholders to the need for prompt medical attention.

Crucially, these developments are moving insurance from a transactional relationship to a continuous and valued engagement with policyholders.

Data and trust

Data is a key source of insight and value. Customers won’t pass it over to you unless they trust you. Insurance is an industry that’s built on trust, but it has suffered from customers’ disillusion with financial services. To win and keep customers’ trust there needs to be clarity on how their information will be used and what reward they might expect in return for giving it to you. Your business needs to deliver on this promise and ensure that all customer data is robustly protected.

Operational efficiency

Amid the continuing focus on expense ratios, digitisation is an opportunity to cut costs by speeding up routine underwriting tasks, claims assessment and payment. Doing this will free-up talent to concentrate on the more demanding activities that add real value. Digital can also improve your staff’s ability to collaborate, share ideas and visualise outcomes and opportunities. Artificial intelligence (AI) opens up even greater opportunities. AI can help to increase efficiency through speed and cost-reduction. It is also consistently learning, opening the way for greater precision, customisation and adaption.

Dealing with disruption

As technology sweeps away barriers to entry, it could be new entrants as well as insurers who are able to take advantage of these opportunities. Traditional approaches to product development and business planning are too slow to keep pace. The smart way forward is to get to market quickly; then test and refine. Sometimes you’ll win, sometimes you’ll have to accept failure. But you should always be innovating, learning and adapting. You can’t do all of this in-house, so it’s important to track what start-ups are doing and looking at how collaboration can move you forward in the innovation race.

On the front foot

So who’s going to come out on top? Well while everything’s to play for, those insurers who are prepared to embrace business disruption are the most likely to succeed. And for that, the key isn’t a digital or data strategy, but a business strategy for the digital age.

Contact the author

Watch the ABI and PwC webinar – ‘Insuring your digital future’

Register for the ABI Data Conference on 9 September 2015

Graham Jackson is Partner, Insurance Consulting Practice, at PwC


Last updated 29/06/2016