The insurance industry service model is undergoing a dramatic shift. Companies increasingly are leveraging digital technologies to move from the long-standing 1P service model that offers only protection, to the 3P model that offers protection, prevention and preservation (see Figure). The reason: Digitally savvy customers, who are now receiving proactive services offered by industries such as retail or travel, are demanding similar innovative products and services from insurers. At the same time, competition from non-traditional players in financial services such as Walmart is heating up. Its clear that insurers will need to move from the role of a passive underwriter to that of proactive risk managers and advisors, to stave off competition and stay relevant.
Heres a quick comparison of the traditional 1P insurance service model and the new 3P service model that enables you to deliver transformational customer service, using digital technologies.
Traditional service model (1P): In the traditional 1P service model, items are insured against unwanted and unforeseen danger. Typically, the customer files the claim after the mishap, following which the insurer validates the claim, and pays the claim amount.
New service model (3P): In the 3P service model, insurers leverage Big Data and artificial intelligence technologies to proactively alert the insured about potential dangers that can be avoided. For example, in the case of auto insurance, if an insurer can alert an insured about timely maintenance of his vehicle through an app, it can help avoid accidents related to parts failure such as brake failure. This means that apart from offering protection, insurers also need to think about preventing mishaps and preserving the insured asset to further cut down on costs.
Another example would be where an individual moves to a location where the cost of living is considerably different. The system based on the 3P model can detect the location change and suggest alternate insurance products based on analytics. So, just an address change event in the system can generate interesting sales leads.
In addition, insurers can analyze the customers public social posts (with the customers permission) using social listening tools to offer value-added services. Lets say a customer posts a public message regarding her job change. In most of the cases, job changes are indicative of a higher salary and savings. Insurers can leverage this piece of information to proactively guide the client towards a better insurance and savings plans.
While many insurers are already on the path to implementing the 3P model, some companies continue to lag as the industry is hampered at many organizations by a traditional mindset that is opposed to change. But sticking to this mindset can result in serious challenges in the digital age. In Part 2 of this blog, we will discuss how your company can leverage emerging technologies to support the 3P model to enhance competitiveness.