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The connected ecosystem: A new business model for insurersTHE impacts of new and developing tech
nologies have dominated recent conversations about the future of the insurance
industry—and for good reason. Advances inrobo advisory, AI, big data, analytics and moreare reducing costs, increasing efficiency andimproving customer service.Yet, in addition to the advances driven by
insurtech and B2B technology innovations, adeeper transformation is underway. Insteadof approaching insurtech from a technologyperspective, forwardthinking insurers areembracing disruptive innovation to reimagine the relationship between the insurer andthe insured, to create a new insurance business model.
One particularly interesting area where weare seeing this type of transformation is in"connected insurance." Connected insuranceenvisions a new role for the insurer as an ac
tive supporting participant in the customer'sdaily life.
A new way to connect to customersTRADITIONALLY, a customer only thinks ofinsurance in the wake of a purchase or lifeevent, whether that's buying a home or vehicle,going through a life change, or needing to makea claim. In recent years, insurers have beenattempting to make the shift from providingprotection from the impacts of unfortunateevents, to helping prevent these events fromoccurring. Connected insuran.ce takes thingsone step further, creating an active role for theinsurer in the customer's daily life and activities, from creating a meal plan to monitoringa pregnancy.
While, historically, insurers have providedproducts based on customers' risk profiles,connected insurance requires the insurer to,instead, think about the customers' lifestyle.As lifestyle is often dependent on life stageand other demographic factors, insurers pursuing a connected insurance approach mustfocus on specific customer segments, developan indepth understanding of that customertype, and then seek ways to seamlessly integrate into the customer's lifestyle.Technology makes lifestyleintegrated in
teractions possible. The advanced capabilities
and widespread availability of consumerfocused devices, such as smart phones, Internetof Things (IOT) enabled appliances, healthmonitors and more, are providing unparalleled abilities for individuals to manage theirlives online.
At the same time, big data, analytics andother tools employed by insurers can unlockpowerful insights from this information thatcan be used to better understand the custom
ers and provide the appropriate connectionswithin the connected ecosystem. That datacan then be used to enhance underwriting decisions and refine pricing for smaller, targetedcustomer segments, as opposed to one, blendedrate for all.
Creating a connected ecosystemTHERE are three core areas where we are cur
rently seeing the development of connectedinsurance: health, home and transportation.
In a connected health ecosystem, the insurerworks as a fullservice customer concierge formedical care. Personal medical monitoring devices and wearables allow customers to track
health information, such as weight and BMI,heart rate and pulse, blood sugar, exercise activity and more. With these devices connectedthrough an app, the insurer could transfer datato a medical practitioner for ongoing monitoring. Should concerns arise, the insurer couldnot only provide support to make medicalappointments or expedite treatment but alsoto arrange transportation, from requesting ataxi to calling an ambulance. Lifestyle supports, such as recommending healthy mealplans, giving tips or reminders, or providingdiscounted gym memberships can also assistcustomers to lead healthier lives.
Recently, KPMG professionals worked withan insurer in Singapore and developed a "connected health" diabetesmanagement program,which allows the insurer to provide affordable health insurance to early stage diabetespatients, who would otherwise not be able toavail themselves of any medical coverage oncethe diabetes is detected.
Networked IOT devices allow an insurer toprovide roundtheclock support in the home,especially for seniors or other atrisk custom
ers. Yet, in addition to medical monitoring andsupport, a connected home can also enable insurers to provide home owners and renters withgreater comfort and security. Support couldrange from remote early detection of problems,such as leaks, shorts or floods, to arranging appointments with repair professionals.When it comes to automobile insurance, a
connected car is an area of particular interest. While early telematics were intrusive andhad a correspondingly low adoption rate, newapps use the smartphones builtin gyroscopeto seamlessly provide telematic data. This enables the insurer to easily identify the driver,track behavioral driving patterns and rewarddrivers for positive driving habits. Insurers canthen create recommended ecosystems of serviceproviders or gas stations at which customerscan spend their "good driving points" for freeproducts or discounted service.
Shifting mindset to create valueWITH the rise of the gig economy and otherfactors increasingly pushing people from assetownership towardassetusage, insurers will needto find ways to connect with customers and provide value in all aspects of their lives. Connectedinsurance uses technology to make the insurera core partner in the customer's life, providingnot only emergency assistance and preventative help but also ongoing, seamless support.The future of insurance is not about the product or technology.Instead, the way forward requires a shift
in mindset: making the customer the priority, with the insurer delivering daily value asthe center of a wider ecosystem of trustedproviders.
The article "The connected ecosystem: A newbusiness model for insurers" is written by Chia TekYew, KPMG in Singapore.
© 2018 R.G. Manabat&Co., a Philippine partnership and amemberfirm ofthe KPMG network ofindependent memberfirms affiliated with KPMGInternational Cooperative ("KPMG International"), a Swiss entity. All rights reserved. Printedin the Philippines.
For more information on KPMG in the Philippines, you may visit www.kpmg.com.ph.
Headline The connected ecosystem: A new business model for insurersMediaTitle Business MirrorDate 05 Feb 2018Section Banking and FinancePage No A11
Language EnglishJournalist n/aFrequency Daily