Shor t Takes
of insurance customers just doesn’t
want to be dealt with the way prior
generations have. So you have a much
less sticky agent-insured relationship
as a consequence, a real need to
reinvent the experience. The second
piece is the change in economics of
the industry. As I mentioned before,
60-65 cents goes towards claims and
30-35 cents is administration costs.
You add those together and that’s 100
and there’s no profit. So you had an
industry that living off investment
income for many years, generally
in fixed investment vehicles where
interest rates are so low and have
stayed low over a long enough time
there’s significant cost pressure from
throughout the industry.
Consulting: What are the big
consulting opportunities you see
arising from this transformation?
Rachlin: I think the word
transformation is almost overused
in the sense that virtually every
company we talk to has some form of
transformational program at work. If
you think about redefining customer
experience through digital and all of
the distribution oriented dynamics
associated with that, what are the
customer journeys, what are the
personas we need to digitize and how
does that change the distributional
landscape and relationship of the
agent and customer? That’s a huge
consulting opportunity and I think
almost every company is asking
themselves those questions. From an
operational standpoint, how do you,
from a combination of technology,
robotics, AI, and data analytics,
take cost out of the operation? How
do you actually make the product
of true straight-through processing
from most insurance transactions
actually happen. Another is for the
new economy we’re looking at, how
do we re-define insurance product
so it actually actively addresses
the new nature of the risks of this
economy. The most trivial example
is how do I change a homeowner’s
policy so it handles the fact that I
may rent my home out to AirBnb?
Or how do I provide the right car
insurance for someone who drives
for Uber two nights a week? The
changing nature of the economy
requires changes in the insurance
products space, and that’s a great
consulting opportunity.
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