Online insurance development
The share of online sales on the MOD market was as high as 23% in Europe in 2018. Meanwhile, in Russia, according to Central Bank data, they accounted for only 1.4% of the individual MOD market, which is estimated at RUB 106 bn. This share was virtually the same in 2017.
Despite the efforts taken by local companies, development of online insurance and establishment of ecosystems, which is currently talked about by many insurers, will take at least three to five years.
Insurers may take the following role models for ecosystem development:
- China's Ping An, where clients have simultaneous access to insurance, banking, medical, and other services;
- South Africa's Discovery, which combines a broad network of partner offers in the Vitality program and offers access to it as part of a health insurance polic
Higher-than-market sales growth in online insurance is accompanied abroad by a higher profitability of this sector. McKinsey estimates efficiency of insurance operations (combined ratio) of online MOD insurers at 90–95%, while traditional insurers have it at 95–115%. The difference is achieved through lower administration costs (5% vs. 10%), as well as through a lower loss ratio (80–85% vs. 85–90%).
Even though the offline insurance policy sales volume is still higher than the online policy sales volume, automation at all links in the insurance product development chain is becoming inevitable.Process digitalization
This is currently a matter of survival for an insurance company. Insurers digitalize entire stages of customer interaction in the policy administration process, as well as the claim settlement process. And this list is far from exhaustive.
Customer targeting, adaptive pricing, online claim settlement, targeted cross-selling – all these product value generation stages are currently the areas of various digital initiatives run by insurers. As a result, they get higher process efficiency, greater customer satisfaction, and better risk management for a profitable insurance portfolio.
McKinsey estimates the impact of such initiatives on claim settlement as follows: NPS (net promoter score – ed.) increase by 20%, administration cost reduction by 25–30%, claim payout decline by 3–5%.Process de-integration and emergence of specialized players
Insurance aggregators, actuarial services (services calculating insurance rates – ed.), fraud management companies are among intermediaries that provide services to insurance companies, bringing up efficiency of selected processes.
The market share controlled by these companies grows annually. Insurance aggregators had totally insignificant shares in total sales just two or three years ago, while in 2018, they accounted for about 17% of overall motor insurance sales in Europe, according to our estimates.