The sharing economy is often seen as a major challenge for the industry and Ben Bessell, chief executive, commercial insurance at CGU has revealed the impact the sharing economy could have on the insurance industry.
Taking the stage at the 18th annual Steadfast Convention, held in Brisbane this week, Bessell gave a detailed talk on the impact of the sharing economy and how changes from businesses outside of insurance, such as Airbnb and Uber, could impact the industry.
“I think that the sharing economy is based on trust, it is based on a model where customers have more power than ever, they are more informed than ever and transactions are more transparent than ever,” Bessell said.
“Whether they are right or wrong, there is more information at their disposal, they are more comfortable using the power of social and commentary and their own research and the views of others before they come to seek advice.
“In some cases, right or wrong, some people are making decisions without seeking advice, that might be a good thing for them but it might be a bad thing when a claim arises and certain circumstances arise but again that is the power of the consumer so people are going to be making those decisions.
“We can’t force that not to happen, but we can embrace that and make sure that we are part of that decision making process and influence the outcomes of where people go.”
Bessell noted that customer will begin to expect more specialised, “bespoke” services which could help brokers in the future.
“I think customers are going to expect a more bespoke service, they might want to speak to someone on the phone but transact digitally. They might want to transact on paper, they might want to speak to three or four people, whatever it is, because the accessibility of business and the sharing economy are different, people are going to expect experiences in traditional services that haven't really been in the commercial domain it has been more of a social domain.
“People want to transact new business like they transact researching a hotel, that is starting to invade into our commercial lives.”
Customers will begin to harness their own power and the power of reviews, Bessell said, as businesses will have to pay attention to customer experience rather than focusing on price which would be good news for brokers coming up against competition from direct providers.
“Increasingly, customer experience is a more powerful driver of loyalty than just price,” Bessell continued. “That whole service experience, yes price will always be important, but what we are seeing more and more, and this is feedback that comes through in things like a five-star rating, price is an important factor but the whole experience is becoming more and more relevant.
“Again, those are the sorts of things that I think will impact us and the sort of things that we need to be reminded of as we design future models and interact with customers that are going through these experiences everyday.”
In future, the sharing economy could present challenges to insurance businesses but Bessell noted that the role of the broker will always be valued.
“Platforms connecting buyers and sellers reduce transaction costs, or should reduce transaction costs, and reflect the changing world of intermediaries,” Bessell said.
“There is always a place for intermediaries but what we are seeing now is the range of information and the transaction types that are evolving will influence and shift the way, over time, we participate in this sharing economy.
“We have got to recognise this as an industry and we are starting to invest and adapt, and test and learn what influence that might have on the longer-term role of traditional markets but also on the longer-term experience that is going to be expected of our customers who may today be 10 years of age.
“How are they going to expect to transact with us over the long-term?”