Mutual insurers’ advantage in industry’s digital transformation

by Insurance Business 20 Jul 2016

Mutual insurers’ advantage in industry’s digital transformation

Many insurance companies are reinventing their operational models to become more ‘customer-centric’, and are exploring how they can harness digital technology to improve their customer interactions.

But one industry expert says mutual and cooperative insurance companies may already have a distinct advantage on that front which will put them ahead of the game.

Ben Telfer, vice-president, business intelligence, at the International Cooperative and Mutual Insurance Federation, said existing operational models of mutuals and cooperatives are already closely-aligned to the needs and preferences of their customers (their members).

“Many cooperative and mutual insurers are associated with affinity groups, and so tend to know their customer base better than other insurance companies,” Telfer said in a Co-operative News opinion piece.

“Without the need to generate short-term profits for external shareholders, cooperative and mutual insurers are also fun, first and foremost, to protect the interest of their members.

“The members’ satisfaction and levels of trust are central to the vision and strategy for mutuals and cooperatives.”

With the use of advanced analytics and the harnessing of Big Data to allow insurance companies to better understand the needs and preference of their customers, and therefore offer a more personalised service, Telfer said cooperative and mutual insurers were placed with a natural advantage.

“They have long been focused on serving the needs, and maintaining the trust, of their members.”

He said the new digital era could see a change in how customers view their insurer, with a shift from a means of financial reimbursement after an event to one engaged in ongoing assistance.

“Cooperative and mutual insurers could also naturally benefit from this shift as many, especially those with close links to the local community and niche affinity groups, are already engaging in risk management, prevention and educational programs to improve the societal well-being of their members, such as youth rural road safety sessions (NFU Mutual, UK) or mental health workshops (FMG, New Zealand).”

Telfer said it was no time to get complacent, however, as mutuals and cooperatives were not immune to the growing external competition from giant technology companies such as Google and Amazon who were set to start offering insurance products, and at the other end of the scale new InsurTech firms looking to enter the marketplace via new digital platforms.

“Cooperative and mutual insurers are no different and must adapt and upgrade their operational processes to embrace this new digitalisation,” he said.

“They may also be able to exploit this new transformation and become the natural fit as the desired insurance model for future generations in the new digital age.”
 

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