The insurance industry has been one of the most stable industries in the world, experiencing significant growth and development over the years, especially in Indonesia. It seems like there is nothing stopping this giant from moving forward, or is there? When we talk about insurance, everybody has insurance ranging from life insurance to car insurance; even your kids’ education is insured. The high rate of growth in insurance businesses emphasises the level of trust people still have in insurance companies to protect their assets. However, everything seems easier in today’s world. Because you have access to basically everything at your fingertips, insurance is becoming redundant when it comes to the modern person’s primary needs. Will the ease of technology disrupt the insurance industry?


On a global scale, the insurance industry experienced strong, premium growth in 2015 at 5.6 percent, with total premiums reaching 4,6 trillion euros, whereas 2016 showed slower growth at 4.4 percent. What factors contribute to the decline within the industry turbulence? Aside from government regulatory changes, another important development is the way consumers have shifted towards hybrid online and offline purchasing and research. The purchasing behavior of insurance markets has shifted, which will mold new business models sooner or later. In Indonesia, insurance businesses experienced a significant development of 16 percent over a range of 4 years, from 2011 to 2014. According to Firdaus Djaelani, the head executive of IKNB, conventional insurance industry investment hit 608,6 billion rupiah with life insurance ranking first, followed by social insurance and general insurance.


The conversion from traditional to digital in the insurance industry is incredibly important; it is expected that the digital customer experience will become a driving force in insurance profitability in the years to come. According to Digitalist Magazine, 50% of insured clients won’t recommend an insurer that doesn’t have an online interface. A majority of 61% of consumers prefer digital means to check their claim status instead of the more traditional means. However, 74% of insurance executives feel they do not possess the necessary skills in dealing with these changes.


Change isn’t always bad; in this case, the key for insurance companies is to begin developing a digital approach. There is a saying among insurance businessess: “whoever holds the data, holds the power.” That is because data is the key to effective risk assessment. We can see that many insurance companies provide online insurance solutions, leading to even faster approval. It is a much more efficient approach to calculate insurance rates by drawing information from wearable devices, workout records and pharmacy records instead of a doctor's visit, or calculating rate reductions for self driving cars by comparing the percentage of time the car is manually driven to the alternative. Even if the insurers are small companies, they can manuever themselves into an advantageous position by adopting new technology and building ecosystems flexible enough to adapt to the shifting trends and new technological advancements. On the other hand, larger insurers can invest in or acquire InsureTech companies. Even though they can’t build the platform themselves, partnering with a company that can will give them a closer look at the necessary infrastructure and allows them to access data without storing the data themselves.


Converting to a solely digital approach is not the entire solution. Even though it would be wise to start taking action and exploring digital possibilities, throwing the latest technology at the problem without a thorough, accompanying process isn’t the answer. More clients are asking how to embark on this digital transformation, and insurers must possess expertise in managing both large data sets and relationship management within the industry. Remember that insurance businesses should always put clients first; with that priority in mind, insurers must not focus on solely client-facing platforms, but they should instead find the right balance between physical and digital operations to discover the best outcome. If your company is ready to take the next step, it is necessary to become more flexible in this digital era.