Digital trends and the increasing sanctity of data will be as disruptive a force on the provision of financial services in the years ahead as deregulation was in the 1980s, says CommInsure.
In a forward-looking article penned for InvestorDaily sister title ifa magazine, CommInsure head of life product and strategy Franco Crapis drew parallels between the impact of deregulation under the Hawke and Keating federal governments and the disruptive trends of the digital age, with a specific focus on the life insurance business.
“In the 1970s and before deregulation, the insurance industry was heavily concentrated, with the five largest life insurance firms accounting for more than 85 per cent of premium income,” Mr Crapis said.
“While the term disruption wasn’t as common, the legislative and economic events that took place at that time to open up the financial markets to competition definitely resulted in greater convenience and choice for customers. [This is] the desired outcome of disruption, after all.”
Use of data and digital technology in the current climate are likely to create similar disruption leading to greater competition in the insurance and financial services sector, Mr Crapis predicted.
“In years to come, we will look back and see this was the time for evolution. It will be the period when data provided the industry new ways to offer life insurance and digital provided customers new ways to consume it,” he wrote.
“Insurance providers will be impacted in ways not dissimilar to the demographic trends changing other parts of the financial services industry.”
The article singles out the emergence of P2P and crowdfunding-enabled models within the insurance market, suggesting significant changes in the customer experience of insurance policyholders.
“The prudent use of digital channels coupled with data analytics is tapping into unmet consumer needs through convenient and hassle-free technology, while increasing product choices and adding transparency to the customer service experience,” Mr Crapis wrote. “It is these trends that insurers need to be aware of and find new ways to deliver to.”
Equities markets are also likely to be affected by digital trends, evidenced by the appetite for tech start-up investment by Millennial investors who instinctively understand this economic sector, he said.