Big Techs in the insurance market: how to use a User-Centrism strategy to address them?
Have you ever heard of the term Big Tech? It refers to large global technology companies that have a real and growing influence on the marketplace and the lives of ordinary people.
We are talking about big players in the high-tech world that, to a greater or lesser extent, have been operating in sectors that they were not initially created for. One of the markets that is feeling the pressure of Big Techs is insurance.
In this article, in addition to considering and reflecting on who the Big Techs are and how they operate. We present a User-Centrism’s strategy that can be used as a powerful tactic to address them.
Are Big Techs, Fintechs and Insurtechs the same thing?
The ” techization ” of the world is increasingly visible to all. From the simplest smartphone users to the big players in the market: no one can deny that the ever-growing world digital transformation is changing the way we live our lives.
Recently, financial companies have been paying attention to the so-called Fintechs, which are, briefly speaking, startups that provide financial services using modern technological software, applications, and other resources.
In the insurance market, the emergence of Insurtechs (insurance + technology) is a phenomenon similar to that of Fintechs.
Big Techs, in turn, are “the top technology companies, such as Google, Amazon, Facebook and Apple, which have excessive [marketing and social] influence” – according to the PC Magazine glossary.
In Europe, the most powerful Big Techs are also known by the term GAFA, which is nothing more than an acronym for the companies previously mentioned. When Microsoft is also included in the debate, the acronym GAFAM appears.
But don’t confuse apples and oranges … I mean Fintechs / Insurtechs with Big Techs! What matters is that Big Techs have enormous capabilities to handle individual consumers and process large amounts of information; they have transformed purchases and payments and appear to be on the verge of a broader expansion in consumer finance. They also appear to be on the brink of moving into the insurance market, which will cause many a sleepless night for some of the industries big movers.
Why are Big Techs making the Insurance Market lose their sleep?
During 2018, Google and Amazon showed a renewed interest in insurance, which led to speculation about their future intentions within this market.
Google has invested, albeit as a minority shareholder, in a major technology company for insurance agencies, Applied Systems. In return, the company offered access to its vast experience in areas such as artificial intelligence, machine learning, and digital marketing. Plus, there is much speculation that another giant of the technology industry is also keen to make a move in the sector:
Amazon has teamed up with two major companies in an ambitious venture to completely reinvent the health and insurance system in the United States. The company, chaired by Jeff Bezos, has also showed interest in creating an insurance comparison website in the UK.
The Travelers Companies Inc. has also announced that it is joining Amazon in some US states to offer smart house kits, insurance quotes and risk management information at a digital store.
The debate over the power of the Big Techs and their possible monopoly in markets where they initially did not act has already reached the American and European parliaments. In several conferences promoted by different market segments, the subject is also at the heart of discussions.
The more moderate experts believe that the issue will be well considered at the legislative level in developed countries, giving the emphasis to other emerging markets.
What cannot be denied is that all these Big Tech moves are being viewed as potentially threatening by CEOs of insurance companies around the world. The reasons for insomnia are varied; the questions, still without palpable answers, are perhaps the biggest source of concern: how to compete with brands with global reach and with such great technological power? Are consumers’ digital habits going to have the right balance when it comes to choosing an insurance product? Will the same thing happen to insurers that happened to the banking institutions?
How can a User-Centrism strategy help you tackle Big Techs?
In addition to the investments and efforts already made in digital transformation by the insurance companies, a strategy is that has been recommended by many experts is to address the competition generated by the Big Techs: User-Centrism.
The term User-Centrism was coined by Rick Levine, Christopher Locke, Doc Searls, and David Weinberger in The Cluetrain Manifesto (1999). It refers to the notion that consumers are increasingly monitoring how services are delivered to them, rather than being forcefully managed by suppliers.
It’s precisely this approach that makes Big Techs loved by the masses: they are constantly improving the user experience, empowering the way they deliver customization, usability and finally, tailored products and services.
Therefore, a User-Centrism strategy can be the differential that softens the action of the Big Techs, especially in insurance companies with history and tradition. By working with Human-Centered Design in the development of insurance product platforms and applications, for example, it is possible to create more usable interactive systems by applying human factors/ergonomics and knowledge in usability and its techniques.
As it has not always been invested in digitization – the more traditional ones just awakened to digital transformation – creating a User-Centrism strategy with internal tools and teams can be quite difficult. The partnership with Insurtechs and specialized consultants, in this case, is the most appropriate.
In any case, if the strength of the big players in technology comes from their reputation, from being 100% online and from the experience they deliver, it’s about time for the insurance companies to focus their efforts on that.
What do you think? Have you ever thought about how the Big Techs are moving toward the insurance market? What do you think of our proposal for a User-Centrism strategy to address them? Human-Centered Design – How to Apply Concepts in Your Business! To further explore the subject, download our Human-Centered Design e-book now!