Financials

<p style="text-align: justify;"><span data-preserver-spaces="true">No one has a crystal ball, and predicting the future is, of course, impossible. However, we can refer to some of the trends outside the Insurance Industry and look at how that segment interacts with its customers and how customer service is evolving due to competition or new market entrants.&nbsp;</span></p><p style="text-align: justify;"><span data-preserver-spaces="true">I take as a starting point the changes that retailers have implemented in the last 10 years to retain market share or increase customer satisfaction, and there are, of course, many lessons learned in that space for companies' fortunes that don't adapt and change. Successful organizations such as Amazon, Vinted, and Ali-express have thrived, and those that have not faired so well are Debenhams and HMV. In each case, these organizations have read the opportunity in the market either well or </span><span data-preserver-spaces="true">badly</span><span data-preserver-spaces="true">, and the results speak for themselves. </span></p><p style="text-align: justify;"><span data-preserver-spaces="true">So why is the focus on retail so important for Insurance Companies and the Insurance sector? </span></p><p style="text-align: justify;"><span data-preserver-spaces="true">Well,</span> <span data-preserver-spaces="true">smart</span><span data-preserver-spaces="true"> insurers will likely think more like retailers to remain relevant, not squander opportunities to compete with the market and introduce differentiated customer service offerings.</span></p><p style="text-align: justify;"><span data-preserver-spaces="true">Most advisors have long been predicting that the personal line and some commercial segments will move from a cover and settle market to a predict and protect environment. To make this shift, there must be a change in how companies collect and use data. At the same time, it is bringing a change in its relationship with its customer base to demonstrate and add value above and beyond its rather simple and what could be considered antiquated claims methods. </span></p><p style="text-align: justify;"><span data-preserver-spaces="true">In 1999 I worked for an </span><span data-preserver-spaces="true">organisation</span><span data-preserver-spaces="true"> that employed a futurologist </span><span data-preserver-spaces="true">and</span><span data-preserver-spaces="true"> everyone thought he was a fruit cake, drifting around the office in shorts and </span><span data-preserver-spaces="true">T shirt</span><span data-preserver-spaces="true">, holding meetings on space hoppers and not desks and chairs </span><span data-preserver-spaces="true">and</span><span data-preserver-spaces="true"> providing all staff with Jellybeans.</span> <span data-preserver-spaces="true">He, however, predicted mobile phones </span><span data-preserver-spaces="true">being</span><span data-preserver-spaces="true"> used for wallets, Smart Screen Technology, and</span> <span data-preserver-spaces="true">the rise of </span><span data-preserver-spaces="true">the</span><span data-preserver-spaces="true"> digital assistants Alexa and Siri.</span> <span data-preserver-spaces="true">The IOT-enabled </span><span data-preserver-spaces="true">home,</span> <span data-preserver-spaces="true">not</span><span data-preserver-spaces="true"> quite there on that one </span><span data-preserver-spaces="true">yet</span><span data-preserver-spaces="true">, machine-to-machine communication.</span><span data-preserver-spaces="true"> Streaming Audio services controlled by voice from your device and, finally, applications that you interacted with that made your life easier.&nbsp;</span></p><p style="text-align: justify;"><span data-preserver-spaces="true">Interestingly, during this period of rapid change, the Insurance Segment has remained largely unchanged; yes, there has been a rise in comparison sites</span><span data-preserver-spaces="true">, and there is</span><span data-preserver-spaces="true"> a range of more sophisticated online services.</span> <span data-preserver-spaces="true">But the principles of customer dynamics have </span><span data-preserver-spaces="true">not altered</span><span data-preserver-spaces="true">: contact the client at renewal or be there when they have a claim, and eventually, after a sufficient waiting period, provide the client with a replacement item after several arguments on the item's value or existence.</span></p><p style="text-align: justify;"><span data-preserver-spaces="true">Bring on the future, where your Travel Insurance Company sends you a message to say flights are delayed at the airport, so leave later than expected, or those that have arrived at the airport to find that their flight has been canceled have a &pound;50 token in their wallet for food and drink and hotel reservation made for them, without them ever having to spend money and then reclaim it. </span></p><p style="text-align: justify;"><span data-preserver-spaces="true">The commuter is advised of roadblocks and the time they should leave to get to work on time and avoid accident black spots. Or cars that book themselves in for service or let the breakdown and recovery service know </span><span data-preserver-spaces="true">exactly</span><span data-preserver-spaces="true"> where the vehicle is the moment it breaks down and notifies the driver immediately how long the recovery truck will be; or better than this, there is a collaboration between the insurers and the Motor Manufacturers to </span><span data-preserver-spaces="true">notify</span><span data-preserver-spaces="true"> the driver that there is the potential for future issues and the car </span><span data-preserver-spaces="true">is immediately booked in</span><span data-preserver-spaces="true"> for service or repair. From a safety perspective, emergency services are notified and dispatched to the vehicle's precise location if the vehicle is detected in an impact. At work, you receive a text message saying that the water consumption is surprisingly high, considering that the property is empty, you have house guests, or it could be a leak. Do you need an emergency plumber to attend? You don't have to leave work; you can let the plumber in via a smart lock on your front door. </span><span data-preserver-spaces="true">Issuing</span><span data-preserver-spaces="true"> a once-only passcode for entry.</span></p><p style="text-align: justify;">&nbsp;</p><h2 style="text-align: justify;"><span style="font-size: 14pt;" data-preserver-spaces="true">Advantages of Data for Better Customer Experience</span></h2><p style="text-align: justify;"><span data-preserver-spaces="true">Whilst</span><span data-preserver-spaces="true"> this may seem like a distant dream and a </span><span data-preserver-spaces="true">feature </span><span data-preserver-spaces="true">rich</span><span data-preserver-spaces="true"> future, why is it not possible </span><span data-preserver-spaces="true">today.</span> <span data-preserver-spaces="true">I believe that the answer is partly due to the availability of data, being able to understand both risk and individuals at a granular level, but equally being able to share that data with other service providers </span><span data-preserver-spaces="true">in a secure and governed fashion</span><span data-preserver-spaces="true">.</span> <span data-preserver-spaces="true">There will </span><span data-preserver-spaces="true">of</span> <span data-preserver-spaces="true">course</span><span data-preserver-spaces="true"> be those </span><span data-preserver-spaces="true">that believe</span><span data-preserver-spaces="true"> that this sharing of personal data will be contrary to privacy and will argue that this is too much of a Big Brother oversight and control.</span> <span data-preserver-spaces="true">Yet </span><span data-preserver-spaces="true">consistently</span><span data-preserver-spaces="true"> surveys indicate that </span><span data-preserver-spaces="true">the &nbsp;vast</span><span data-preserver-spaces="true"> majority of people will </span><span data-preserver-spaces="true">willing</span> <span data-preserver-spaces="true">allow</span><span data-preserver-spaces="true"> data on themselves to be used and shared if there is demonstrable benefit to them in either the provision of better services or the reduction in the cost of those services.</span></p><p style="text-align: justify;"><span data-preserver-spaces="true">We have all been experiencing massive increases in insurance premiums in the last 12 months, blamed on the cost of inflation. Poor results in Home Underwriting have resulted from bust pipes, as people have been unable to heat their homes sufficiently due to rising fuel prices. Of course, vehicles have limited parts availability or price hikes from fuel and labor costs for repair and recovery. </span></p><p style="text-align: justify;"><span data-preserver-spaces="true">Yet, in 2023, Aviva reported a</span><span data-preserver-spaces="true"> 9 </span><span data-preserver-spaces="true">and an increase in operating profit. The company's sales are up, costs are down, and it announced a share buyback of &pound;300 million, upgraded dividend guidance, and reported that despite weather-related claims, it expects to beat its medium-term financial targets and achieve 5-7% growth. </span></p><p style="text-align: justify;"><span data-preserver-spaces="true">Zurich Insurance Group posted a record full-year operating profit of&nbsp;</span><strong><span data-preserver-spaces="true">$7.4bn</span></strong><span data-preserver-spaces="true"> for 2023, materially ahead of analyst forecasts thanks to a stronger-than-expected performance in Life and Farmers, although its non-life P&amp;C unit fell short of expectations.</span></p><p style="text-align: justify;"><span data-preserver-spaces="true">Appreciating that some Personal Lines only businesses have </span><span data-preserver-spaces="true">not seen</span><span data-preserver-spaces="true"> similar results, what are these large insurers plans for the future.</span><span data-preserver-spaces="true"> We will have to see and depend on market pressures and long-awaited competition on the marketplace from the labelled Disruptors. So, for now, it is very much Business as usual.</span></p><p style="text-align: justify;">&nbsp;</p><p style="text-align: justify;">&nbsp;</p><p style="text-align: justify;">&nbsp;</p><p style="text-align: justify;">&nbsp;</p>