Telecom Prepares to Charge on Insurance – Buckle Up For the Biggest Disruption in the Industry

30 Nov Telecom Prepares to Charge on Insurance – Buckle Up For the Biggest Disruption in the Industry

With the advancement of the digital era, developed countries are more saturated than ever with mobile phones and ever-growing options of telecom services, causing the inevitable collapse of price levels. This results in plummeting ARPUs (Average Revenue per User) due to commoditization. Globally, we’re witnessing revenues per user dropping by a quarter. Europe faces the worst of it; revenues per user have been slashed in half from above $35 to below $20 ARPU in the last 10 years.

Graph supplied by PWC report “Grasping at differentiated straws: Commoditization in the wireless telecom industry”, 2018

What Can Mobile Providers Do to Prevent a Profit Crash?

The answer lies in finding unique ways of building value in the customer base and turning to non-telecom income streams.  Thankfully, the wealth of additional services that can be offered is the light at the end of the tunnel. E-commerce, finance, and insurance are booming digital markets that the telecom business is set up to tap into – with big payoffs.

The participation of mobile operators in these markets is actually a driving factor in their evolution and disruption. Mobile tech is changing fast, ingraining deeper in our lives every day. Chances are high that you are reading this on your smartphone right now! When it comes to sorting out finances or searching for the right insurance plan it’s the norm to grab the phone and get Googlin’. Insurance companies fighting for the consumer’s attention are leaping on this trend, particularly since mobile optimisation of their services is actually in their own best interest. There’s a host of reasons why insurance professionals are raring to go ‘mobile’; and since IT constraints are slowing down the elephants of the industry, it’s opened an opportunist window for nimble insurtech companies.

First and foremost, everyone’s on their damn phone! Potential customers are not only using their device to search for the best deal but actually favour companies that allow them to sort the whole claim process easily and quickly with their mobile. Convenience pays. This is also a much more cost efficient solution for the insurer. Secondly, it allows the insurance provider to offer ‘on-demand’ plans short-term and with little notice – a hot trend in travel insurance. If the customer opts into GPS tracking and the use of AI their coverage can begin when they (and their trusty smartphone!) land in a foreign country and end when they return home – all enabled by BOT technology.

Service providers that make their processes fast and efficient on mobile will win consumer loyalty.

Telecom has the Winning Edge

The natural fusion of insurance with telecom is beneficial to both parties, but mobile operators are actually at an enormous competitive advantage should they jump into this market. Mobile providers know their customers much better than any insurance company ever could, giving them a serious edge against established insurance enterprises. Right now, mobile providers have the chance to become the better and more successful insurance provider than the traditional folks in the insurance sector. Reputation is everything, and mobile operators are already perceived as ‘positive disruptors’ by the very nature of their industry. After all, nowhere is cutting-edge tech more visible than in the media-frenzied world of mobiles. Telecom providers are therefore by default more trusted in leading digital advancements such as new insurance offers.

With their large and loyal client bases, telecom providers are also in a privileged position to cross-sell services like insurance very easily. What’s more, the cost to the customer can be seamlessly integrated into existing monthly phone bills, which makes payments frequent and convenient. This kind of processes in place allow for smooth uptake of the new service by the consumer.

Unconventional insurance offers like per-day car insurance are a big hit with millennials

Why the Time is NOW

Many mobile operators have already dabbled in insurance by offering mobile device protection insurance when they sell a handset. However, the scope of what telecom providers have the potential to offer in the realm of insurance goes much further. Travel insurance, as mentioned, is a huge and mostly unexplored market.  A few tech-savvy operators ahead of the game to build adjacent revenue streams with insurance offers are NTT Docomo – who offer plans such as 1-day car insurance for young drivers without their own vehicle – a huge success in Japan.

Clearly, mobile operators are in a unique position to spearhead disruption in the insurance industry and successfully channel profitable revenue streams from this market into their own. It’s a guaranteed way to survive crashing ARPUs and develop an even closer relationship to the customer by meeting needs above and beyond traditional telecom. Here comes the cavalry…

If you’re a telecom professional and are ready to learn how to leverage insurance, get in touch with i-surance here.