Technology and the Insurance Industry by Antonella Cappiello
Author:Antonella Cappiello
Language: eng
Format: epub
Publisher: Springer International Publishing, Cham
4 Technological Innovation and Evolution of Distribution Channels
The dynamism of the competitive scenarios leads to the adoption of policies of differentiation and innovation of the services offered, in which the realisation of appropriate distribution solutions assumes a critical role.
The intangibility of the insurance service makes it complex to use the product lever to acquire stable competitive advantages. Suffice it to remember that insurance product, as it is intangible, cannot be the subject of differentiation policies that affect the extrinsic character of the same; furthermore due to the lack of physical requirements, this product can be imitated without the possibility of patenting it.
The peculiarity of the insurance business requires, therefore, the use of appropriate methods of differentiation of the products/services, among which the distribution variable constitutes, without doubt, a valid instrument available to the companies (Fürst et al. 2017; Klotzki et al. 2017).
In fact, the interdependence between the production, distribution, and consumption phases makes the delivery system decisive in the connotation of the service, as well as in its qualification with the customer.
The combination of the components of the delivery system, that is, the physical support, the agents/brokers , and the customer, and the relationships that come to be established between these elements are therefore strategically important.
The differentiation of the product can be implemented through a change of technological, relational, and organisational kind, which interests the constituent elements of the delivery system, and consequently modifies the use of the product by the client (Nightingale 2003; Pires et al. 2008).
In this sense, new opportunities for innovation in the insurance business are also offered. It is evident that technological evolution acquires a critical character in the renewal of the production and distribution processes of insurance services, as well as of their innovation (Coelho et al. 2003).
The adoption of advanced technologies, in fact, in addition to contributing in an incisive way to the rationalisation of the systems of delivery of insurance services, also promotes the possibilities of differentiation and innovation of the same (Brown and Goolsbee 2012). More specifically, the change introduced by technology may concern the product/service in the strict sense—reference will be made, then, to the introduction of new insurance services—or the production and distribution process of the product/service.
In this case, thanks to technological progress, the relationships between the different elements of the traditional delivery system are sometimes also considerably modified. For example, the subscription and use of an insurance policy which can be carried out alternately with the agency , or through digitalised solutions, is thought to be the case. It is apparent that the purchase place of the service, the distribution procedures, and the insurer–client interaction change considerably from one hypothesis to another, modifying the qualitative and functional characteristics of the service.
It is useful to underline, in this respect, that in the field of insurance activity, there is not always a clear distinction between product innovation and process innovation. Since the “finished product” and the different phases of its delivery system are often strictly combined, it is not difficult to
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