Insurers must cross an “inflection point” next year, crossing from operating in a product-oriented marketplace to operating in a customer-oriented marketplace, according to “2014 Trends to Watch: Insurance,” from consultancy Ovum Ltd.
Growing customer empowerment, the increasing ubiquity of mobile capabilities and little or no economic growth in major countries in the developed world are limiting revenue opportunities and making it imperative that insurers make the transition, Ovum said.
The four major trends Ovum cites for 2014 are:
- Insurers will implement customer self-service initiatives in order to become more customer-centric.
- Insurers will shape their sales channels to align more closely with agents' expectations.
- Insurance legacy system modernization will focus on customer channels.
- Data management and analysis, including analysis of variably structured data, will become an essential competency for insurance companies.
There are several contributing factors that are putting the onus on insurers to support real-time commercial interactions with customers, prospects and sales channels, Ovum said. First, customers armed with smart devices and apps; second, insurance agents/brokers and financial advisors expect insurers to offer them the capabilities to create market awareness, generate business and service clients; and lastly, regulators expect insurers to comply with tightening capital requirements despite resistance by the U.S. state regulators.
Another prediction that Ovum makes in the report: Systems of engagement will become as important as systems of record. This will lead insurers to integrate systems of record, such as underwriting and core administration systems, with systems of engagement, such as customer channels and online and mobile engagement, and with hybrid systems combining the two, such as customer relationship management (CRM) or customer experience management (CEM) systems.
Other steps insurers need to take to pass the inflection point in 2014, according to Ovum, are mobile sales channels, as well as the ability to analyze variably structured data for decision-making and improving tactical go-to-market and customer service initiatives. The report does note the primary difficulty in achieving all of these 2014 goals: decades-old underwriting and core administration legacy systems slowing down progress.
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