Against the rapid rise of the Internet of Things, mobile computing and other digital advancements, some insurers have viewed the technology race forward as largely an IT issue, pursuing a series of unconnected initiatives that have been added piecemeal onto legacy systems. This traditional, stop-gap mindset may be changing, however, as insurers realize the key role that digital technology plays in improving the customer experience. That said, insurers still have a ways to go.
Craig Weber, CEO of Celent, pointed to the need for our industry to
For example, newly published research reports that measure the insurance industry’s willingness to embrace a formal digital vision reveal that insurers are still slow on the uptake. The most recent research, co-conducted by Boston Consulting Group and Morgan Stanley Research, included 50 interviews with senior insurance executives and technology providers as well as proprietary survey of insurance consumers in 12 countries.
“Consumers’ overall digital experience with insurers lags that of other industries—particularly when it comes to moments of truth’ such as paying claims,” says the report, “
Report authors Ugo Cotroneo, Jean-Christophe Gard, Micha'l Niddam and Nick Barsley suggest the research findings are so compelling, they call on insurers to completely rethink their customer engagement model.
“To defend their markets, insurers must aggressively build new business models that focus on meeting consumers’ expectations for digital interactions,” the authors say.
One thing is clear: What is considered a digital innovation today will be the expected norm tomorrow. “As consumers continue to integrate digital experiences into their everyday lives, they expect these experiences, as well as their relationship with insurers, to become more direct, simple, seamless, and intuitive,” say the authors.
And much is at stake: According to Accenture, up to $400 billion in insurance premiums could change hands within the industry in the coming year, placing customer satisfaction requirements at an all-time high.
John Cusano, senior managing director of Accenture’s global insurance practice, points to where those requirements might be leaning: “More than two-thirds of customers would consider buying insurance products from non-insurers, and 23% said they’ consider buying insurance from Google or Amazon.” Other outsiders, such as Chinese Internet providers Tencent and Alibaba, are collaborating with Ping An to offer insurance products online.
Cusano admits that it takes more than market research and distribution to be an insurer. The competition will have to fight regulatory barriers, capital requirements and the ability to compete against well-known, well-respected brands that have healthy investment portfolios and deep industry expertise.
“These assets, however, will lose value if insurers don’t develop digital capabilities to meet the changing demands of their customers,” Cusano says. “At the strategic level, insurers, like other service providers, need to move from simply selling products to delivering “useful experiences.”
If we rethink digital vision as an enterprisewide issue rather than an IT issue, insurers will be positioned to — at a minimum — improve overall business tactics, meet specific customer requirements and add value to each transaction at every step. And outside upstarts, which may have tech savvy transaction capabilities, will fall back when they are unable to match the insurer’s core competency.
Pat Speer is president of Speer Consulting, a communications and content management consulting firm. She is also the former editor-in-chief ofInsurance Networking News.
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