New digital technologies and improved network connections over the last decade have provided businesses across industries with the tools they need to improve customer relationships by elevating customisation and delivering a higher level of service.
The expectations of customers have now changed. The millennial generation for instance has largely grown up with digital technology and expect services that are specifically catered to their behaviours, while the over 50s are increasingly becoming more digitally savvy. Individuals using online banking in the UK for instance have doubled from 30% to 60% in the last decade.
The insurance industry has lagged behind other sectors in the shift into digital technologies, making the sector variable to disruption. Being slow to adopt digital, insurers are putting their businesses at risk in three areas.
Low customer retention
Without access to their information and the services they rely on, customers often grow frustrated and switch to the insurance companies that can best provide these services.
Inability to attract new customers
Millennials represent a growing segment of the market, and they place a high priority on mobile-centric solutions. Insurance companies that can’t meet these expectations are perceived as old and out of touch.
Lack of innovation
Without accurate data, companies are unable to create custom products tailored to individual customers.
The insurance industry is now racing to catch up as it becomes increasingly concerned about these vulnerabilities and the possibility of losing market share to digital natives that may enter the market, such as supermarkets or social media networks.
This urgent need for insures to evolve is now being recognised by its the leaders. When Thomas Buberl become CEO of AXA towards the end 2016, he made digital transformation rather than more big money acquisitions his number one goal.
At Aviva, it has opened two international “digital garages” setup up by the insurer to explore all things digital and Germany’s Allianz has followed suit by forming a unit called digital transformation. Italy’s Generali continues to invest heavily in digital. And in the US, insurers such as MetLife and MassMutual have committed millions to tech start-ups.
Here are five big technology trends currently taking places within the market.
Insurance companies are adopting mobile technologies, particularly tools such as the iPad for brokers and underwriters for anytime, anywhere access to data. Adoption of this technology will also rise in the commercial lines space.
Leveraging analytics for micro segmentation of customers is helping insurers target the most profitable customers and brokers. This is in turn increasing their return on investment and helping to retain customers and aid in cross sell and up sell initiatives.
3. Social media and gaming
Social and gaming platforms are playing an increasingly important role in influencing purchase decisions. Customers, particularly the youth, constantly communicate through social media. Insurance companies need to create the technology and service infrastructure to listen to relevant ‘narrative bits’ by establishing effective ‘listening posts’. Social media and gaming present a great opportunity to bring a ‘fun’ element to the sales process. Gaming can also help insurers improve their brand image. In the US for example, Farmers Insurance has partnered with the popular Facebook game called Farmville and lets players buy ‘protection insurance’ for their online ‘crops’.
Increased collaboration between underwriters, customers, and brokers is possible through the effective use of collaborative technology. These technologies are helping to personalise the conversation between the underwriter and broker and cement long-term relationships.
5. Product configurators
These are helping insurers create the building blocks for effective multi-channel infrastructure. Product configurators help insurers launch products quickly into the market, bundle product offerings, and customise offerings quickly based on changing market demand or competitive pressures.
The digital transformation that the insurance industry is going through will ultimately give customers the opportunity to have tailored insurance policies that meet their growing expectations. Equally, it will allow insurers to have a stronger relationship with customers as interactions will no-longer be limited to an annual basis, with data and new tools giving both parties regular touch points throughout the year.
For digital transformation projects to run smoothly however, insurers need to learn from other industries by having more than just technical expertise on board; partners need to have a depth of experience that is gained by working with clients from many different sectors. This knowledge is invaluable, because it ensures speed of delivery by overcoming challenges before they arise, and prevents budgets from being overstretched.
Moving into digital will ultimately make insurers more agile and give them the tools and the insights they need to deliver highly customised solutions, improve customer satisfaction and retain pre-existing customers and attract new ones. If insurers continue to play catch-up around digital however, they run the risk of losing customers to new digital natives entering the market.
Sourced from Joel Lindsey EVP and Head of Digital Services, NIIT Technologies