Whether you are reading this on your PC, tablet, smartphone or on paper, as a savvy insurance professional you don’t need anyone to tell you that the world is becoming more digital. More and more of what we do as members of society, consumers and business people is enabled - and in some cases challenged - by the vast flood of data and the changes in all manner of interactions that are part of everyday life.
We’re all aware of the pace of change, so we’re no longer surprised by findings like those from PwC's recent research, which showed that around 70% of consumers carried out some form of digital research before buying insurance and over a quarter bought their policies online. Customers are better informed and more connected every day, and their service expectations are ever more demanding and sophisticated.
The practical challenge for insurers and brokers is to work out what all this change means for their customers and their businesses. How do they best align their strategic strengths with opportunities in the marketplace? Where should they innovate and focus their efforts, and where are they better off stepping back and giving up ground to other players with the right capabilities or position in the market/value chain? Knowing where NOT TO focus will be as important as where TO focus.
Distribution will be a key battleground. Insurers and brokers will have to decide whether they are capable of providing the omni-channel experience that consumers and businesses are coming to expect. If they are not capable of providing a service across all of their customer touchpoints that is convenient, consistent and joined up, then consumers will see through the cracks and go elsewhere to fulfil their insurance needs.
Risk selection and pricing will change beyond recognition. Digitisation provides a huge range of opportunities to form a deeper understanding of a risk and the best price to offer in a particular set of circumstances, as well as the ability to make real-time changes to the product and pricing offered to customers. The winners in digital insurance will be those organisations that can apply insights drawn from rich data sources, and do so across their integrated channels.
Service and claims fulfilment will also be transformed in the digital world. Product features and cover will be adjusted without customer or insurer intervention to suit needs and circumstances. Losses will be notified to the insurer automatically. In some cases, customers and insurers/brokers will be notified proactively of a change in the risk, providing an opportunity to avoid the loss altogether.
There is no one-size-fits-all approach for implementing a digital strategy, so a key question is how ambitious an insurance company wants to be. With insurers and brokers of different sizes adopting diverse business models, some will need to focus on the digital capabilities required to operate effectively on a B2B basis, while others will want to immerse themselves fully in the digital world of the new consumer.
Every insurance enterprise needs a digital strategy, including where in the changing market they will focus, which capabilities they need for the medium to long term, and how to manage the transition from their existing business model. It also needs to set out the immediate actions required to make sure that they don’t get left behind in the short term, because the change is happening now, and it's happening at a blistering pace.