Your customers are changing fast. They want more…and they want more of that to be digital. As well as being extremely social, they’re more empowered, with higher expectations. Crucially too, they’re buying things differently. A combination of declining loyalty, changing priorities and evolving technology has created a switching economy. Accenture’s recent Global Consumer Pulse Research shows that just 29 percent of insurance customers are satisfied with their current providers, and as few as 16 percent are sure to buy more from them.
Welcome to the ‘Millennials’, the insurance customers of today, and tomorrow. A fascinating infographic from Goldman Sachs highlights what makes them special. The biggest generation ever, they’ve grown up in a digital world. They take social platforms for granted. And they have different priorities, putting off responsibilities like home ownership and marriage, and favouring access over ownership.
The big question: which insurers will capture their business, and which ones will lose out? One thing’s clear, maintaining the status quo is no longer an option. Up to now, companies in other industries have led the way in converting digital innovation into customer insight, mass personalisation, interconnectedness and agility. And some of them – like Google Compare – are already staking a claim on the insurance market. It’s time to fight back.
Piecemeal digital responses won’t work. What’s needed is nothing less than a holistic digital business strategy – one that encompasses the entire enterprise. It’s a big ask – and there’s no shortage of challenges along the way to becoming a digital insurer.
We believe three key questions need answering. First, how far and how fast should you proceed toward true customer-centricity? Most insurers know they need to improve their understanding and segmentation of customers. But going it alone may be too much. Many will need to partner with other companies, probably outside insurance, to create ecosystems that can offer broad, innovative services (TomTom’s UBI solutions for insurers are a great example).
Second, understand what it takes to be a digital transformer. Our research recently uncovered a group of insurers – ‘digital transformers’ – that are reaping rewards from astute investments in digital technologies, all viewing digital as the vital catalyst for change and all focused on the sweet spots where customer value and business value coincide. Like State Farm in the US, which has partnered with various security firms to launch a smart-home risk management and insurance offering using in-home sensors and the IoT.
Third, identify your role in the broader digital ecosystem. There’s more and more collaboration between insurers and complementary companies. Whether you’ll be playing a leading role, or a supporting part in an existing ecosystem, this is the way to improve distribution capabilities, extend your appeal and infuse new skills into the workforce. There are plenty of examples. Take Axa, which has partnered in Europe with BlaBlaCar to create a successful long-distance ride-sharing platform.
To compete from now on, insurers have to become more innovative and more assertive. Making do with what you’ve got is no longer enough.