Digital—the use of information, business resources and technology in a tightly connected manner to produce innovative outcomes—is certainly not new. What has changed in recent years is its potential to transform businesses and even industries. In the past, the primary benefit of digital technology was its ability to deliver incremental efficiency gains, to do familiar things better. Today, it’s impossible to open a business publication without reading about traditional firms or industries that are being shaken to their foundations by digital innovators.
A strong link
Many insurers believe there is a strong link between digital initiatives and growth. But what form will that growth take?
A recent survey of C-level executives charged with driving their companies’ digital agendas found that:
- Life insurers expect revenue income to grow by up to 7 percent as a result of digital initiatives.
- Twenty-nine percent of respondents expect their customer bases to expand through the use of digital channels and they expect this expansion to be the main driver of premium growth.
- A third of respondents expect innovation to increase the innovator’s market share by as much as 10 percentage points.
Incumbents have the advantage
One interesting finding from the survey is that respondents believe existing insurers stand to gain more from innovation than new entrants. In other words, incumbents have a built-in advantage over those entering the market—but they need to use that advantage effectively, balancing digital transformation for the sometimes conflicting goals of short-term profitability and long-term investment in sustainability.
One of the major advantages for incumbents is their existing customer base. But in a switching economy, where customers can easily compare products and services across carriers, insurers are having to work harder to retain and attract new customers. This is an area where innovative technologies can make a marked difference. For example, the SmartVideo product, by Accenture Software for Life and Annuity, improves customer retention by providing highly relevant video-based customer communications. Using client and policy data, the solution generates one-to-one video communications, on demand, to increase customer satisfaction and foster brand loyalty.
An integrated transformation plan
Unfortunately there is no one-size-fits-all approach to adopting digital technologies, which is why we suggest life and annuity carriers devise an integrated digital transformation plan that takes into account their unique position and strategic goals. When they create this plan, we suggest insurers consider the following key points:
- Build capabilities now to collect data and turn it into actionable insights.
- Develop new partnerships.
- Create an outcomes-based digital business strategy.
- Adopt a solution-based approach to embed themselves in customers’ lives.
- Aim for the sweet spot where customer value and business value intersect.
To learn more about why digital initiatives are expected to generate additional growth, visit Seizing the opportunities of digital transformation and register to download the full report.