Ireland’s insurers must move now to keep the customer satisfied.
In my previous blog, I summed up the forces driving Ireland’s insurers inexorably towards change. The main message? It’s clear that customers are looking for something extra. And there’s every indication that InsurTechs will step in soon to meet these needs if incumbents don’t do so themselves.
What options do Ireland’s insurers have? Competing on price definitely isn’t one of them. With so much pressure on margins, there’s little room for manoeuvre at that level. Instead, our research points to major rewards for insurers that can reimagine how they engage with customers across the insurance lifecycle.
We know that advances in IoT, AI and other technologies, along with significant shifts in consumer behaviour, create outstanding opportunities. These range from refining market segmentation and offerings to rethinking distribution. For insurers that get it right, there’s the chance to enhance relevance and value ahead of the pack.
So how are Ireland’s insurers stacking up to customers’ expectations? The short answer: not too well. Digital-savvy players in other industries are raising the bar on service and user experience all the time. And when consumers bring these heighted (‘liquid’) expectations to the insurance market, they’re not being met.
For an example of this dynamic in action (and where it can lead), look at another ‘traditional’ industry that’s being wrong-footed by fast-changing consumer behaviours: Retail. Shopping preferences are changing in favour of online-only experiences, particularly among younger shoppers. And digital-born players are clearing up. At US$477 billion, Amazon’s shares are now worth over half as much as the rest of the US retailing market put together.
Digital is emphatically here. But Irish insurers’ go-to-market approaches still remain relatively unchanged. Relying heavily on brokers, traditional affinity channels and some D2C, they’re inflexible, predominantly one-size-fits-all and enormously vulnerable to disruption.
After all, there’s no shortage of startups targeting this space. And although InsurTech is not yet particularly mature in Ireland, there’s no question that its ambitions reach wider than the UK market. And that’s not the only source of competition. Many of the major insurers – Axa, Aviva and Allianz among them – have internal investment arms focused on InsurTech and innovation.
Irish insurers urgently need to take action to defend their market. But they face a common challenge: limited spare cash to pay for an improved customer experience and/or end-to-end business model change.
There’s plenty of good news, however. Ireland’s well established as a digital innovation hub in its own right, with a wealth of startup activity going on in and around Dublin. However limited funds may be for innovation investment, insurers have a great opportunity to tap into this activity to develop their own ecosystems.
It’s something we examine in this year’s Accenture Technology Vision for Insurance. As more insurers move in this direction, we’re seeing core functions like customer service and distribution relying on networks of digital partners. Look at the recently announced global partnership between AXA, Alibaba and Ant Financial services, for example.
This is exploring opportunities to distribute AXA products and services through Alibaba’s ecommerce system. Our research backs this up the power of propositions like these. Seventy-six percent of insurers say their competitive advantage will be determined by the strength of their partners and ecosystems.
For Ireland’s insurers, these ecosystems hold huge potential for redefining how they engage with consumers. Think about it. In five years, most customers will be purchasing their insurance through digital intermediaries like messaging apps, connected devices and smart assistants. Now’s the time for some smart ecosystem-driven positioning.
In the next blog, I’ll have some specific recommendations for actions insurers can start to take now. Meanwhile, I invite you to click here to take a closer look at our research.