In my last post I discussed the first of three fundamental questions that insurers must answer to successfully compete in the future. Today we’ll take a closer look at the second, what does it take to be a Digital Transformer?
Digitization is the application of new data and technologies to existing business processes to reduce cost or improve effectiveness.
Digitalization goes far beyond that, taking a customer-centric view of the organization and using innovative strategies, products, processes and experiences to create new revenue. While it enhances efficiency, digitalization is essentially concerned with seeking new opportunities for generating customer value, often outside the traditional business model, customer experience and industry norms.
Our research shows that leaders recognize that they can’t just look digital; they need to be digital. These leaders see digital both as an immediate competitive imperative, and as a catalyst for transforming the insurance value chain over the long term.
We live in a world where customers can compare prices and bind coverage instantaneously, with the click of a mouse. Our study shows that nearly 23 percent of customers would consider buying insurance from online service providers like Google (through its Direct Life product) and Amazon ( through its Alife product), or even newer entrants like Alibaba, Tencent, Walmart and Ikea. Almost half (47 percent) want more online interactions with their insurers, and only 15 percent are satisfied with their providers’ digital experience.
Moreover, 49 percent of P&C customers have already bought insurance online, and 52 percent would like more access to online channels at all stages of the insurance cycle.
Insurers know this: 83 percent believe digital technologies will transform the way they interact with their customers. Fifty-nine percent expect to be challenged by online service providers, and 57 percent say the same about aggregators.
Digital Transformers focus their digital investments on the “sweet spots” where customer value and business value intersect. We believe there are three characteristics that distinguish them from Digital Followers:
- They view digital as a catalyst for transformation.
- They establish holistic digital business strategies.
- They create digital value propositions, often as part of a larger ecosystem.
An insurer with a good grasp of the importance of digital integration is AXA. In France, the insurer is working with the BlaBlaCar, a long-distance ridesharing service, to tailor an innovative insurance product in addition to drivers’ existing policies. The coverage includes breakdown coverage and onward travel, and insures BlaBlaCar passengers to drive. The coverage is provided free to all members in France every time they travel on journeys organized through BlaBlaCar’s online booking system. Members also receive access to a dedicated 24-7 assistance hotline.
The AXA/BlaBlaCar liaison is a great example of working with non-insurance partners in a larger ecosystem to provide a customer-centric experience that anticipates customer needs.
Next week I’ll tackle the last fundamental element insurers must adopt to succeed in the future: developing an ecosystem.
For more information download the report: Capturing the insurance customer of tomorrow: Three key questions to guide success
Here are some other reports that may be of interest: