ransforming an established business to exploit the new touchpoints made available by digital is no easy task. However it is a necessity that the full breadth of the insurance industry has woken up to, albeit a little later than its banking cousin. If you are responsible for an insurance product or digital strategy you are no doubt asking new questions about where your customers want to engage, and how to seize those opportunities that play to your core strengths.
Last month the UK’s Insurance POST magazine hosted a roundtable entitled Digital is an attitude. The panel, which comprised the technology leaders from the likes of Allianz, Legal & General and AIG agreed upon three priorities for digital success:
- Being fast
- Offering new market propositions
- Using data insights
But the road to transformation has many obstacles. Let’s begin with data insights. Many insurers have the opportunity to make significant gains simply by better understanding the customer journey and the intent of customers to better position and cross-sell products. More detailed personal data may be the proverbial new gold for risk profiling and personalisation, but it is the major technology providers and major retailers that customers trust or agree to share their data with - not insurers. To leapfrog the competition and get closer to the customer requires significant innovation, the ability to fail fast, and to become open to new partnerships with those who own those customer relationships.
The acceleration of change in consumer behaviour has been driven by younger consumers who expect to be able to “get things done” where and when they choose. Historically, this has been seen as a need for instant gratification driven personified by petulant teenagers - and perhaps there was some truth in it - but today there’s a broad demographic of current and potential customers to whom the ability to make informed decisions and serve themselves through digital channels is highly desirable. To quote McKinsey’s Digital disruption in insurance report, “Digital technology destroys value” - that is, if focussed solely on efficiency.
New propositions must be driven by customer need, which that is something the fast-growing and well-funded insurtech community is able to understand and exploit. A recent PwC report found 83% C-level insurance executives consider insurtech a threat, but the majority of large insurers mitigating this by accepting their position and forging partnerships. Many have established innovation hubs similar to Aviva’s Digital Garage to create and roll out new propositions, but not all core businesses are ready to move from the garage and deliver at the speed and scale required.
Where are you going?
Perhaps a better question is “in how many directions”? Whether you are an established business or a startup, we are entering a new era with complex business ecosystems. Those who are successful will create new propositions that put the customer’s needs at the centre to provide real value. A participant in the aforementioned Insurance POST roundtable said that their industry could be wiped out in 2 years if the technology giants turned their attention to insurance. Rest assured they are already watching, but will become a digital ecosystem partner out of necessity on various levels. Established companies are the insurance expert, with the know-how and talent to navigate regulation and to build upon the business processes they have created to establish their position as the coveted digital platform at the centre of a complex emerging digital ecosystem.
How fast can you go?
Being fast is the increasingly recognised as the fundamental challenge for businesses of heritage and scale. Indeed, being fast is a prerequisite for the other two roundtable priorities. The big players have been steadily refocusing on digital channels for several years - but the cultural and leadership challenges remain. New technology alone will not solve this. However, making those informed and strategic decisions to become a platform-oriented business removes the crippling drag of legacy technologies and siloes. Today’s leaders are systematically joining the dots between their business processes and their digital portfolios so that they are able to move fast to innovate in new propositions, fail fast if needed and forge new digital partnerships in an API economy.