Insurers Need to ‘Exploit’ Digital Technologies
Capturing the insurance customer of tomorrow is going to require a substantial investment in digital technology, a new report from Accenture consulting firm revealed.
A survey of 13,000 P&C and life insurance customers in 33 countries showed that as much as $470 billion in insurance premiums will be up for grabs globally as a result of declining customer loyalty and perceived commoditization of products.
Fewer than one-third of insurance customers indicated they were satisfied with their current provider.
“The study data indicates insurers are not keeping up with rising customer expectations, leading to increased customer dissatisfaction with insurance providers,” said John Cusano, senior managing director of Accenture’s global insurance practice.
“This has created a ‘switching economy,’ which threatens traditional insurers by giving the advantage to companies most successful at exploiting digital technologies.”
Nearly one in four (23 percent) of the respondents said they would consider buying insurance from online service providers, including technology giants such as Amazon and Google.
Nearly half (47 percent) of the survey respondents said they want more online interactions with their insurers.
At the same time, the number of customers who believe that most insurance carriers are the same in terms of their products and services jumped 50 percent in the last year, up to 21 percent in this year’s survey from 14 percent in a similar survey last year.
“Today’s insurance customer is more empowered, more social and has higher expectations of his/her providers.” — John Cusano, senior managing director, Accenture global insurance practice
Furthermore, fewer than one in six customers (16 percent) said they would definitely buy more products from their current insurance provider. In addition, only one in four (27 percent) had a high estimation of their insurance providers’ trustworthiness.
“Today’s insurance customer is more empowered, more social and has higher expectations of his/her providers,” Cusano said.
While many consumers globally are using online tools to purchase insurance products, only 15 percent said they are satisfied with their insurers’ digital experience.
“Leading insurers realize the need to offer a broader range of innovative products and services and create a differentiated customer experience, which will likely require partnering with nontraditional players,” said Jean-Francois Gasc, managing director, insurance, Accenture Strategy, Europe, Africa and Latin America.
“As a result, traditional insurance providers face a stark choice: embrace digital and customer-centricity, or become a highly efficient manufacturing utility, leveraging capital and digital technologies to provide low-cost insurance product manufacturing and servicing,” Gasc added.
“Those who do neither are likely to lose out in this switching economy.”
The report noted that insurers need “a holistic digital business strategy that encompasses the entire enterprise” if they want to remain relevant.
While many insurers have improved their customer-centricity, only a minority — the “digital transformers” — have taken that holistic approach.
The report found that 82 percent of digital transformers have invested in digital channels and technologies to advance customer-centricity and provide tailored customer experiences across all products and channels. Only 56 percent of the “digital followers” have.
To give customers what they value, many insurers will have to partner with other companies, probably outside of insurance, to form ecosystems that offer a broad and innovative range of products and services.
Sixty one percent of insurers are exploring the possibility of offering non-insurance products and services.
“Building digital capabilities can be challenging, especially for industry players with little experience and complex legacy infrastructures,” the Accenture report noted. “It makes sense, then, that 43 percent of insurers plan to acquire innovators/start-ups to build new digital capabilities, or have already done so.”