Digital and technological integration is changing the workplace, and the insurance industry is no exception.
Approximately one out of four insurers are taking the lead in digital transformation, and this elite group is already aiming to achieve significant benefits. These are the companies to watch because, if they are successful, competitors will find themselves scrambling to catch up.
But despite the fact that most insurers are aware of the need to invest in digital technologies, many feel that the change from traditional models to new practices are not always welcome. In fact, for some carriers, digital technologies create more challenges than opportunities.
And yet, digital front-runners are positioned to reap the benefits of their adaptation and investments, despite the discomfort of leaving traditional practices behind.
Who is leading the insurance industry’s shift to digital-first operations? The Accenture Digital Innovation Survey, released in December, knows.
The research, which surveyed 141 insurers, reveals that those who are leading the way tend to be large insurers, whose planned digital investments for the next three years average $56 million. The average industry spend hovers around $43 million.
Moving forward, insurers are looking to expand their digital value creation, including doubling their premium growth and expanding their customer bases.
But even these expectations are substantially lower than what Accenture proposes in its latest survey. All insurers, according to Accenture, should aim to be digital leaders in the field. The leaders in digital transformation have a clear set of characteristics, they say, and carriers looking toward the future should both improve their own digital capabilities while expanding their online activities to remain competitive in the evolving market.
Click through the following slides for the six characteristics of digital leaders.
1. They have a digital strategy that covers the entire insurance value chain
Insurers understand that they need to expand traditional value chains, or even create new ones, in order to weather disruption. Creating new partnerships, investing in innovative companies or broadening their offerings to include non-insurance products are just some of the ways companies can prepare for and initiate change.
The survey reveals that those who have made changes have also made the most progress in distribution. About 72 percent are planning to form new distribution partnerships in the future, or have already done so. Targets for future partnerships often include banks (69 percent); Internet players like Google, Apple and Facebook (44 percent); and aggregators (44 percent).
2. They have an established or are working on a single view of the customer
Results reveal that the minority of insurers regard customer-centricity as an integral way to conduct business. Only 25 percent have a single view of the customer, which involves improving the customer experience across multiple contact points. And even though an additional 35 percent of insurers are working to achieve these goals, the combined total still represents less than two-thirds of Accenture’s survey sample.
The report claims that additional progress will need to be made in this area, particularly since there is a clear link between digitalization and customer-centricity. This will entail a much more far-reaching process of transformation.
However, this will not come easily. There is a disparity between what insurers know should be done and what they are actually doing. Accenture notes that this may be due the challenges of overcoming legacy systems, which respondents identified as the No. 1 obstacle in executing a digital strategy. Other factors might include insurers’ mixed views about the digital revolution.