Digital is with us
Consumers today already use multiple channels of communication and switch freely between them in real-time. 60% of people use at least two devices every day and 25% use three devices. People start an activity on their mobile, such as exploring and researching broker options or comparing policy quotes, and complete the task on a desktop and expect the other end of the interaction to be complete and seamless, no re-explaining to the call centre who I am and what I want.
Insurance companies are lagging behind in Digital. Relative to other industries they have been slow to adopt Digital business models. That will change, and has to. In less than two decades we have gone from 1% to over 40% of the world on-line, and for customers of insurance companies in the primary markets that’s probably 100%.
Why aren’t you doing it?
Well, you’re not alone, most insurers in Life, Accident and Health are only dipping their toes in the Digital water. A recent worldwide survey revealed that most insurers do not believe they have the ability to build and execute successful Digital models and are lacking a clear vision(i).
Of course there are technology constraints, primarily old systems and questionable data quality. These can be expensive and disruptive to replace but that data quality issue is a link to something else. Do you really want your customers to see, relatively unhindered, into your organisation and reveal to them how you work? When you open the door and welcome strangers into your house you like the place to be tidy. Are your internal processes up to being scrutinised by that most critical of inspectors – the customer?
Insurers do not typically have a culture of transparency. They are used to intermediaries providing a buffer zone between them and their customers. They build complexity and ‘cleverness’ into their products and services and use jargon to exclude and mystify. 68% of Life companies cite culture as the key barrier to delivering a Digital strategy(ii).
This is not just about installing new technology; you have to change the way you work in order to provide a satisfactory Digital experience to your customers. 57% of insurers worldwide say they have an operating model that does not facilitate Digital.
Why should you do it?
Digital is already a catalyst for huge change in supplier/consumer interaction. Customers want digital service, they’ve learned to love Amazon. You’ll win new customers if you can service employers and employees digitally.
Customer retention is a powerful incentive. Improving the customer experience and controlling the relationship are the primary motivators for insurers developing Digital strategies. You’ll also reduce costs but this is usually perceived as a minor benefit, it is more about extracting value from the portfolio while it is there.
Time is running out. If you don’t do it someone else will – the barriers to entry for those without the legacy are much lower.
What can you do?
There is a strong business case for going Digital and a powerful temptation to try to make it happen all at once. But trying to change too much at once is daunting and can cause paralysis, like Buridan’s donkey that starved to death standing equidistant between two piles of hay as it couldn’t decide which one to go for first. Thinking you have to do it all can get you stuck as addressing these problems directly may be too hard and too expensive.
There is an alternative, and that is to lead with something you can do and build on that gradually, learning and developing as you go. There is no better way of learning than by doing. Of course, this only really works as a business strategy if your IT platform is the right one to take you on to your final destination.
Start small but start
Begin with the data that the client supplies, starting with claim intake. As the dataset grows, your service grows and your data quality problems retreat. What you are doing is acquiring, creating and curating information on behalf of your customers
Above all remember that Digital is not an end in itself. It is just another way of giving your customers what they want – good service. It’s just that our perceptions of what constitutes good service have evolved pretty rapidly in the last few years.
(i) Bain & company: Global Digital Insurance Benchmarking Report 2015
(ii) Ernst & Young: Insurance in a digital world: the time is now