The remarkable growth of insurance portals and other online marketplaces reflects changing customer attitudes towards shopping for and buying insurance. Now instead of calling up an insurance agent or financial advisor, consumers and prospective policyholders might simply jump on to their smartphone or tablet and do their own research. For the behemoth traditional insurance industry, this new internet-enabled movement begs a crucial question – how can firms adapt to or even embrace this trend?
Many insurers still view “digital” as tactical channel initiatives – creating a social media page or launching a mobile app – rather than as the comprehensive, transformative mindset it should be. Digital should infiltrate an organization from top to bottom, revolutionizing products, services, processes and operations on the way. Why? Because “digital” is more than just a marketing buzzword. It can ensure an insurer’s survival and success in an increasingly disrupted environment. According to a study by McKinsey & Co, a thoughtful digitization program can deliver up to 65 percent in cost reduction, a 90 percent reduction in turnaround time on key insurance processes and improve conversion rates by more than 20 percent. They also found that in spite of this, of more than 30 leading U.S. and European P&C and life insurers, 39 percent had not articulated a digital strategy across the customer decision journey at all.
Just as the industrial revolution completely overhauled the automobile industry, digital transformation is revolutionizing insurance. Singapore is an incredible example of this trend, where commercial insurance rates hit historic lows in 2014, driven by new digital entrants and fierce competition. As such, the government has implemented a nation-wide insurance portal enabling consumers to compare the premiums and features of life insurance products across different insurers in a transparent and neutral manner. Polaris worked closely with the Monetary Authority of Singapore (MAS), the insurance regulator in Singapore, to create comparefirst.sg through which prospective policyholders can compare product features, premiums, sum assured, access insurance, budget & retirement calculators, send feedback and make more informed decisions about what type of insurance and which product to buy in a user friendly and intuitive way.
Globally, consumer preferences toward their interactions with insurance carriers are changing. A Boston Consulting Group study found that approximately 15 percent of consumers in Western nations would, if possible, conduct all of their transactions with insurance providers remotely, up from five percent two years earlier. Another 50 percent or so would prefer their dealings with insurers to be a hybrid of online transactions and interactions with sales or service people, up from 30 percent two years earlier. Undoubtedly, insurers must not only recognize the changes the industry is facing – but get ahead of them.
Here are a few key tips to future-proofing the insurance business:
Digitize the enterprise: As noted earlier, digital must saturate every thread of a company’s knitting. From a customer service standpoint, firms should look at how every customer touchpoint – from application to policy issuance to customer service – is seamless and efficient across mobile, desktop and more. This should allow for eliminating paper-based, manual processes. As policyholders gravitate towards self-service functionality, insurers should look at how their self-service portals are delivering accessibility and ease of use. For new services, insurers should modernize their backend core policy administration systems to go-to-market faster with innovative products.
Build new commercial models: The traditional insurance sales model is dying. Insurers must meet a growing commercial need for balancing online and traditional distribution channels. Innovative insurers are using enhanced interfaces to sell directly to consumers as well as through traditional channel partners. These insurers are treating their traditional channel partners as their internal customers and are also enhancing their user experience through automation of their day-to-day operations.
Wherever insurers are in their digital transformation journey – from converting manual paper-based processes to digitally revolutionizing the way they work – the Polaris approach can help. Our step-by-step process is designed around the business process, customer/ user experience (UX), to reduce the cost and complexity of operations across front, middle and back office with minimal impact on existing systems while unlocking new ROI potential.
About the Author
Brijesh Chandra, Global Head – Insurance Practice: Brijesh heads the Insurance practice at Polaris, driving new solutions and business delivery models while leveraging the latest technologies that deliver ROI for global insurers. Brijesh has more than 20 years of experience with insurance, banking and financial services products and service providers. Prior to joining Polaris, Brijesh was with American International Group’s (AIG) life insurance business.