Accenture has published a report called “ The Digital Insurer : Change now to get ahead”. In the view of The Digital Insurer this should be mandatory reading at boardroom level.
Business as usual is the highest risk strategy
The 3 key messages that I think are of relevance, and I quote directly, are:
- “….this time the forces of change are more additive and more profound”
- “Winners will be those organisations that apply digital technologies to be connected, analytic and agile”
- “And if the incumbents cannot get this right then new entrants will”
Cynics will say Accenture have a vested interest and would say this – which is all true. But industry executives need to also heed the clarion call from other independent parties and to understand the changing dynamics of customer behaviour. Observe your children, the “digital natives” of the future, rather than seek comfort in your fellow executives. And understand the young distributors you are recruiting now already have fundamentally different expectations than the distributors who are your major contributors to enterprise value at the moment – you have to listen carefully to the people with no power, and only a small voice, to understand how the future is most likely to evolve.
Digital insurance is much more than online selling
What is misunderstood about digital insurance is a belief that it simply means selling more insurance online and direct to consumers. This is indeed one implication of digital insurance but the reality is much more nuanced and complex; the smarter companies are deploying digital thinking to support the “hybrid” consumer who may choose to buy on-line, over the phone or via an advisor.
The Accenture report has a lovely statement : “The danger is that a real gap emerges between consumer demand and insurers’ capability to deliver. Winning in digital therefore requires a fundamentally different mindset as well as new capabilities.” The Digital Insurer would go further and say the gap is already so wide that many of the existing incumbents will not be able to bridge it. A similar message applies to retail banking. New entrants, with brands untainted by the financial crisis and considerable digital assets, could and most likely will, redefine the insurance industry.
Consider “Newco” – but don’t bet the company on it ( just yet)
The report rightly challenges insurers to consider and invest in “newco” models as well as transformation of existing operating models. The Digital Insurer would probably still place the majority of investment dollars in digital transformation of existing models but would support insurers placing a large number of small bets on understanding how to truly engage customer digitally – and be better prepared to participate in the new models that will surely emerge.
The leopard may not be able to change its spots and dinosaurs clearly couldn’t adapt quickly enough to avoid extinction but chameleons are able to adjust perfectly to their immediate habitat. Which route beckons for your insurance company?
To read the entire report from Accenture click here. Well done to the team at Accenture for such a lucid report.