How to Compete in the New Digital Economy – CSC
Article Synopsis :
Consumers of all ages are becoming more comfortable not only using tablets and smartphones but with electronic transactions in general. Big data, cloud computing, mobility, social networking and the emerging “Internet of Things” (IoT) are converging to enable a new digital economy that places increased value on the needs of these end consumers. The traditional insurance company is set up to best serve a type of customer that, in the very near future, may no longer exist.
In the research report “Digital Insurance: How to Compete in the New Digital Economy”, the CSC team discusses how customer empowerment is disrupting the traditional ways of doing business and the role data plays in the emerging digital economy. The report helps insurers better understand what it means to be ‘digital’, outlining a four-point approach that speaks to mindset as much as it does specific capabilities:
- A customer-centric approach to doing business
- An omnichannel-enabled buying journey that augments traditional channels with robust self-service options, direct purchasing and a single customer experience across online, mobile and now social channels
- The ability to leverage data and analytics across the entire value chain, including product innovation, marketing and sales, new business, servicing, claims, and operations
- Straight-through processing (STP) made possible through simplified products, automated underwriting for new business, first notice of loss (FNOL) automation and self-service options for claims
How well a carrier acquires and analyses data, the report asserts, is more important than any other factor. To wield data as a competitive weapon, an insurer needs to master three core competencies. More than anything else, it’s these three skills — mastering consumption, understanding and engagement — that will separate truly digital insurers from the rest.
- Master of Consumption — embraces the concept of the service-enabled enterprise and the API economy. This is about an enterprise getting better at both consuming and becoming more consumable. It culminates in the development of a true omnichannel experience for customers, agents, brokers and even internal stakeholders.
- Master of Understanding — Develops the capacity for meaningful data and analytics work by implementing a big data platform. Then, explores both what’s possible and how business value might be generated as a result.
- Master of Engagement — Executes on the overall strategic vision of digital insurance. Sets ambitions to move the basic value proposition from indemnification to continuous value.
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Digital Insurer's CommentsTraditional insurers are all about the policy – not the policyholder. Digital insurers move beyond insurance products as mere instruments of risk management. Digital insurers understand the relationship with customers needs to be more holistic and experiential. Digital insurers move the core value proposition from one of simple indemnification of loss to one of education, prevention and continuous value.
It’s our view that all policies of a given type (e.g., Auto, Home) are essentially created equal. How the policies are sold and serviced is the differentiator. A truly digital insurer utilizes technology to make products easy to comprehend and simple enough to enable e-applications, automated underwriting and direct issuance — all to help deliver the type of instant gratification today’s digital consumers have come to expect.
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