Bain & Co: Insurers now need bigger, bolder digital moves

Executive summary :

Despite extensive transformation plans pursued by many major insurance companies, progress has been slow for the industry over the past few years.

Insurers need to invest in tech

Customer loyalty, as measured by the net promoter score (NPS), has inched up, but the loyalty leaders among traditional incumbents have not changed much. Expense ratios have remained flat. Many digital tools and channels still are not easy and convenient for customers to use. Innovation also lags, as illustrated by the low share of connected devices provided by insurers, relative to technology companies and automakers (see Figure 1).

Scale still matters

Looking at the largest firms, the relative market shares of some leading incumbents have eroded, and multinational carriers no longer cluster as top performers in total shareholder return. Traditional scale by premiums or assets still matters, but increasingly will require capitalising on data and analytics to create a competitive advantage.

Enter the Covid-19 pandemic and subsequent economic turmoil that have, first and foremost, taken a terrible toll on human health, household finances and business activity.

Digitalisation has intensified

For the insurance industry, the crisis has had some specific effects. Notably, Covid-19 creates an imperative to accelerate digital tools and channels, because of extensive work-at-home adoption, cost pressures and changes in customer behavior. Many customers who did not previously interact digitally have now gone online for shopping and other activities, making it easier for insurers to drive digital adoption. The crisis also catalysed some insurers to quickly mobilise cross-functional teams and adopt new ways of working. Now many insurers are looking to accelerate digital and cost agendas.

Four areas for growth

To gauge how well the industry was positioned before the pandemic, Bain & Company benchmarked 104 retail insurance executives in life and property and casualty (P&C) in the US, UK and Australia. Bain identified insurers that are setting the pace – the 10% of companies that achieve above-average premium growth and profitability, and also outperform on innovation and customer loyalty.

These leaders have built critical capabilities in four areas that position them well for a post-pandemic environment.

See the full report for more…

Link to Full Article:: click here

Link to Source:: click here