Consumerization and the digital enterprise – E&Y Research Paper
Article Synopsis :
Future growth in the insurance sector may not be driven by traditional models of distribution, but will likely come from insurance consumerization. In a world where the balance of power is increasingly tilted in favour of consumers, building stronger bonds with them and making their life simple is imperative to driving growth and long term profitability.
In the research paper “Consumerization and the digital enterprise”, the E&Y team explore the importance of making the digital agenda a priority and why insurance companies have not realized the full benefits of investing in a digital enterprise. The E&Y team suggest that future insurance strategies must focus on solution portfolios to connect the “what” (underwriting, claims and compliance) to the “how” (managing customer risk). They believe innovative mobile, social and big data applications will create differentiating customer experiences while reducing costs, improving efficiency and driving product innovation. The paper contrasts ‘Traditional insurance’ with ‘Consumarized insurance’ and articulates the following traits of the latter:
- Sales strategy: Sales to end customers
- Product scope: Configurable and simpler
- Feature set: Personalized and focused
- Marketing strategy: Consumer-led marketing and viral strategies
- Service approach: User self-service
- Support experience: User- or peer-driven
- User experience: User-driven and inductive
Figure One: Drivers and enablers of consumerization
The paper illustrates the role of Social, Mobile, Analytics & Cloud (SMAC) as the digital enabler and proposes that insurers should work on the following aspects in order to reap the rewards:
- Omni-channel experience
- Informed decision-making
- Integrated systems and processes
The research paper also identifies some critical reasons that have stopped organisations from realising the benefits of their digital investments:
- Siloed implementation, based on a particular business or budget: Companies may invest in sales and marketing functions to enable social media, mobile capabilities and analytics, but fail to address back-office and support systems.
- Inadequate capabilities: Investments do not build a foundation for capabilities. Existing IT systems, data, analytics and real-time capabilities to analyse social and mobile outputs need to complement SMAC initiatives.
- Disconnected goals: Target capabilities enabled from SMAC implementations must be aligned with overall business objectives. Committed executive sponsorship (with clearly defined goals) will bring value by selecting the right SMAC-enabled tools, technologies and processes.
- Rigid business model: Many models lack the agility to deal with the dynamics of digital technologies and will necessitate more flexibility in changing processes and strategies to engage in faster decision-making.
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Digital Insurer's CommentsAs a result of digitisation, there is a substantial shift in consumer expectations which is questioning the traditional way of creating, selling and servicing insurance products. Customers are increasingly demanding simplicity, transparency and speed in their interactions with carriers and intermediaries. The rapid proliferation of online/mobile channels, social media and emerging ecosystems like IoT is continuing to fuel fickle customer expectations.
The acknowledgment of the growing role of consumers in the digital landscape is of utmost importance as they are better informed and more selective towards product price and service quality. To keep them engaged and loyal, carriers need to build and adopt a technology-driven, consumer-centric mindset. We have identified three key foundations to help them achieve this and which will enable them to harness the power of technology to drive growth and deliver a better customer experience:
- Capitalise on data to drive product and service innovation
- Leverage digital technology solutions to automate processes and to improve the acquisition and service experience
- Go omni-channel to serve customers from anywhere at any time
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