Digital Adoption in the Insurance Sector – The Economist Intelligence Unit
Article Synopsis :
In the report “Digital Adoption in the Insurance Sector”, the Economist Intelligence Unit looks at the ways in which digital adoption is shaping the insurance sector by forging new business models, new commercial partnerships and different consumer relationships, and by providing new potential revenue streams.
Boot up and save . . . the challenge for non-digital insurers, which, according to the Economist, is most insurers
The report delivers four key findings:
- Insurers are limited in their digital capabilities, for example in terms of digitally processing insurance claims. One of the greatest challenges is integrating the new and essential data analytics tools with existing legacy systems and ensuring the smooth and safe transfer of data between previously siloed departments and business systems.
- A crucial way in which insurance companies are transforming themselves is in their commercial partnerships. Some large insurers have minimised the FinTech (financial technology) disruptor risk by collaborating with FinTech start-ups; partnering with large technology companies; or creating their own innovation labs.
- Insurers have identified big data as one of the most significant developments of the digital age. They are using data from myriad sources and in myriad ways, from personalising marketing messages to more accurately matching risk-premium pricing.
- The Internet of Things (IoT) could transform property and object-based insurance. It presents opportunities for the future of insurance aggregators and highlights the changing face of potential insurance partners. As digital capabilities have enabled real-time marketing to emerge, so could the IoT and wearable technology herald real-time insurance-risk pricing and customer servicing.
The report also considers Social, Mobile, Analytics and Cloud (SMAC) technologies and the opportunities and challenges they present in the context of insurance, specifically:
- The digitally savvy call centre
- The data dilemma
- Data controversy
- The Internet of insurable things
Digital Insurer's Comments
Technology tends to move faster than people. People, according to this report, are moving faster than their insurance carriers in the adaption of digital technologies.68% of insurance buyers want to conduct transactions online. Yet, today, less than 50% of insurers are able to digitally provide a product or service quote; fewer than 35% can process a transaction or sale digitally; and only 23% incorporate digital into the claims process.
Digital technologies open up new avenues of customer engagement and serviceability, not to mention policyholder retention, loyalty, and cross-sell/up-sell business growth for insurers.
The delta between what buyers want and what insurers currently provide is the challenge for incumbents and the opportunity for up and comers. In this report, Andrew Grill of IBM Interactive asserts, “The consumer of the future has already arrived.” In our view, he couldn’t be more right.
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Hugh Terry
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Hugh Terry
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