Seizing the opportunities of digital transformation – Accenture
Article Synopsis :
In order to capitalise on the competitive advantages digital transformation provides, insurers need to reinvent the way they think and operate.
Digital transformation is likely to continue to be a key component of insurers’ strategies over the next 5 years
In the research survey “Seizing the opportunities of digital transformation”, the Accenture team surveyed 141 insurers in Europe, the Americas, South Africa and Japan between July and September 2014 to discuss their digital strategies. The Digital Innovation Survey provides a valuable perspective on where insurers are in this process of change, and what their priorities are. As highlighted by the research , digital transformation features high on the agenda of insurers for the next 5 years and the key findings are represented in the diagram below:
In addition, Accenture report on the following key findings:
- Respondents expect their company’s digital initiatives to spur premium growth of 5-7% over the next 3 years
- 31% of insurers expect innovation to increase market share by up to 10 percentage points
- One-third of respondents expect usage-based auto insurance to account for >6% of premium income by 2017
- 29% expect the main driver of premium growth to be the expansion of their customer bases through the use of digital channels
- 72% of insurers are forming new distribution partnerships
- 64% focus their digital strategy on enabling digital channels
- Only 25% of insurers have a single view of the customer and see customer-centricity as a pillar of their business
- >90% expect agents to improve abilities to find and convert new leads and improve abilities to cross-sell and up-sell
Accenture draws six important conclusions from the data collected in the survey:
- Insurers expect digital transformation to be a top priority for the next five years
- Digital initiatives are expected to generate additional growth
- Radical extension of the insurance value chain is key to success
- The majority of insurers are Digital Followers, concentrating on incremental rather than transformative change
- Carriers expect successful distributors to ride the digital wave
- Insurers are expected to invest more than $40 million in digital projects
Accenture also present five recommendations for how insurers should balance their priorities, and what is the best way to set about achieving digital transformation:
- Build capabilities now to collect data and turn it into actionable insights
- Adopt a solution based approach to embed themselves in customers’ lives
- Develop new partnerships
- Aim for the sweet spot where customer value and business value intersect
- Create and outcomes-based digital business strategy
The report concludes with some digital strategy implementation tips , summarised in the diagram below:
Digital Insurer's Comments
The Accenture survey reveals a lot of valuable data and insight directly from global insurance executives about their views and plans for going digital. Although the survey did not have a strong Asia focus, we are really pleased to see that much of the insight is aligned to our views, not only on the growth opportunities that digital presents, but also on how to leverage these opportunities.We believe that reimaging the distribution component of the value chain is critical to success but this should not be the only focus, which many insurers fall into the trap of doing. The findings from the Accenture survey confirm this as less than half of the respondents have a digital strategy that covers the entire value chain and only a small minority (25%) have a single view of the customer and see customer-centricity as a core pillar of their business. In addition, Accenture highlight that “most insurers seem to have adopted a hybrid strategy in which digital initiatives are running in parallel with traditional business models, with digital technologies being used to enable traditional channels rather than to develop potentially disruptive innovations”.
Although these findings are not surprising and are in line with what we have seen most insurers doing, we are of the firm belief that the greatest opportunity with digital lies in deep transformative change – or as Accenture term it, the application of, ‘Digitalization’ as opposed to ‘Digitization’, where the former uses “innovative strategies, processes and experiences to create new revenue”. Whilst both approaches have the potential to generate results, it’s insurers who go down the route of ‘digitalization’ that are more likely to achieve significant benefits.
In order to have a strategy that sits across the entire value chain, we believe insurers should also be incorporating the following components into their digital transformation strategy:
- Customer-centricity and engagement
- Data and analytics
- Automated underwriting
- Omni-channel delivery and support
- Claims transformation
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Hugh Terry
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