Going digital: A $470bn opportunity for the insurance industry (Thinkstock)

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We've written before about the insurance world's readiness for digital transformation. Compared to other industries such as retail and even banking, insurance is relatively old-school – interactions with customers are still largely restricted to channels like snail mail and the phone, and self-service and mobile solutions are mostly unheard of. But that's not to say that change isn't inevitable, or that it isn't just around the corner.

A new report from Accenture, published on August 4th, attempts to describe what this means for insurers in financial terms. It claims that as digital transformation becomes a reality, as much as $470 billion (£300 billion) in existing industry revenue will be "in play" in the near future.

To put it more simply, firms that continue to sell the same commoditised products as in the pre-digital age will lose customers, while those that set themselves apart with innovative new services will gain them.

Some 23,000 individuals from 33 countries took part in the Accenture survey, with their responses indicating that the industry as it is today simply isn't delivering.
Fewer than a third (29 per cent) were satisfied with their current insurance products and providers, and more than a fifth (21 per cent) stated explicitly that "most insurance providers are the same" – an increase of seven percentage points on similar research carried out the previous year.

It follows, then, that customer loyalty is in short supply – just 16 per cent of respondents said they would definitely buy more products from their current provider.

However, when quizzed about their digital wants and needs, their responses showed decidedly more fervour. Almost half (47 per cent) expressed a desire for more online interactions with their insurers. And while a fair number of property and casualty insurance customers had bought policies online (49 per cent) or on mobile (41 per cent), the majority (85 per cent) said they felt their providers' digital experience could be better.

Finally, 23 per cent of respondents told Accenture they would consider buying policies from non-traditional firms – specifically technology giants. This should definitely be enough to prompt insurers to sit up and pay attention: if they don't respond to customer demand with the right digital products and services, and someone else does, then as much as a quarter of their business could be at stake.

"Today's insurance customer is more empowered, more social and has higher expectations of his or her providers," said John Cusano, a senior managing director at Accenture's global Insurance practice.

"The study data indicates insurers are not keeping up with rising customer expectations, leading to increased customer dissatisfaction with insurance providers. This has created a 'switching economy,' which threatens traditional insurers by giving the advantage to companies most successful at exploiting digital technologies."

If you're an insurer, how are your efforts to go digital doing?

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