Moreover, they are voracious new adopters: it took Google six years to reach 50 million users, while its social networking site Google+ needed just 88 days to reach that number. As consumers increasingly shift from computers to smartphones and tablets, they can research, compare prices and buy anytime, anywhere. The easy access that Apple, Google and Amazon deliver is what consumers now expect from everyone.
Digital is a new market force that is driving a massive change in consumer expectations. It will require a different set of skills, culture and measurement. Industries such as telecommunications, consumer products, and media and entertainment have already harnessed digital to attract and retain new customers. It is time for insurers to evolve and respond: they cannot afford to be on the sidelines of the shift to digital.
In light of this imperative, EY undertook a ground-breaking survey ‘Insurance in a digital world: The time is now’ of more than 100 industry players to understand how the digital agenda is reshaping the sector and to what extent life and non-life insurance companies are grasping and exploiting the shift to digital. At a time when the speed of digital change is so fast that standing still means falling further behind, this new survey provides fascinating insights into how insurers can respond to — and succeed in — the digital future. Here are our findings.
1. 79% say they are not settling the baseline for digital or are still learning
A striking number have no up-to-date digital business case. Nearly half (47%) say they have no single cohesive digital strategy business case. More positively, 57% say that within three years, they intend to have a regularly updated digital business case that integrates detailed budgets and forecasts with financial and HR planning.
2. 57% have operating models that do not facilitate digital
Most respondents say their digital strategy has support from the top — but actions speak louder than words. Over 40% of insurers have support from senior management and a digital sponsor within their C-suite, but more than one-third of respondents believe senior management support is “not always backed by actions, budgets or resources.” Currently, only 5% say their C-suite execs “personally lead by example” and incorporate digital platforms (blogs, Twitter, Facebook, etc.) into their agenda; however, nearly one-third envisage such a future state in three years.
3. The majority of insurers use digital at a basic level to support customer value management
Only 11% use predictive modeling to identify prospects for targeted, personalized email marketing campaigns, use online product comparison tools or encourage development of an online community. A startling 89% do not leverage past interactions when recommending products or services to online customers. Just 1% currently offer online rewards, discounts, apps or “live” website assistance (e.g., virtual assistant, chat, click to call), although 27% expect to provide these benefits in the future.
In view of the significant gap between current state and future ambitions, are insurers investing enough? Nearly 70% of respondents spend less than 10% of their business and IT development budget on digital. However, the majority of insurers (81%) believe they could lose competitive advantage if they fail to embrace digital, and 74% feel this may affect their ability to innovate.
“Whether insurers can make the ambitious changes they envisage within the next three years remains to be seen. Attaining their goals will require significant – and rapid – improvement to close the current gap. However, customers will demand considerable changes in how their insurance is delivered, and the winners will be those insurers who execute well against their digital ambitions in the coming years”, says Elena Badea, Head of Marketing, EY Romania.