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Growing customer demands and evolving technologies have changed the game for insurance companies in recent years. To remain competitive, leading insurers have stepped up to digital capabilities—by developing mobile apps, digital portals and platforms – in an effort to leverage new opportunities and meet rising customer expectations. But insurers need to do even more to ensure they retain customers and solidify their position in the marketplace. They need to become true digital insurers, which they can do by taking these five key steps in 2015 and beyond:
- Create a Comprehensive Omni-Channel Experience: There’s no denying the growth of the digital lifestyle of today’s consumer. Customers often source quotes and research insurance products online, yet a majority of purchases still happen through agents or by phone. As a result, insurers are increasingly recognizing the need to invest in a comprehensive omni-channel strategy to reach customers at different points during the sales cycle. Capgemini’s 2014 World Insurance Report (WIR) found that the customer demand for services via digital channels has grown at a rapid pace, with insurers reporting that within five years they expect nearly one-third of their business to occur over digital channels (online and mobile). In the next 12-18 months, we’ll see insurers undertake progressive simplification of legacy systems to remove barriers from offering a consistent customer experience across channels.
- Capitalize on the Internet of Things (IoT) Across Insurance Segments: As the trend for connected devices continues to accelerate, the IoT is being seen as a transformational driver within the insurance industry. We’ve already seen several auto insurers implement new models based on vehicle telematics. As the number of devices that provide new data sources grows, insurers will focus on the implications for broader insurance segments. The possible applications of connected devices across the industry are extensive and have the potential to revolutionize claims processing, product pricing and fraud detection.
- Continue Leveraging and Expanding Cloud Services: Many insurers are actively using or implementing cloud computing for operational flexibility, function standardization, cost savings, scalability and business agility, and this will continue to increase in 2015. Small to mid-market insurers have been seen as early adopters of cloud computing services, which is enabling them to deliver faster claims, policy and billing services. Multinational insurers have been utilizing cloud services to swiftly enter new markets without building a centralized IT architecture. By 2015, the average IT budget for cloud computing across insurance segments is expected to grow even further.
- Put Data to Good Use to Help Mitigate Risks: Most insurers lack confidence in their company’s ability to safely and accurately execute data analytics. By not capturing and extracting data accurately, insurers are not able to accurately assess their business positioning and the associated business risks, including security breaches. This doubt trickles down to customers. With retention rates at an all-time low, growing customer demands and rising concerns around global cybersecurity will force insurance executives to make operational changes and put data to better use.
- Migrate Legacy Systems to Drive Retention of Customers: An ongoing priority for insurers is the migration of legacy systems. By automating and digitizing core systems, insurers will improve efficiency and customer interaction at multiple touch points. Legacy system transformation has been slow due to perceived high costs and lengthy implementation timelines. Yet, the longer insurers wait, the more risk they take in losing customers and lagging behind competitors. In the life insurance and auto insurance sectors, customers are dealing with crisis issues when they contact their insurer, and demand a responsive provider that can pull together a claim with real-time information and data—a feat that many legacy systems can’t accommodate.