(Photo credit: Claudio Cigna.)
Changing expectations on the part of customers in the millennials range are a major influence in insurers’ plans to enhance customer experience and achieve greater speed and agility throughout their product development infrastructure, according to an SAP survey of 200 insurance executives at the IASA Annual Educational Conference and Business Show in June.
SAP reports that 34 percent of respondents indicated rising consumer expectations are their primary driver for new product development, followed by changing regulatory demands (22 percent) and availability of new technologies (20 percent). Those changing customer expectations are in great measure conditioned by the emerging customer base of millennials, the SAP findings suggest. Fifty-five percent of respondents cited convenience as millennials’ top priority when seeking insurance products, with low cost (22 percent) and relationships with their agent (16 percent) followed by brand recognition (8 percent).
Adaptable Product Strategy
Insurers have, in turn, identified a need to develop a more adaptable product strategy, according to SAP. Over half (52 percent) of respondents affirmed that their primary strategy to reach millennials has been one focused on online, mobile and social technologies in support of an omnichannel approach. Twenty-one percent indicated they are tailoring products to suit millennials’ unique needs and 12 percent are investing in data analytics to segment and target communications, the survey found.
In order to support a better customer experience, insurers are updating their back-office infrastructure to inject speed and agility across their processes, according to SAP. To that end, 51 percent of respondents said that their organizations have adopted cloud computing in some capacity. Nearly have of those respondents said they have implemented cloud-based systems for less sensitive back-office functions in areas such as human resources, accounting and procurement. A smaller number have adopted cloud for mission-critical functions such as policy administration (18 percent), product development (seven percent), claims processing (six percent) and risk management (six percent).
“Cloud computing has matured and we’re seeing insurers shift from leveraging the cloud for just back-office functions to implementing cloud across the entire organization,” comments Ross Orrett, global head of Insurance Industry Innovation and Development, SAP. “Insurers are becoming more adaptable and laser-focused on meeting changing customer needs. To be innovative in its products and the way it serves agents/brokers and customers to meet these demands, carriers are investing in industrializing the back-end with integrated, agile infrastructure while innovation across these systems.”
Insurers Cautious About Cloud
Insurers remain cautious in their adoption of cloud, however, with 34 percent of respondents to the SAP survey citing security reasons as the primary adoption challenge. Over a quarter of respondents (28 percent) specified that it was hard to secure internal buy-in to cloud computing, and other concerns expressed about adopting cloud were budget and financial considerations (13 percent), unstable technology infrastructure (13 percent) and time constraints (12 percent).