(Photo credit: Nascarking)
Consumer digital expectations are rising and the challenge for many in an insurance industry known for its conservatism in this area is in how to keep up. For businesses still relying on older legacy systems there are a number of issues to overcome, but the solutions are there. The question is, will those falling behind adopt them in time to avoid losing customers?
Certainly with U.S. online spending exceeding $394.86 billion in 2016 : up 15.6 percent over 2015, and mobile purchases increasingly popular across all sectors, with 36 percent of online purchases in the U.S. completed on mobile in Q4 last year , it is clear that consumers like to shop online. To meet their expectations, a more efficient multi-channel communications model is necessary with an increased focus on digital touchpoints that includes user friendly, intelligent interfaces: not only to increase loyalty, but to deliver cost efficiencies too.
However, there are a number of issues to face down first. With mobile demand rising steeply and digital technology continually moving forward, to remain ahead of the curve the insurance sector needs to ensure that it closely monitors customer behavior so that it can provide solutions to fit. Mobile optimized sites and relevant apps are, for example, particularly suited to delivering valuable add-on services such as “find my nearest” tools for auto glass repairs, renewal reminders and support for reporting a claim. Other digital technologies increasingly popular with consumers are conversational/natural language artificial intelligence (AI) chatbots, useful for questioning companies about cover before making a purchase decision, and of course social media, which is also becoming an increasingly important channel for this and more. Insurers need to embrace these technologies to keep up.
Of course, it is not simply a case of offering these digital channels, but of integrating them to provide a seamless experience for consumers who often start the process of finding insurance on one channel before completing their purchase on another, and this is often where companies relying on the old legacy systems struggle.
Tying Everything Together Requires Data Integration
Tying everything together to give that seamless experience requires data integration and a single customer view. Yet with customer information held in back-end systems tending to be held in different formats for the use of single departments, it can be impossible for a broker to access a single customer view showing all the policies a client has taken out and make them a relevant offer.
The market is moving however, albeit slowly, to a model that requires this up-to-the-minute overview of the customer. While trying to integrate back-end systems into one is an expensive and time-consuming process, creating new modern front-ends and integrating them with the different back-ends is necessary because of how it allows all types of both structured and unstructured data from various systems to be collected and pooled. Add Big Data to this, and the combination creates a unique data repository, regardless of the data source, whether internal or external, structured or unstructured data, and of immense value to the organization.
Only with all this in place, can companies begin to meet consumer expectations. However, achieving digital innovation even at a more basic level can also be time consuming and relies on staff having the technological skills and the capacity available to carry out the task. Understandably, this makes managing this type of project internally difficult for most underwriters, and it makes sense therefore to use a third-party consultant to help implement, or even entirely outsource, the process.
Certainly, in a market as highly competitive as insurance, no one can afford to lose the loyalty of direct customers or of brokers through not providing the level of digitalization they expect. And as the market moves towards this, any who fail to grasp the importance of getting on board will risk jeopardizing the future of their business.
 US Department of Commerce 2017
 Criteo, Cross-Device Channel Report 2016
One of the things I love about getting older (there are many) is that I get to see The Little Wheel turn many times. The Little Wheel is a smaller, less consequential part of The Big Wheel. It spins faster. It gets people excited. It attracts more attention than The Big Wheel with every spin. And it just keeps spinning.
Over the past 35 years, The Little Wheel would have enabled us to revise the title of your piece in myriad ways, including: Can legacy insurers embrace computers before it’s too late? Can legacy insurers embrace DOS before it’s too late? Can legacy insurers embrace .NET before it’s too late? Can legacy insurers embrace Java before it’s too late? Can legacy insurers embrace wireless before it’s too late? Can legacy insurers embrace SOA before it’s too late? You get the idea.
While The Little Wheel continues its frenetic spinning — holding us in thrall through its agents in the trade media; the analyst community; and the ranks of the young, the impressionable, and the gullible — The Big Wheel goes about its slow, methodical business. And the insurance industry spins right along, quite nicely, with it.
As a wise gentlemen said to me at one of the major insurance companies more than 30 years ago, “You can’t hardly f&$@ up compound interest.”
Thank you for a thought-provoking read.