Digital Transformation in Insurance Is Finally Achieving Liftoff
According to a 2014 survey, 79 percent of consumers say that over the next few years, they expect to use online resources for insurance purchases.The insurance industry tends to operate along traditional lines, and insurance companies with deep roots have been slow to adopt digital tools and business models. Outdated organizational structures and legacy technology have also impeded the rate of change. Meanwhile, other industry sectors, such as retail, banking and travel, are already staking their claims in tomorrow's digital landscape. The need for insurance hasn't diminished, however, so tech startups and young insurance firms are stepping into the gap and offering new digital alternatives to consumers who prefer to do their research and purchases online. The Insurance Information Institute reports that as of 2012, 3.1 million auto insurance policies were purchased online.
The Lure of Digital
One of the larger changes online lately has been consumers' willingness to engage remotely in serious transactions. This trend extends beyond insurance; where once the limits of online financial decision-making for the typical consumer may have begun and ended with their checking account, opportunities for major financial decision-making online have proliferated vigorously. Even mortgage loans are now being offered in a "Push Button, Get Mortgage" format. Buying insurance online is a natural next step.
Consumers Expect to Compare Options
As consumers read reviews and study the pros and cons before making even minor purchases, they feel empowered by the vast trove of information available to them. Choosing the right level and type of insurance coverage depends very much on the individual's personal situation, as well as on local and state laws. Because of this complexity, empowered consumers will be seeking a clear understanding of their options. Furthermore, many of them want the chance to research their options without the distraction of interacting in person with an agent. Once they narrow their options and make a list of pertinent questions, most people still find value in speaking to an agent, but 83 percent of consumers would use the internet to research life insurance before purchasing a policy if they had the option, according to the Life and Health Insurance Foundation for Education (LIFE) Foundation and LIMRA. One-quarter of respondents noted that they would prefer to both research and purchase online.
The Competition
A few examples of new insurers who are taking advantage of the openings left by traditional insurance companies to disrupt the industry include U.K. auto insurer Insure the Box and Oscar, a U.S. health insurer. You only have to visit Oscar's homepage to understand how the company has gained recognition for its easily navigated website and transparency with rates. Customers have demonstrated their eagerness for this kind of simple functionality when it comes to a complex decision, such as which insurance policy they should buy. According to a 2014 survey, 79 percent of consumers say that over the next few years, they expect to use online resources for insurance purchases.
The Pushback
Industry leaders within life insurance are taking notice and have begun to make major pushes towards digital transformation. For example, global insurance company MetLife has announced a major initiative to become more digital, and they are currently investing $300 million a year in their digital transformation.
Digital Enables a Seamless Experience for Customers
In going digital, the goal is to allow the company to provide a more streamlined experience to their customers. MetLife plans to provide customers the same opportunities to have their questions answered through a smartphone or website as they would through dialing a call center. All ways of contacting Metlife, including social media, will be integrated into one omnichannel experience.
Digital Strategy Needs to Be Well-Defined
If you're still struggling to shape your digital strategy, you're not alone. Only 30 percent of insurers have a multi-year investment plan to support digital. A robust digital strategy has several specific components, and understanding these components will give you the confidence you need to invest in the digital transformation. Each individual part will fall into place, and the entire concept of going digital will shed its "black box" obscurity. Here are the major pieces you'll be looking at:
Customer Experience
Meeting the needs and expectations of your customers is the driving reason behind going digital, so it makes sense to give this component the highest priority in your developing program. To some extent, the aspects of superior customer experience online are self-evident: intuitive navigation, clarity, an integration of information, and options that feel empowering and can also be personalized. Rolling out a new digital experience will also include collecting feedback from representative customers who express willingness to be part of a beta testing group.
Omni-channel Delivery
Customers increasingly expect to receive the same access, branding and personalized information across web, mobile and live interactions with a business. Your digital strategy should include methods for carrying a consistent experience across every medium, so that your brand voice and the product value can follow whichever access point your customer prefers. Direct personal contact with agents is still an important aspect at many insurance companies, and digital access doesn't lessen the importance of an agent. As a matter of fact, the 2015 Insurance Barometer notes that the majority of life insurance customers in all age categories prefer to do their research online and then contact an agent in person to make the purchase.
Improved Internal Operations
The digital transformation isn't just customer-facing. At the same time that you're creating a whole new experience for your customers, you are also speeding up your own internal processes, reducing error and increasing employee productivity. It's important to engage in a thorough review of your internal structure and routines at the time of creating your company's digital structure in order to benefit the most from technological streamlining.
Advanced Analytics
One advantage of going digital will be the greatly increased volume of information you'll be collecting. Connecting with your customers online means you can mine data that they share through various apps and social media platforms. For example, over half of all millennials are "very or extremely likely" to be willing to share the results from a wearable activity tracker with their life insurance company, and this number rose to 65 percent of those who already wear such a tracker. Raw data and the analytic tools to turn that data into actionable information will transform your internal decision-making. Once you have the analytic end of your transformation activated, you'll be far more protected against a wide range of fraudulent and inadvertent risk.
Appropriate Technology
You have choices when it comes to the technology required to power your digital transformation. Working with the right IT people, you'll be able to select the best options, from building up your system internally to buying a complete off-the-shelf system.
Opening Up Your Organizational Mind
Going digital entails a change in corporate perspective and a willingness throughout your organization to reexamine current practices. True transformation depends on having company-wide buy-in, so it's important to budget time to make your case to every group of employees.
Your Digital Transformation Will Create New Revenue Channels
According to Harvard Business Review, "a thoughtful digitization program can deliver up to 65 percent in cost reduction, a 90 percent reduction in turnaround time on key insurance processes, and improve conversion rates by more than 20 percent." Increased revenue also springs from the fact that digital marketing lets you connect with customers in entirely new ways. Social media marketing enables insurers to establish a personal connection with current and potential customers while also collecting usable data streams that enable more accurate rate-setting and risk calculations.
Social Media Conversations Are Part of Digital Transformation
Insurance has always been about people talking to people, and it's important to recognize that the arrival of the digital era hasn't changed this core truth. Some of those conversations are simply happening in different venues, such as over Twitter or Facebook. The Agents' Council for Technology states that social media is "an essential tool for communication," and brokers, agencies, carriers and individual agents are all making use of it. The process of lead generation and relationship building has suddenly expanded, with social networks making the entire process more efficient.
Going Digital Gives Insurers a Stronger Identity
In the past, a consumer's relationship with their insurance company often centered around their relationship with an individual agent. Developing a personal connection with your customers is still essential, but now your company can directly assert its identity in addition to communicating via the agents. Digital media allows your organization to communicate its involvement in today's global conversations. MetLife's Global Women's Initiative, for example, declares the company's commitment to "increasing the role of women in leadership roles." Of course this stance pertains to the personnel strategy of the company itself, but it also communicates MetLife's overall philosophy when it comes to meeting women's needs. Another successful marker of their new identity includes their popular Infinity application, a digital time capsule for capturing, preserving and immortalizing life's happy moments.Insurance companies are strengthened by their traditions, and in today's digital world they are finding ways to express those traditions in a fresh new idiom. The truth is that your customers have already gone digital, so digital transformation in insurance is merely the natural way in which to continue the conversations you're already having with them.