The insurance industry worldwide is undergoing a significant change accelerated by the financial meltdown and changing demographics of its customer base. In this blog, we will discuss the challenges, approaches and possible solutions to dealing with the transformation that the industry has unwittingly entered into.

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June 2, 2015

Nordic Insurance - Digital disruption underway

Digital transformation today has taken entire industries by storm, transforming the landscape beyond recognition. Think about Nokia, Kodak, Blockbuster, traditional music labels, brick & mortar book stores and numerous other examples. Digital mavericks are coming to the market with game-changing innovations and business models focused on customer journeys and experiences that is proving to be the sudden death for traditional ways of doing business. Consider Geico, Friendsurance, Netflix, Airbnb, Apple and Uber - each one of these has changed their respective industries, and overnight everyone has to play according to the new agenda set by these digital mavericks.

According to the latest Forrester Consulting Thought Leadership Paper commissioned by Infosys (The Digital Insurer In 2015, Insurance Business Performance Depends On Digital), Digital insurance laggards are at a great risk if they do not ensure that digital customer experiences meet customer expectations. Still surprisingly, over half of those surveyed indicated that creating unified experiences for their customers is not a critical priority for their firms in 2015. Digital insurance laggards are missing out on leveraging digital innovations to engage more closely with customers and ultimately drive business outcomes.

Also, we found out in the survey that fundamental structural problems are threatening insurer digital success. Even though many insurers have big digital ambitions, there are structural issues fundamental to the insurance industry that could impede digital transformation. One in five respondents mentioned competing business priorities, while another 55% mentioned past stumbles when it came to executing digital marketing projects.


Digital innovators have shown the way

Globally, across Europe and in Nordic countries, innovators have already shown that digital is a big opportunity. Friendsurance, Guevara, Kroodle, Whoosz, Drive like a girl, Knip etc., have already demonstrated the enormous potential of digital in European insurance business. We have seen Nordic innovators such as Skype,, Bank Norwegian, Wimp, IKEA, take their industries by surprise, and it's only a matter of time before we see such cases in the insurance industry.

Think what will happen when Google enters the insurance market or as ICA Bank has now received permission to conduct insurance business from the Swedish Financial Supervisory authority. Insurers are facing competition from all directions, be it automobile manufacturers, utility companies, consumer good companies etc. All these potential competitors have crucial customer touch points and data repositories that can provide them invaluable insights about users' insurance needs. They can super customize their offerings based on individual cases and provide better premium rates rather that depending upon some generic statistics. Smart data insights is the competitive edge in today's business scenario. In fact, 41% of insurers surveyed highlighted that digital initiatives will lead to gaining a competitive edge.

Highly curated digital strategies will drive insurer growth in 2015

Customer is king in every business and more so in the case of insurance with changing demographics. Customers are increasingly demanding better customer experiences across channels. Insurers need to deliver a consistent omni-channel experience taking into consideration the preferred channels through which customers want to interact with them. The days of unidirectional communication are over!

IT and business decision-makers are recognizing this imperative. 44% of insurance organizations surveyed highlighted that creating a unified experience for their customers is a key business priority for their digital strategy, and a similar percentage also highlighted that they are leveraging their digital strategy to drive growth (47%) and market share (44%) in 2015.

To further delight customers and further distinguish themselves as value providers in the marketplace, insurance organizations recognize that extremely personalized experiences for each particular customer is utmost important to their business survival in the long run. 34% of respondents are leveraging digital to improve personalization for their customers.


Where to start - key recommendations for the Nordic insurer

Nordic insurers need to scale up their digital initiatives, which will help them provide better customer / agent experiences and run their businesses efficiently. Digital is not only about the front end but also about what goes unseen behind the systems. CIOs who choose to wait this out might find it painful and would be forced to adapt to rules set by their competitors. It's a real choice to be either the digital prey or predator. We recommend:

§  Create value ecosystems by partnering with innovators to drive digital:
Insurers need to create cross domains SWAT teams to ascertain the most relevant customer touch points and journeys. This team needs to identify strategies to maximize the digital potential and deliver exceptional customer experiences that would serve as a unique competitive advantage.

§  Utilize data and predictive analytics to create bespoke experiences:

The days of generic offerings are over and customers expect insurers to deliver contextual offerings, experiences and interactions. It will be not enough to just know the historical behavior; it is imperative to predict how customers will behave in the future as well. Insurers need to build teams of data scientists, analysts and data experts spanning the experience spectrum.

§  Look for alliances to accelerate the speed of digital time-to-value:
Digital is going to be the key imperative going forward, but some areas of the initiatives can be taken up by the partners and insurers do not need to build these capabilities in interest of the timelines. Insurers should select the partner that has the correct fit in terms of domain, digital competencies, geographical coverage, partner ecosystems, and thought leadership to help them digitally future-proof the organization.




Forrester Consulting Thought Leadership Paper commissioned by Infosys (The Digital Insurer in 2015, Insurance Business Performance Depends On Digital)

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