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, Finn.no, Bank
Norwegian, Wimp, IKEA, Kolonial.no 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.
References
Forrester Consulting Thought Leadership Paper commissioned by Infosys
(The Digital Insurer in 2015, Insurance Business Performance Depends On
Digital)