Advances in technology, changing customer expectations, and the rise of new competitors are driving digital transformation in a number of industries. The insurance space is no exception.
That is the message in an insightful new white paper “The digital transformation of insurance: The forces, influences and benefits driving change” from Alcatel-Lucent (News - Alert), which is now part of Nokia.
Customer expectations related to insurance are, in fact, changing so significantly that 67 percent of senior insurance executives in this vertical tell The Economist that companies in this space that fail to improve and simplify buyer experiences are likely to fail.
The good news is that big data and data analytics and the Internet of Things (IoT) can help insurance companies reinvent themselves by better managing their risk and creating new packages and products tailored to the needs of customers, according to the paper.
The bad news, as the white paper explains, is that insurance companies need to figure out what this all means for their employees and their existing and siloed IT infrastructure. It means drafting a map for a new path they have yet to travel. Compounding these challenges is the fact that the insurance space has seen enormous consolidation (to the tune of more than $7 billion in 2014 and $4.7 billion in 2013) in recent years, the paper adds.
More importantly, however, is the threat that traditional insurance providers face from the breed of newcomers to this space.
“As consumers increasingly research and make their purchase decisions online, insurers risk losing their customers to companies that provide a multichannel experience to the consumer versus relying on face-to-face sales with an insurance agent,” the white paper notes. “Web 2.0 companies, such as Google (News - Alert) and Amazon, and major retailers such as Walmart are now offering value-added insurance evaluation sites and tools as well as selling actual policies.”
Realities are that the insurance industry in general and specific parts including Property & Casualty in particular has been identified as technology adoption laggards. The old ways of doing things do die hard. However, it is becoming increasingly clear that without an infusion of workflow automation capabilities, mobile apps, customer portals and the like, traditional providers are going to find that in an era where the completion is a click or touch away that fickle customer will go elsewhere.
Indeed, there is a certain irony to the fact that those who are in the business of assessing risk have been less than adept at assessing the risk to their business of not undertaking a significant digital transformation. This translates into upgrading, in many cases significantly, their IT infrastructures in support of major business process automations and customer engagement capabilities.
Edited by Peter Bernstein