Rising costs, volatile markets, and increasing consumer demand for digital services show no sign of abating. The industry is expected to embrace an end-to-end digital customer cycle.
Digital transformation isn’t a new topic in insurance, but coming on the back of a pandemic a lot has changed. Insurers are investing in digital technologies that will help them achieve their top three business priorities: enhance customer experience, improve the ability to innovate, and reduce costs.
According to Accenture’s 2021 analysis of economic and demographic trends on the insurance industry, and the revenue opportunities these trends create for insurers —
of the $1.4 trillion growth expected for the industry over the next five years, approximately 15% or $200 billion, will come from new risks, products, and services. This will include new product innovation of $160 billion, and the monetization of value-added services to the tune of $40 billion.
But to compete for this $200 billion in revenue, insurers can no longer rely on the familiar products, channels, and historic retention rates. They need to innovate by investing in technology-enabled insurance products to drive profitability long-term.
01 Influence of Digital Touch Points is Growing
Customers have embraced digital touchpoints for a range of insurance activities. But digital technologies are changing to drive more than just sales and service. The digital mode is now influencing the entire insurance value chain.
According to Forrester’s 2021 report — 83.4% of new auto, property, and travel insurance sales are expected to be digitally influenced by 2023. For instance, insurance buyers in UK were found to be turning most frequently to insurance comparison websites and online search engines to research policies. In US, insurance buyers 26% of US vehicle insurance buyers were relying on search engine results to inform their purchase.
Usage based car insurance is on the rise, as consumers continue to work remotely and drive fewer miles, the report predicted that the ownership of UBI policies will increase 50% in 2021.
02 Agility And Innovation are Top Transformation Drivers
Enabling customers to buy flexible, short-term coverage as and when needed is a top trend, with Insurtechs paving the way for data-driven personalized coverage. End to end digital experiences that simplify and speed up the process of buying, managing, and using insurance are in demand. By deploying new sources of data to lower risk and develop better pricing models, Roadzen is creating a 100% digital journey, from automating underwriting, to claims, and customer services, that delivers the competitive edge legacy insurers seek.
03 Digitizing the Customer Lifecycle
Most insurers have moved beyond one-off digital initiatives such as digitizing marketing or implementing paperless processes. More insurers are now focused on digitizing the entire customer lifecycle from end to end. But most are still struggling to deliver a compelling digital customer experience and build strong digital capabilities for the future. As insurers expanding their digital transformation efforts, they must become more ambitious in their digital efforts.
An Increased Digital Urgency
To sustain growth in the challenging context of a global pandemic, it’s become crucial for insurers to have visibility into variations across regions, and lines of business. In the longer term, as the pandemic has also sensitized customers toward direct or digital channels the business case for digital transformation is fortified.
Digital insurance strategy will require demonstrating potential returns on investment. The success of digital business transformation can be measured through increased revenues, reduced costs, improved time-to-market, and enhanced customer experience and differentiation.
Because digital business transformation is a journey and not a destination, thinking through processes, organization, and metrics is needed. Rather than a one-off implementation of an agent portal or a digital claims filing system alone, embedding new end-to-end capabilities will position an insurer well for the future. To evolve successfully into a more customer-focused, collaborative, and faster organization, setting up new processes and governance models are recommended.