Can insurance companies compete with Amazon, Google and Softbank?
IT is no secret that big tech companies such as Amazon, Google, and Softbank are looking to get into the insurance game.
Being digital natives and kings of customer experience in their own domains, their offering will definitely be tempting to most customers (who already feel like they have a relationship with the brand).
Capgemini, which recently produced the World Insurance Report, surveyed insurers and customers and studied the market to produce some interesting insights about the future of the industry.
According to the report, almost 30 percent of customers globally are willing to buy insurance products from BigTech companies such as Amazon and Google, spurring a greater need for traditional providers to develop future-ready operating models to satisfy evolving customer preferences.
In order to compete effectively and retain customers, traditional insurers must enhance their digital agility and develop future-ready operating models.
Customer experience must make it to the top of the agenda
“The use of data and being able to offer a truly digital customer experience are both critical for the insurer of the future, something Big Tech firms like Amazon and Google excel at. The threat from such entrants is more real than the insurance industry might want to admit,” said Anirban Bose, Global Head of Financial Services and Member of the Group Executive Board at Capgemini.
Insurance firms repeatedly fail to deliver a positive experience to customers, according to Capgemini.
In fact, they ranked third after retail and banking on cross-industry customer experience scores, with the greatest difference among Gen Y customers aged 18 to 34.
While more than 32 percent of Gen Y customers said they had a positive experience with their bank, less than 26 percent reported a positive experience with their insurer.
Insurers must take note of evolving customer preferences
Disruptions from environmental, technological, and organizational factors along with the ambitions of BigTech companies are making digitally agile operating models a necessity.
InsurTechs, new insurance firms that use technology innovations to focus efficiencies and attract specific customer segments, are leading the way with digital agility.
Collaboration between traditional insurers and InsurTechs is essential for the efficient and cost-effective development of digital capabilities across the industry.
More than 80 percent of insurers cite evolving customer preferences as the most critical factor driving digital agility, and their investments provide insights into the industry’s future.
Almost two-thirds of insurance firms are testing smartwatches and wearables, more than one-third have deployed telematics, and more than 55 percent are investing in speech recognition and blockchain, with robotic process automation currently the most highly deployed core digital technology among them.
“To gain value from their investments, insurers must think about the big picture and develop a holistic approach that is strengthened by InsurTech capabilities, rather than piecemeal adoption,” said Vincent Bastid, CEO of Efma.
Transition to digitally enabled, future-ready operating models for long-term sustainability
To succeed in the digital era, the report highlights that insurance firms must foster digital agility and develop operating models to deliver a superior customer experience, bringing together the best of digital and traditional channels.
“Insurers, risk assessors by nature, must urgently turn their gaze inwards and consider the competitive risks within their own industry in order to evolve and survive,” suggested Bose.
More than 65 percent of surveyed respondents said end-to-end personalization of the customer journey was their highest need.
However, to enhance the customer experience with personalization, insurers need a digitally integrated ecosystem that seamlessly interconnects insurers with customers and partners, and enables an efficient flow of information and services.
The report says that a digitally integrated ecosystem will support the real-time, personalized services that customers are growing to expect and demand.
With enhanced digital agility, insurance firms can gain greater insight into customer needs and improve time to market for innovations, while driving greater operational efficiency and cost savings the report concludes.