If, as an industry, we do not transform successfully to being truly digital businesses we will not survive in our current form. This was the overarching message at a recent SSP networking breakfast focussing on the digital evolution and how it is impacting the way insurers do business.
“As an industry that is traditionally risk averse, it’s time to start understanding digital better by learning what works and what doesn’t so we can urgently start the process of transformation to digital,” says Rhys Collins, Head of African operation for SSP.
SSP and its partners have undertaken detailed research and analysis to understand the value of digitalisation to insurers. Martin Vipond, partner – Management Consulting (Insurance) at KPMG, and Craig Beattie, insurance senior analyst at Celent, spoke at the SSP event, highlighting global trends and discussing practical realities for South African insurers.
“Embracing a digital strategy offers an opportunity to gain sustainable advantage. Applying the right philosophies and technologies at the right time will enable insurers to become connected, analytic and agile. Digital offers a new way of operating, impacting on all strategic and functional areas as an insurer,” says Collins.
In fact, it’s less about a ‘digital strategy’ as it is about an ‘insurance strategy’, and a sound integrated strategy has a digital component that runs through a number of different areas. Digital should not be packaged separately.
Worldwide, the most successful insurers have a good knowledge of their customers, when is the right time to interact with these people and what channels to reach them through, with a positive customer experience across all touch points. The use of digital is a common thread throughout all of these attributes.
Speaking at the event, Vipond advised the use of analytics to get a clear understanding of clients and gamification as a form of “edutainment” to engage clients, provide education and promote the brand.
When it comes to digital strategy integration, a consistent customer experience can be achieved through channel integration. “Ensure digital and traditional channels work together, which requires a good understanding of your consumer’s journey to purchase,” says Vipond. “Our research shows that the majority of people want to research online and purchase offline (ROPO), especially when it comes to complex products.
“For consumers who use your digital channels, it’s important to ensure all the necessary information is available and the products are well presented. They need easy access to traditional channels to finalise the purchase.”
Social media is another way to digitise your interactions with clients and to engage traditional channels. Vipond says that internationally, many firms have realised that consumers value personal relationships with people more than they do with brands and as a result, these firms are using social media to empower the broker.
“Giving brokers the tools to interact with consumers is an affordable yet impactful strategy to implement, whether it’s using tablets to make the process easier or providing social media content and facilitating online interactions between your broker and the consumer.”
Beattie highlighted the rapid evolution of technology and how insurers can take advantage of this. To illustrate this, he pointed out a key trend for insurers: The use of telematics. “It’s not only in cars anymore; you now get smart homes and smart buildings, which presents unique opportunities for insurers. For example, a commercial insurer is able to see if a factory is actually in use seven days a week instead of the stipulated five days.”
Telematics-based insurance has evolved quickly to become a valuable tool for all insurers. When it first launched, it was simply about tracking a vehicle. It then evolved to include simple measurement, measuring the distance travelled and time of travel using position data. With this information, insurers were able to convey messaging such as “drive less” or “drive during the right time of day” to impact driver behaviour.
“The next step was to use the vehicle data and apply analytics to it, allowing insurers to examine how the driver drives and assess journey risks,” explained Beattie. “Insurers were able to understand driver behaviour over a period of time and to ultimately provide driver coaching, helping drivers improve their skills and become better drivers.”
The final stage of the telematics-based car insurance evolution was context-based, assessing how the driver responds to conditions and broader risks. “Now, the same data is being collected, but post-processing, analytics and how it’s being applied is changing to offer better value to consumers,” enthuses Beattie.
For example, data might show that a particular driver is not anticipating junctions. The message from the insurer could be, ‘You’re not anticipating junctions. If you just slow down 5km as you approach junctions, you can save yourself from having an accident.’
“In other words, you are appropriately informing the consumer so they can make the right decision. Consumers generally welcome this kind of input into their lives, so it’s an approach the insurance industry as a whole could adopt, not just the motoring insurers.”
Digital offers the potential of being engaged in someone’s life story and affecting it for the better. However, more digital is not always better. Some products are too complex and they require traditional channels for sound advice. Some markets simply aren’t ready and it typically reduces profits in the industry.
“However, as markets and technology continue to evolve at a rapid pace, it’s important to relook at and revise your strategy regularly,” says Beattie. “If your business is looking at a four year digital implementation plan, you’re doing it wrong because so much would have changed in those four years.”
The key take out from this event? “The need for customer centricity is amplified by the changing consumer trends around mobility, social networking and behaviour. Assessing these changes and responding appropriately is essential in building the right business and IT strategies during the next five to 10 years,” concludes Collins.
