How is the insurance sector responding to digital change?
5 min read
03 June 2019
The exponential growth of cost comparison sites has completely transformed the insurance sector over the past decade, making it easy for consumers to switch to the provider offering the best product at the lowest cost.
Loyalty between customers and providers is no longer what it used to be For insurance firms struggling to keep pace, a clear and effective digital transformation strategy will be essential in driving growth and competitive advantage.
Though cost is a clear driving force, starting with people – the staff, customers and wider stakeholders – and understanding exactly how they engage with existing platforms and processes, is key to long-term success.
Change in consumer behaviour
In today’s digital World consumers expect fast, efficient and real-time results when purchasing a product or service online.
This is no different for the insurance sector, where firms failing to respond to both digital and consumer behavioural changes – primarily the expectation of better products and instant engagement – are quickly falling behind.
For example, recent statistics have revealed a staggering 92% of millennials use a smartphone. Unlike an older demographic, an increasing number of millennials now live and work in city locations, with the majority renting property and reliant on public transport. Their fast-paced lifestyle is supported by a smartphone, with the majority of tasks completed and decisions made via the click of a button.
This transformation in lifestyle and resulting consumer behaviour has led to a change in insurance requirements amongst this age group, with many millennials, for example, now seeking temporary car insurance for either recreational or professional means.
This change in demand extends to how insurers deal with and respond to claims, where speed, ease, and accessibility is what results in renewals.
The insurers able to adapt and adhere to this demand, understanding that consumer behaviour drives change, are the ones getting it right and developing competitive advantage.
Digital Transformation starts with people, and in the case of the insurance industry, it starts with the pain points people experience when engaging with insurance providers.
The growth of insurance comparison sites has completely diminished consumer loyalty, which means the providers able to present their product with ease and clarity, supported by real-time relationships with customer service representatives, are securing increased market share.
Change in insurance products
Change in consumer behaviour has changed the insurance product, or particularly, how it is presented to the consumer.
Industry growth combined with increased competition and product choice, has forced providers to be more competitive in how insurance products are positioned.
Those which are clear and simple to understand, purchase and claim for, are far more likely to experience growth, compared to those likely to require contact with a call centre representative.
The tech-savvy, modern day consumer does not have and does not want to dedicate time to lengthy purchase or claim processes.
Therefore, insurance providers able to create a fast, efficient and cost-effective consumer journey are far more likely to experience growth.
Analyse and respond to change
The exponential growth of tech platforms means insurance providers now have access to more data than ever before.
However, if this data is not analysed or utilised effectively, insurance firms will fail to adhere to changes in consumer demand.
Not only do insurance providers need to regularly assess how consumers engage with their platform and products, but they also need to account for the different demographics their products appeal to.
Where the millennial, tech-savvy customer is likely to respond positively to a chatbot or similar A.I. application, stakeholders from an elderly demographic are more likely to want to engage with a customer service representative as part of the sales and/or claims process.
An effective digital transformation strategy will take into account both changes and disparity in consumer behaviour, creating a customer journey that successfully engages with all stakeholders.
Ultimately, digital transformation starts with consumers…
Understanding what consumers demand from both insurance products and providers, and their preferred customer journey.
Where a strict online-based customer journey will work for some providers, others will need to call on other tech platforms or incorporate other means of customer relations to make it a success.
Despite these differences, one thing is clear: Both insurance products and insurance providers need to respond effectively to digital change to create competitive advantage and drive long-term growth.