Digital (R)Evolution in Insurance Industry
The world is faced with an all-embracing trend which also affects the traditional insurance business. New digital technologies are changing the way consumers engage and interact with insurers. For insurance companies this means that their traditional structures and operations are getting disrupted. The executives need to reassess their business models and rethink existing strategies.
The fundamental change that has happened is that customers themselves realize that they can express themselves as individuals and want to be recognized and dealt with as individuals. And they expect this from everyone, especially organizations that they do business with.
About 79% of customers are digitally connected and spend at least 50% of total shopping time researching products online, 53% of customers are social networkers who already abandoned an in-store purchase due to negative online sentiment, and 59% of customers are willing to try a new brand to get better customer service.
How will this affect the insurance markets?
Every company needs to reassess their business models. For example some markets are dominated by intermediaries. The insurers leave relationship management to these intermediaries. In former times such co-operations were an appropriate way to increase market shares. Now in the new digital world the constraints of this business model become visible.
The insurers are missing out on opportunities for a greater dialogue with the customer and deeper insight into the customer’s needs. This makes it difficult and expensive to create new offers and solutions. Because of missing details of customer behavior in the digital world some of these activities will lead to trial and error. Another hindrance is the lack of information about how the customers interact with the digital world and how insurers could connect to them.
As a result of this the topic of customer centricity becomes a #1 priority action item for the insurance industry.
Another example of how the new digital world will affect the insurance industry is found in the way that customers are interacting with insurers. About 79% of the customers are digitally connected and spend half of their total digital shopping time with product research. More than 50% of the customers have already abandoned an in-store purchase due to negative online sentiment.
Today in a digital world customers get more and more transparency about market offers. Especially for the insurance business where you sell trust to be the right partner the positive gut feeling of customers is very important. It starts with an easy to understand digital appearance by intuitive handling, a good shopping experience of tailored solutions supported with simple processes, and an easy-to-consume-services which helps to run your life better.
In order to be able to offer an excellent customer experience in real-time it’s necessary to manage and analyze high data volumes, predict the customer needs, provide real-time offers, and exceed customer’s expectation with valuable add-on services. This means you need to be able to manage big data in real-time, run simple processes, and offer exceptional front-end experiences.
How can SAP support this challenge?
Every company needs to think about digitization across five key business pillars which SAP is calling the Digital Business Framework.
This Digital Business Framework helps customers to manage the challenges of the new digital world. A fast core platform for managing the business processes of a digital world, supported by powerful analytical capabilities, and connected with customers, workforce as well as suppliers can help insurers to cope with their digital challenges.
With the digital core insurers can simplify their processes which are the basis for a positive customer experience, create successful and beneficial connection of suppliers, and enable cost-effective operation for their insurance business.
The most interesting challenge for the insurance industry now is how to transform from traditional insurance business management into the new digital world. The best way to manage business transformation will be part of my next editorial.
Industry Principal Insurance – MEE (Middle & East Europe)
SAP Deutschland SE & Co. KG, Hasso-Plattner-Ring 7, 69190 Walldorf, Germany