Countless industries have faced digital disruption over the past decade. There might not be a better example of this than the travel industry. Just think about how the Internet has changed the way we purchase plane tickets and vacations. Travel agents who didn’t adapt to these changes went out of business a long time ago.
So far, insurance has been able to avoid this kind of digital disruption, at least for the most part. But not for long. Digital technologies and experiences are becoming ingrained in virtually every area of consumers’ lives — from shopping (Amazon and eBay) to travel (Uber and Airbnb) to entertainment (Netflix and Spotify). Therefore, it’s not surprising that many consumers are bringing these same expectations for digital capabilities to their insurance experience.
Insurers lagging behind digitally
So how are insurance companies doing when it comes to adopting new technologies enabling them to provide customers with true digital experiences? A new report from Forrester titled The State of Digital Insurance concluded that in general, insurers are still lagging behind most other industries when it comes to their level of digital transformation.
But there’s wide variation in terms of the digital maturity of insurers in different segments of the industry. For example, property and casualty (P&C)-flow insurers like Geico and Progressive tend to be the most advanced from a digital transformation perspective. They are transforming client experiences through personalized digital interactions driven largely by data and analytics capabilities. In the process, they are severely minimizing agent-customer interactions.
P&C-non-flow insurers like Zurich and AIG still rely more heavily on traditional, non-digital interactions between customers and agents. For these insurers, digital transformation consists primarily of putting their collateral online and giving customers a degree of personal digital interaction. Life insurers, meanwhile, are the least digitally transformative segment of the insurance industry – they could someday find themselves like the non-existent travel agents of today.
Insurance customers’ digital preferences
The report concluded that insurance customers are still more likely to discover products offline — for example, through friends and family or via a personal interaction (either in person or on the phone) with an agent. But they’re much more likely to do their insurance research online, especially for more complex insurance products.
And insurance customers have widely embraced digital customer service. They’re using computers and mobile devices to view and renew their policies, change their personal information and coverages, and pay bills. They are also open to trying new insurance products and services with digital technologies at their core.
The genie is out of the bottle
Data like this makes it clear that if insurance companies want to thrive in the future, they must embrace digital adoption. Customers’ expectations have been forever transformed by digital technologies — there’s no putting the digital genie back in the bottle. Insurers that cling to the analog past could end up like the pre-digital travel agents who didn’t think the Internet was going to change the way people purchased travel.
My next blog will look at how insurers are dealing with the challenges of legacy technologies and the tremendous benefits they can receive when they overcome them.