Engage and delight: the ‘everyday’ challenge for insurers
Unless insurers start adjusting their digital tactics, the millions they have spent in recent years to counter insurtechs and other tech challengers may come to nothing, according to Accenture.
Many remain underprepared for the digital revolution, despite having invested heavily in new hardware to improve customer experience and raise productivity, the consultant warns.
A spending spree on the latest and best technology is not enough; a top-down revamp of the business model is also in order.
Accenture Insurance MD Jean-Francois Gasc says becoming an “everyday insurer that constantly engages and delights” should be the modus operandi.
It means borrowing from the playbooks of digital disruptors such as the GAFAs and the NATUs: Google, Apple, Facebook and Amazon; and Netflix, Airbnb, Tesla and Uber.
“To thrive in the highly connected digital market, where most personal insurance products will be sold in future, carriers need to overhaul their traditional operations,” Mr Gasc says.
“They should become ‘everyday insurers’ and emulate successful digital disruptors… by offering customers connected services that are constantly accessible, personalised and pleasing. The clamour among insurance customers for enhanced digital experiences is a sign this shift has begun.
“Unless insurers can do business like successful digital disruptors… they’re likely to struggle in the years to come.”
Those that fail to adapt could lose as much as 40% of their risk protection revenues by 2025, Accenture warns.
Unlike the media, retail and transport industries, tech-driven disruption of insurers has come at a somewhat slower pace.
But that does not mean the industry can afford to relax.
In fact, technology is making such rapid advances that insurtechs and other challengers are finding it easier to break into the insurance ecosystem.
“Insurers need to react quickly to protect themselves,” Mr Gasc says. “Those that move swiftly can gain the upper hand over their more sluggish competitors.
“They’ll not only be able to preserve many of their revenue streams, but they could also tap exciting new business opportunities. Many of these opportunities are going to emerge far outside the traditional insurance market.”
Take self-driving vehicles as a case in point: as driverless cars become mainstream, insurers could see a steep drop in motor premiums, starting as early as 2026. Accenture estimates the reduction may be up to $US25 billion ($32.2 billion), or 12.5% of the total market.
“The strategic imperatives for insurance carriers… include strengthening their fragile hold on their traditional customer base and developing new revenue streams as autonomous vehicles, the sharing economy and lower asset ownership begin to eat away at premium revenue,” Accenture says.
So what is an “everyday insurer”?
According to Accenture, it is “a carrier that provides customers with ‘living services’ that help them at the moments and micro-moments that matter in their lives. Rather than simply promoting specific products or leveraging corporate assets and distribution networks, it prioritises meeting the needs of its customers.”
This approach essentially fixes what Accenture considers the three main flaws in incumbents: late positioning in the consumer decision-making process; low customer interaction; and lacklustre customer experiences.
“Each of these three vulnerabilities represents time and space in the customer relationship that the typical insurance carrier is leaving open for competitors to occupy,” Accenture says.
“Insurers that do not respond to these threats may lose a significant portion of their risk-protection revenues to new competitors.
“In the longer term, their brand value may be eroded, their relationship with the customer ceded to an aggregator or platform, and their offering to the market further commoditised as they are forced to compete on price alone.”