Insurance companies must begin to embrace digital technology – and support advisors in the efficient use of this technology – in order to meet rapidly changing consumer expectations, says a new report from Ernst & Young Global Limited (EY).
EY’s report, entitled Insurance in a digital world: The time is now, highlights the findings of a survey of more than 100 insurance companies around the world. It finds that insurers, which have been slow to embrace digital technology, are missing the mark on delivering experiences that customers now expect.
Nearly half of the companies surveyed said they have no digital strategy, and they admit that they have been slow to adopt the use of analytics, mobile technology and social media. Only 1% of insurers currently offer online rewards, discounts, apps or ‘live’ website assistance, according to the survey.
“Insurers acknowledge their current low levels of digital maturity, and they know they need to take action,” said Doug McPhie, EY partner and Canadian insurance leader. “They have high digital ambitions, but they’re still failing to communicate at critical times and missing opportunities to engage with their customers.”
By failing to embrace these kinds of tools, EY’s report says the industry risks losing existing clients, and could struggle to attract new ones.
“Insurers are being held back,” said McPhie. “Internal factors like legacy technology are hindering their digital progress — to the detriment of the consumer and, ultimately, the bottom line.”
The survey shows that the life sector is currently spending more on its digital strategy than the non-life insurance sector. Seventy-nine percent of non-life companies spend less than 10%; in contrast, 68% of life insurers spend less than 10%. However, life insurers seem less concerned (46%) than non-life companies (60%) that customers will ultimately leave.
Both life and non-life insurers must begin viewing digital technology as a retention strategy, according to EY.
“They need to deliver on new customer expectations, or risk being left behind,” McPhie said.
The advisory channel must be a high priority in digital planning, according to EY. In particular, the report says that a central focus of any digital strategy must be improving the efficiency and quality of interactions between advisors and clients. Thus, it urges insurers to provide advisors with ample digital support.
“An agency force with good communication agility and the right digital tools to manage the customer will become a key strategic asset,” the report says. “It is critical that the intermediary or agent channel is enrolled early and insurers communicate a clear value proposition around mutual benefits of digital to deliver a better customer experience.”
The realm of data analytics also holds significant potential for the industry, according to EY.
“Insurers potentially have a wealth of data at their fingertips,” McPhie said. “But without the right analytics, they’re missing a big opportunity to better understand their customer, and improve their experience.”