Digital Channels

32 | Post Magazine | 27 February 2013

The fuTure is digiTal

Fewer natural disasters and better alignment between premiums and payouts meant 2012 was the year the global insurance industry saw a boost in their bottom line,

according to the 2014 World Insurance Report from Capgemini and Efma.

However, despit e t hese pos it ive developments, nearly 70% of customers are not overly loyal to their carriers. Given the proper incentives, these customers could be persuaded to switch, signalling a need for insurers to make significant improvements to secure customers and remain competitive.

It is clear that delivering positive experiences is essential to retaining customers and driving profitable behaviours, and the WIR reveals that enhancing digital capabilities is a crucial area that can help to improve customer experience.

To meet the evolving needs of customers, increase efficiencies and improve business performance in the years ahead, insurers need to do more than make minor improvements

in their digital offerings – they need to fully embrace a top-to-bottom digital transformation to truly see success.

While agents and brokers have historically dominated insurance sales, customers are increasingly turning to other channels – particularly internet and mobile – to get information and interact with companies.

Among insurance customers, the internet is now ranked second to agents. It is also classified higher in importance than a number of traditional channels, including brokers,

Insurers must perform a root and branch review of their digital channels if they want to remain competitive in the coming yearsBy Jean Lassignardie

Delivering positive experiences is essential to retaining customers and driving profitable behaviours

banks or using the phone. Younger customers – those aged 18 to 34 – are showing particular preferences for digital channels (see graph).

Virtually every major insurance provider worldwide now uses the internet to provide customers with purchasing options or to offer information on their policies and products. The ability to purchase policies online, pay premiums and even check the status of applications are just a few examples of how insurers are using the internet to better connect with their customers.

Growing focusThe focus of insurers on digital channels is expected to grow in the years ahead as customer preferences for digital solutions increases. In fact, insurers report that within five years they anticipate nearly one-third of their business to occur over digital channels – approximately 20% online and nearly 11% from mobile channels.

Although insurers have upped their digital game, these channels are not yet meeting the expectations of customers. The WIR reveals

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Post Magazine | 27 February 2013 | 33

customers are reporting a low rate of positive experience with digital channels – the internet has 41% satisfaction, and mobile has only 31%.

This disconnect highlights just how far insurers have to go to ensure these emerging channels cater for the changing needs of their customers. In order to meet demand in this area, insurers need to fully embrace digital transformation and improve capabilities across multiple channels to provide customers with a seamless experience through all touch points.

By enhancing digital capabilities, insurers can improve the overall experience for their customers, which will increase customer retention and help drive profi tability. In fact, fi rms with a strong digital presence are, on average, 26% more profi table than other fi rms, according to research from Capgemini and the MIT Centre for Digital Business.

While mobile is currently the least likely channel to give a positive customer experience, when it does, it has a signifi cant impact, with nearly 48% likely to refer friends and 40%

likely to buy additional products as a result of a positive mobile experience.

There is no question that the appeal of mobile apps is growing and becoming an increasingly important channel for insurers. Current insurance apps on the market allow customers to conveniently connect with agents, look up details on their policies, pay premiums and report claims from the convenience of their handheld device.

Simplifying tasksMobile excels at simplifying tasks into easy steps, which can be especially helpful and compelling to customers who are trying to connect with insurers during stressful events.

However, the WIR fi nds that digital maturity levels across the globe vary. In general, North American insurers have the highest levels of maturity, providing consumers with increased capabilities across seven out of 10 touch points.

European insurers are the least digitally developed, offering only minimal self-service capabilities for customers looking to change

their policies or take actions related to their claims. Insurers in Asia-Pacifi c also offer the minimum when it comes to claims servicing, but perform slightly better than Europe in terms of allowing customers to acquire policies online and make changes to them.

Digital capabilities also differ by insurance type. Non-life insurers proved to be more digitally advanced than life insurers, for example.

The WIR asked customers to rank the importance of digital capabilities for various activities. Researching products and receiving price quotes rose to the top with 39.5%. Claims servicing ranked second, followed by policy acquisition and policy servicing. There are opportunities for insurers to enhance digital capabilities throughout all four stages of these customer life cycles.

The first stage is research and getting quotes. Insurers should strive to present basic information in a streamlined and engaging way using dynamic data such as videos, testimonials, online chats and real-time information.

The second stage is policy acquisition. After a quote is provided, insurers should provide easy ways for customers to apply, submit documents and pay for policies via online channels – with the ability to transfer to an agent if needed.

The third stage is policy servicing. To keep customers satisfi ed, insurers should allow them to monitor, renew or alert their policies. Other capabilities should include making modifi cations to premiums, and adding or deleting insurance riders.

The fi nal stage is claims servicing. Insurers are generally not delivering satisfying claims servicing experience to their customers. By adding online functionality, insurers can greatly improve their track records in claims servicing and, in turn, boost customer retention.

With customer demand for digital capabilities growing at breakneck speeds, insurers cannot afford to take incremental steps toward digital services. Proactivity is essential. By fully embracing digital transformation – while driving operational excellence at the back end – insurers can ensure profi tability. Those that successfully execute the move toward digital transformation will be best positioned to remain

competitive in the years ahead. ■

Jean LassignardieChief sales and marketing

officer, Capgemini Global Financial Services

competitive in the years ahead.

Jean LassignardieChief sales and marketing

officer, Capgemini Global

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Developing Asia-Pacifi c

Latin America

DevelopedAsia-Pacifi c

North America

Europe

Agent

49%

56%

59%

38%

38%

50%

52%

38%

45%

45%

61%

59%

41%

37%

56%

56%

44%

48%

55%

50%

75%

63%

44%

40%

65%

59%

57%

38%

25%

31%

23%

42%

22%

28%

43%

43%

41%

43%

52%

48%

12%

4%

6%

4%

3%

0%

2%

0%

0%

2%

4%

0%

4%8%

5% 6%

19%

6%

0%

2%

Traditional channels Digital channels

Note: Importance here represents the percentage of customers who rate the importance of the channel as ‘high’ or ‘very high’, divided by the total number of respondents in the region The World Insurance Report includes data from insurers across 30 markets across the globe including Australia, Belgium, Brazil, Canada, France, Germany, India, Italy, Japan, Netherlands, Spain, Switzerland, the UK and the US, and covers both life and non-life (including health) segments.

Key: 18-34 years 35+ years Diference

Non-life insuranceChannel importance by region (%), younger vs older customers, 2013

Phone Internet – PC Internet –Mobile

Source: Capgem

ini analysis 2013; C

apgemini Voice of C

ustomer Survey 20

13

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