Traditional business models of insurance carriers and intermediaries (agents/brokers) across the globe are challenged due to the change in expectations of customers and partners, technology innovations, regulatory demands, and sociopolitical and economic disruptions. The advent of semi-autonomous or autonomous vehicles, connected vehicles and homes, sharing and on-demand economies, and peer-to-peer insurance models are adding a new dimension to the competitive landscape.
To tackle the challenges and stay relevant in an ever-evolving market, many insurance organizations are embarking on a transformation journey. IDC believes that to succeed in their initiatives, the insurance technology buyers need to identify where and how to craft a winning Digital Transformation (DX) business strategy and execution roadmap. The technology suppliers that serve the industry need to have a contextualized understanding of how and where key software, hardware, and IT services enable DX business outcomes and success. Keeping this in mind, IDC has built a DX use case taxonomy research that outlines the digital mission of Contextual and Value-Centric Insurance, strategic priorities that support the mission, programs that help meet priorities, and use cases that help realize the overall goals and objectives of the organization.
The digital mission of ‘contextual and value-centric insurance’ is to create simple, transparent, and unique experiences that are rooted on the principles of proactive risk management and secure, seamless and contextual engagements across the customer journey. To achieve this and align to the changing expectations of customers, partners, and markets, the industry needs to transform from a traditional, product-centric mindset to a customer-centric mindset enabled by digital technologies and the power of data and analytics.
This digital mission of ‘contextual and value-centric insurance’ is supported by 4 strategic priorities:
- Omni-Experience Engagement that enables customer connect through multiple channels and deliver personalized products, services and communication through customer’s channel(s) of choice in a frictionless manner.
- Usage and Value-Oriented Offerings that involves the launch of usage-based insurance (UBI) products powered by sensor-based technologies and to bundle them with value-added offerings in partnership with other industries. The priority is to meet the customer expectation to receive true value for the premiums they pay, above and beyond the traditional products and services delivered. It also involves investing in evidence-based loss prevention powered by sensor based technologies in different lines of business for the company’s benefit as well as improving customer retention and brand loyalty.
- Speed, Scale and Agility that addresses the need for insurance carriers and intermediaries to transform digitally to respond quickly to market changes, but achieving this in a controlled, secure, and agile fashion. It deals with modernization or replacement of their core functions such as policy admin, claims, and underwriting; modernizing infrastructure systems; going paperless, enabling connected workforce and automating their channel operations.
- Building Cognitive Competencies which focuses on leveraging a combination of data from internal and external data sources to build a complete picture of customers and risks to mitigate risks and handle fraud in the digital world. The insights drawn from the data is vital to respond better to incidents and meet the regulatory requirements more accurately and effectively. The use of analytics and cognitive technologies will enable to price risks in real time, more accurately as well as help build new revenue streams by sharing data with other insurers or non-insurance industries.
These strategic priorities, and the programs that help meet these priorities and the use cases (individually funded projects) are detailed in the Worldwide Digital Transformation Use Case Taxonomy, 2017: Insurance.This study forms the basis of IDC’s insurance DX research in the coming years.
We recently published a research titled Connected Cars: An Exciting Convergence Point for Insurers and Automakers to Monetize Data to Deliver Great Customer Experience that aligns with the strategic priorities of ‘Omni-Experience Engagement’ and ‘Usage and Value-Oriented Offerings’.
We will be continuing the discussions on DX priorities of the banking and the insurance industry at our upcoming IDC Financial Services Forum on 28th September, 2017 in London.