Digital insurance: A clear forecast in Canada for insurers, customers, and brokers?

This year’s Toronto ICTC event was ablaze with early spring optimism as the snow melted outside. The team put together a very forward-thinking agenda with the theme of “The Digital Customer Experience.” It brought to town insurance experts and executives ready to explore a broad array of trend topics from geospatial risk management, cyber risk, social data analysis, and telematics to connected home, connected car, and omnichannel solutions.

But while the digital insurance future was painted blue sky bright for insurers who can better engage and service customers and offer innovative solutions, some voices were pulling back gently on runaway enthusiasm. Clouding the view is evidence that consumers appear less gung-ho than many insurers about their digital futures, begging the question: Are insurers matching their IT investment in digital strategies to the marketplace realities?

A global warming trend?
Some forecasters reading the weather patterns differently see a much slower pace of consumers warming to digital channels.

Kimberly Harris-Ferrante of Gartner Research revealed market research showing over half of Canadians still buy their auto and home insurance via agents and, somewhat surprisingly, only 6% buy online from carriers. These numbers buck the ballyhooed notion that consumers are flocking to digital. Some reasons for this discrepancy are the finding that only 27% of Canadian consumers say they feel comfortable with insurance terminology. At the same time, the majority feel satisfied with their communications with insurers. Harris-Ferrante concludes that through 2016, consumer preferences for traditional interaction will stall the use of digital insurance channels to below 30%.

These numbers indicate the prevailing relevance of the broker/agency channel to consumers. Customers still want broker advice to guide their purchase. And another Gartner data point tells that story: 58% of consumers stated they “strongly agree” that they would prefer to speak to a customer rep versus buying online. Only 6% “strongly disagree” with that statement.

The “power of and”
A former CEO of mine would always promote the idea of the “power of and” across the company. He would ask his staff how we could do this “and” that. For the foreseeable future, insurers will need to follow this approach of supporting digital and traditional channels.

But it won’t be enough to support the channels as they stand operating independently of each other. There is a bigger “and” here. They will also have to add capabilities that enable brokers and agents to participate in their customer digital channel strategies.

The how and the why of digital insurance was clear from multiple presentations in Toronto; the more insurers digitize their operations, the better will be their ability to evaluate risk in real time and improve customer experience (i.e., integrating customer info, preference, and value-add products and solutions) and service all channels equally.

Making a more accurate forecast
So where are brokers and agents in the new digital world of customer experience? Are they looped into the real-time omnichannel experience also? Can they be positioned where their clients would like them to be and take on a value-adding role? For instance, an agent might wish to be notified of a claim the moment a mobile or call center FNOL is received on a policy, equipment is failing at a client’s property, or a property has a security breach.

While digital transformation is about much more than digitizing the buying process, the need to fully integrate the agent/broker channel in the digital customer experience is one example that argues hard for core system enablement. Unifying call center, portal, and mobile interactions across all channels and adding the necessary customer intelligence and digital commerce can most efficiently and cost-effectively be accomplished from within core policy, billing and claims systems, especially core suites.

A well-designed core system can expose all transactions and has a digital experience layer with built-in mobility capabilities. With all the data and transaction history available to it natively, it is only a function of role-based management configuration within the solution to determine who in the insurance value chain gets what, where, and in what format. In the case of agents and brokers, this would be determined by what transaction model an insurer has established with the party.

Insurers can embark on an array of initiatives in the drive to digital across their ecosystems, but I fear that many will still lack sustainability and hence not deliver business value if they are not easily unified with and scalable at the core systems level.

I would be very interested in hearing how you are balancing traditional and emerging digital business needs against core system modernization needs.

Philippe Lafreniere

Philippe Lafreniere

PUBLISHED March 26, 2015

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