Advancing digital insurance: A survey on the digital maturity of the European insurance industry
The insurance industry is increasingly adopting a digital agenda. However, DXC Technology’s recent survey, conducted with IDC, finds that only 36 percent of the 100 insurance respondents have implemented a digital strategy that addresses the new technologies and business processes required to succeed in the era of “digital insurance.” Fewer than half of those organizations have experienced a positive business outcome. This implies that the insurance industry is digitally immature and faces a great journey ahead, a conclusion that corresponds with the results of a recent IDC study in Western Europe.
Digitalization is changing the world fundamentally: customer expectations, business models, value chains — no element will remain unaffected. And while the speed of change is increasing in the insurance industry, a study jointly conducted by DXC Technology and IDC finds that the European industry remains digitally immature compared to others. For decades the industry has benefited from making underwriting models more accurate and optimizing back-office processes, but rapid changes now demand a strategic focus on customers and growth.
In their book, “Dream and Details — A Leadership Model: Reinvent Your Business and Your Leadership,” by Jim Hagemann Snabe and Mikael Trolle — whose experiences come from SAP and the Danish volleyball national team — relate how technology has disrupted and changed the game for technology companies and how it is now having an impact on other industries. The insurance industry is not immune. Consider how the arrival of ride-hailed self-driving cars might alter the demand for individually owned cars. The industry could be affected significantly, since 20 percent of industry revenue comes from auto insurance.
Only 36 percent of insurers surveyed have implemented digital strategies.
But we don’t have to wait for the future to observe technology-driven insurance industry changes. Advances that enable cars to avoid collisions have already resulted in a decrease in the number of claims, leading to the need for the industry to lower prices on the classic automotive risk product. The industry needs to reinvent the product. The time to act is now.
While the European insurance Industry in our surveyed countries can be defined as digitally immature, our survey reveals ongoing efforts to meet evolving customer demands, embrace new technologies and fight off incoming competitors that are founded on a digital business model. Our study reviews who is driving the digital agenda, the top priorities and expectations, what technologies companies are banking on, the role digital ecosystems will play in competition and even the outlook for the talent that will be required to see the agenda through.
With these short glimpses into our study, we invite you to explore and benefit from the results. We hope you will enjoy reading it.
Sections of interest:
Three mega trends
A key question to consider when creating your digital strategy is where the insurance industry is going. From our long involvement in the industry and research such as this survey, we see the industry being shaped by three major trends:
- Transforming to a platform economy
- The product innovator
- The lean organization
Advancing digital insurance — IT’s changing role
The digital agenda is changing the perception of IT. Once viewed as a business support cost, today IT is increasingly viewed as a key enabler of the business. This is reflected in the survey in questions about who is driving the digital agenda.
Customer experience and optimization top the agenda
The survey reveals two core elements in emerging digital strategies that are significantly more important than the others: enhancing the customer experience, and automation and optimization of internal processes.
Agility is key
When asked what technologies and capabilities are most important for insurers’ digital agendas, the study revealed one surprising finding: “Agile” came out on top.
Ecosystems to expand lines of service
The insurance industry is changing from being a low customer-interaction industry, where customers are loyal to a brand, to a digital world, where transparency in pricing and service levels leads to greater change in a customer’s preferred brand of insurance. Digital ecosystems enable insurers to provide new services in their portfolio and increase the level of customer interactions.
“Culture eats strategy for breakfast”
The famous quote (often attributed to Peter Drucker) seems to be reflected in our survey questions about the barriers and obstacles for executing digital strategy. It also underlines the challenge mature insurers face in adopting a digital agenda.
The hunt for talent
The insurance industry needs new core competencies and has begun the global hunt for talent. However, the war for digital talent is vigorous. One element that easily is overlooked in the discussion about the digital agenda is the need for new skills.
