Get digital or get left behind

Jonathan Holden, Managing Executive: Insurance at Innovation Group South Africa.

Businesses are increasingly demanding a digitally literate workforce. The educational system is churning out digitally savvy learners. And e-skills are becoming as important as a hardhat on a construction site. So why is the insurance industry apparently still in the dark when enlightenment is just a few clicks away?

Insurance has sometimes suffered from a poor reputation, but with consumers now able to make their voices heard online faster than ever before, the industry is facing a different challenge. Innovation Group’s Managing Executive for Insurance, Jonathan Holden, takes a look at how the digitalisation of society can rock the insurance industry.

The digital transformation and the Internet of Things can offer a compelling route to new clients and markets while enhancing insurers’ ability to retain their policyholders.

The question is: are South African insurers ready to stride confidently onto the social stage and be part of the conversation? Or are they still sitting quietly on the side-lines at the party watching their customers get chatted up by smooth-talking digitally literate flirts?

Insurance has always been a social industry. From its humble beginnings during the early decades of the 17th century in a coffee shop in London that saw ship owners, merchants and ships’ captains exchanging shipping news and discussing insurance for cargo and ships, the industry has always had a high degree of social usefulness. It has a long history of binding together members of the public. Before insurance was established, "friendly societies" existed in which people donated amounts of money to a general sum that could be used for emergencies.

Yet today many insurance companies engage only sporadically with their clients. Once a year on the renewal date in many cases and then for clients that suffer claims. Can this be a sensible strategy in an omni-channel world where consumers are so switched on that they often learn about the latest trending news before the major broadcasters?

A digital strategy is rapidly becoming a critical business tool. Although only an estimated 10% of insurance business is currently being sold through digital channels, this figure looks set to multiply in the near future. Digital offers a simplified process that encourages high levels of communication and interaction which invariably leads to happier customers.

The rising cost of infrastructure today makes product distribution and customer interaction through digital means a highly attractive option. It equates to lower human resource costs, greater accuracy as a result of the removal of human error and increased convenience for the customer.

A lack of a digital transformation strategy, not only in the commoditised personal lines space but also in the “Big Ticket” commercial lines arena could be an act of self-harm. Consider the competition: not just the direct players, the insurance aggregators and retail supermarket offerings, but have you noticed that more and more businesses without insurance as a core offering are getting in on the action?

Competitive advantage in the digital arena will require a comprehensive approach to technology that engages customers seamlessly across all channels (omni-channel) - both online and offline - and on their own terms. Customers increasingly don’t want to be sold to; they make buying decisions based on an informed consideration and sentiment that is shared online.

Price and service experience are driving policy sales, rather than loyalty. The benefits of business transformation will result in flexible underwriting capabilities that offer scope for increased margins – invaluable in today’s challenging regulatory and soft market environment.

But digital innovation can also lead to enhanced risk management, customer service and retention through full-cycle, multi-channel policy and claims management. Meanwhile, insurance-specific analytics will improve insight and analysis of customers, policies and claims.

A seamless, real-time, multi-channel offering is now a baseline for good customer experience. The key to success for insurance suitors in this new age will be to engage confidently and regularly with customers, smile on-line and, above all, be authentic and friendly!