Insurers shift investment focus to mobile technologies and digital marketing

Insurers plan to invest $84 million, on average, over the next three years to improve their multi-channel distribution strategies, according to findings of a global survey of 125 insurers by Accenture.

The survey also indicates that insurers will shift investment priorities to mobile technologies, digital marketing, including social media such as Facebook, and channel integration over the next three years. While a limited number of insurers said their current investments are focused on creating mobile capabilities, improving digital marketing, and integrating channels (19%, 34% and 36%, respectively), a much higher percentage of insurers are planning or considering investments in these areas for the near future (62%, 49% and 44%, respectively).

“Increasing investment in mobile capabilities to take advantage of the growing use of smart phones and in digital marketing, to create new opportunities to influence customer choice, is necessary, but not sufficient in today’s environment,” said Edmund Franklin, Insurance lead at Accenture SA. “Consumers are not simply replacing one channel with another, but are diversifying and using more channels than ever for all of their needs. The challenge facing insurers is to develop a distribution strategy that capitalises on the strengths of each respective channel. For example, developing products targeted for distribution through specific channels to reach specific customer segments. So, we have to be clever about matching the right customers with the right products, at the right price, through the right channels.”

According to the survey, insurers will increasingly tailor their marketing strategy to specific customer segments. More than one-quarter (26%) of insurers said they will customise their products, promotions, channels, services, and pricing strategies to specific customer segments in the next three years. The survey showed that only 14 percent of insurers currently tailor all of these activities by customer segment.

“Potential buyers of insurance are changing in numerous ways and their expectations of their providers are increasing steadily, as consumer-service leaders such as Amazon, Outsurance or InstantLife, for example, raise the bar for everyone,” said Franklin. “Insurers are aiming to deliver products that are bought and not just sold. To do this they need to truly understand their customers, and to achieve a level of segmentation that is indispensable for moving from a product-centric to a solution-centric business model. The objective is to create a unique customer experience across all channels.”

Among the survey’s other findings:

· Nearly two-thirds of insurers (63%) do not consider their current distribution model as a source of competitive advantage.

· The emergence of new technologies was the most widely cited factor (85 %) by insurers for making decisions to invest in distribution over the next three years, followed closely by changes in customer needs and attitudes (84%), new regulations (81%) and the increasing importance of advice in the distribution of insurance products (also 81%).

· Sixty-three percent of insurers said that all services, including quoting, underwriting, billing, claims declaration and account management will be available online within the next three years; only 21% will have these services available on mobile devices within that time.

· Three out of four insurers (75%) said that developing relationships with “non-tied” channels (independent agents and brokers, and others) was a main priority, with nearly as many (73%) naming the development of specialised tools and sales support as a major focus.

· Two-thirds (66%) of insurers identified investment in training as a key priority for optimising the performance of their captive sales force, with nearly as many (64 %) identifying specialised tools and sales support, including information technology (IT), as their main priority.

· Aligning IT infrastructure with a defined distribution strategy was cited by 63 % of insurers as a key challenge.

Methodology

Accenture commissioned a survey of senior executives at 125 major insurance companies around the world – equally divided between life and property and casualty carriers – in 25 countries, to better understand insurers’ distribution strategies, their investment priorities, and the challenges they are facing in dealing with the development and integration of multi-channel distribution models.

The telephone survey was designed by Accenture and was conducted by Kadence Ltd. from December 2009 through April 2010. The 125 respondents included 44 from the Americas, of which 32 were from the United States, 7 from Canada, 4 from Brazil and 1 from Mexico; 47 from Europe, of which 14 were from France, 8 from the United Kingdom, 4 each from Italy and Sweden, 3 each from Germany and Switzerland, 2 each from Denmark, Finland, the Netherlands and Turkey, and 1 each in Norway, Russia, and Spain; 30 from Asia Pacific, of which 7 were in Japan, 6 in China, 5 in India, 4 each in Australia, Singapore and South Korea; and 4 from Africa.