It’s no secret that more people are digitally connected today than ever before. This trend shows no signs of stopping anytime soon, with 2.5 billion people expected to be connected on social media by 2019. As a result, businesses across all industries need to begin assessing their business models to reflect this shift to a digital economy.
The insurance industry is no exception to this. Specifically, insurers will need to understand the digital revolution and what it means for their customers. From there, it should be necessary to reimagine business models, processes, and frameworks to better cater to today’s consumers.
How the digital economy is changing insurance as we know it
So, how exactly is the digital economy changing the insurance world? In the past, providing insurance was more focused on handling claims after an incident occurred. Today, however, we’re beginning to see a shift towards risk prevention and mitigation. In other words, the digital economy is helping insurers move from being reactive to being proactive.
Consider, for example, auto insurance companies that now offer a plug-in device to track driving habits. This device can be installed into a driver’s USB port or charging port to record acceleration, braking, and other activities. This information can then be used to build a profile on the driver and offer discounts or specific policy recommendations. The introduction of self-driving cars and questions about insuring these vehicles is another prime example of how the digital economy is shaping insurance.
These changes, in addition to many others, make it more important for insurers to:
- Use technology to their advantage against competitors
- Manage large amounts of consumer data
- Shift to a focus on risk prevention
How insurers can keep up with these changes
Keeping up with these changes in the industry is difficult, but with the right resources and strategy, it can be done. Insurers are advised to focus on five strategic priorities as outlined below.
1. Digital lifestyle insurer
More than ever, insurers need to focus on analyzing customer behavior and adjusting their offerings to reflect those needs and behaviors.
2. Connected insurer
These days, it is not enough to have a physical presence in the insurance world. Being digitally connected is a must; this includes social media channels and all devices.
3. Data-driven insurer
With so much data out there, insurers should be collecting as much relevant data from their consumer base as possible. The challenge then becomes knowing how to gain insights from that data. This demands a more streamlined and simplified collection and aggregation process for most insurers.
4. Consistent/customized experience
Today’s insurance customers not only demand, but expect, a consistent and customized experience to remain loyal. This is where implementing multi-channel solutions as well as training employees to provide a consistent customer experience comes into play. More consumers are shopping around for insurance than ever before, so this should be a key priority.
5. Product agility
Today’s digital economy makes it more important than ever to deliver new and innovative products while maintaining existing offerings.
Transforming to a successful digital state
Reimagining and realizing an entire business model isn’t something that happens overnight, which is why insurers need to plan their transformation carefully. This should begin by developing a strategy to simplify and innovate existing processes and models with the digital economy in mind. From there, insurers can begin building and launching new offerings (starting with prototypes) and optimize them as needed. However, because of the time and work involved in developing and implementing such a plan, it is generally best for insurers to seek outside guidance.
SAP’s digital business services can help insurers make this transition easier and more streamlined with a variety of tailored service offerings. From digital advising to implementation and everything in between, SAP offers customized options to help insurers transform and thrive in today’s changing world. With more than 25,000 professionals available in 70 countries and customers is 130 countries, insurers stand to benefit greatly from SAP’s services. With a strong understanding of the changing digital economy and how to transform accordingly, insurers will outpace their competition.
Learn how to bring new technologies and services together to power digital transformation by downloading “The Future Services Sector: Connected Services for Continuous Delivery.”