Digital Transformation In The Insurance Industry: A Snapshot

Andy Hirst

Customer-centricity is more important than ever when it comes to driving profitable growth of insurance companies. As noted in a new IDC InfoBrief, more customers are digital natives and expect simple and personalized products and services that suit their unique needs and situations, as well as contextual, meaningful interactions at every stage of the policy life cycle.

To succeed with these customers, insurers need to collect, analyze, and monetize customer data from every touchpoint, as well as integrate it with new, external data sources like social media, wearables with sensors, and public data sets. In other words, they need to achieve a sufficient level of digital transformation. IDC believes that digital means data, and drawing value from data using analytics for transforming business models. Insurers who make the most of digital by applying the right technologies will be best placed to respond to market challenges in the coming years.

But digital transformation is no small feat for insurers facing challenges like inflexible legacy systems and a culture notoriously resistant to change and innovation. The good news is, new technologies like advanced analytics, artificial intelligence (AI), and machine learning can vastly accelerate your organization’s digital transformation journey – and deliver significant and immediate returns to your business. Adoption of these technologies is clearly on the rise; IDC’s 2016 European Vertical Markets Survey indicated that nearly half of insurers are already using Big Data and analytics solutions.

What are these early adopters focusing on, and what are they achieving?

According to IDC, one of the top use cases for insurers is enabling contextual and meaningful interactions across the customer journey—and across multiple digital channels. This requires collecting and analyzing data that goes beyond what’s used to identify risk classes, determine policy prices, and settle claims. Think social media data; demographic, credit, and other public data; location and other sensor data; and more that can be used to build a holistic picture of each customer.

By analyzing this data, insurers can understand each customer’s lifestyle, behaviors, and preferences in order to engage with them at the right time and place, offer personalized service and offers, and more. Machine learning can then analyze interaction data so that the insurer can learn, improve, and predict more effectively for the next interaction with that customer.

IDC reports that companies like MassMutual, Grange Insurance, Nationwide, and Safeco are already investing in this use case to transform their customer experience. MassMutual, for example, is data mining social media content to segment customers more effectively so they can position specific products and services in ways that are timely and relevant. And Grange Insurance, Nationwide, and Safeco are partnering with Amazon to use its cloud-based virtual assistant device to help customers find local agents, get timely tips and advice, and research relevant products.

Car insurance providers can take advantage of another compelling use case: using advanced analytics and cognitive technologies to maximize the value of connected car offerings. IDC notes that advanced analytics can use real-world data about individual and current driving behavior—rather than actuarial studies of historical driving records—to more accurately assess individual risk and reduce losses.

Companies like UK insurer LV= Broker are using this approach to more accurately price premiums for each customer. The company is working with a telematics player to use its data analytics and telematics services to more accurately price risk, enhance claims management, and reward consumers with significantly lower prices. Similarly, The Generali Group in Italy is using telematics to detect crashes in real time and reach out to assist customers as needed; currently, one million customer vehicles have these devices installed.

These are even more compelling insurance use cases and customer stories shared in IDC’s InfoBrief, “Redefining Insurance Business Models Through Advanced Analytics and Data Monetization.” And to learn more about SAP’s suite of insurance solutions, please visit: SAP for Insurance.

Learn how to bring new technologies and services together to power digital transformation by downloading “The Future Services Sector: Connected Services for Continuous Delivery.”


Andy Hirst

About Andy Hirst

Andy Hirst is vice president of Banking Solutions, SAP Banking Industry Business Unit, at SAP. He is responsible for driving the success of the SAP go-to-market strategy in Line of Business Cloud Applications and Analytics in Financial Services. Previously, Andy was responsible for Capital Markets solutions for banking. Andy is an expert in Big Data and analytics use cases in financial services and has been involved in many digital banking initiatives for banks.