We all know that digital technology has changed, and continues to change, how people shop for, buy and own/use goods and services. Power has shifted from the company to the customer. All companies must adopt the digital technologies that create the interaction experience that consumers now demand and expect. But is this more of an imperative for some industries than others?
What if you are in an industry that sells a product that most people don’t really even want to buy, own or use…that people probably wouldn’t even buy if they didn’t have to…a product that was confusing and mysterious? Heck, one that isn’t even a “product” at all? If you were a company that fit this description and you lagged behind in digital technology, how long do you think you’d last if a new competitor came along and used digital technology to actually make the experience of buying, owning and using the product you sell more appealing to customers?
Well, this is the position the insurance industry finds itself in. Satisfaction ratings with the industry vary – they’re so-so in the U.S. and pretty poor in the U.K. based on research commissioned by Majesco in report titled “Assessing the Quality of the Customer Experience ”, for example – and few customers actually switch each year but loyalty, if you can call it that, is driven more by inertia than a true feeling of satisfaction and emotional connection to one’s insurance company. Quite frankly, it’s a royal pain to shop for and switch insurance and most people are willing to put up with minor annoyances – until they get pushed too far.
The company that can best remove or reduce the pain of buying and owning insurance stands to reap a huge market of consumers who are tired of being treated poorly by the insurance industry, compared to the new benchmarks set by Amazon and Apple.
This is not new news. But, the good news is that most leaders in the insurance industry get it. They know they need to act, and they are. Three-quarters of respondents in a cross-industry survey by MIT-Sloan on digital strategy said that digital technologies are important to their companies today, and 93% said they would be important in the next three years.
It’s easy to talk about but it’s hard to actually make the digital transformation in any industry or company, not just insurance. It’s not just implementing new technology. It also requires strategy, leadership, culture, resources and technical capabilities. The MIT-Sloan survey found that most companies are in the early or developing stages of digital maturity. Even those who were in the most advanced “maturing” phase could not be truly considered as fully mature.
Majesco surveyed its insurance customers in Q3 2014 to get a better understanding of the insurance-specific promises and challenges that digital capabilities are presenting them, which are profiled in the report “Digital Readiness in Insurance”. They overwhelmingly agreed that digital capabilities are the foundation for the future and that this was the biggest driver of their digital strategy work. While their current priorities for digital transformation/enablement are focused on specific internal business operations like billing and payments and eService for customers and agents, they at least are aiming at improving the experience of their two most important stakeholder groups: customers and agents.
Despite these good intentions, most of these insurers reported that these operations are currently only weakly supported by digital technologies. Most said there was little concern in their companies about the strategic priority of implementing their digital strategies, but they are encountering barriers when it comes to integration of systems and the capacity and capabilities of their organizations and technology.
It’s great that Majesco’s customers recognize the expectation to improve the experience of shopping for, buying, owning and using insurance. The mandate for a compelling digital experience. And the necessity to compare themselves to companies like Amazon. These are the first steps on the digital journey. Where are you?