2020 was a year that no one will forget with Covid-19 forcing disruption on every business, industry and person on the planet. The insurance industry has received one of the most significant blows due to the losses associated with pay-outs relating to the pandemic. The Lloyd’s of London insurance market forecast has
estimated that the coronavirus could cost the global insurance industry $203Bn.
However, despite this, insurers are still hopeful for a better 2021 in the industry as it continues to adapt and change to the new normal, with digital transformation being top of the list. EIS analysed 1,057 consumers of insurance services in the GWI survey commissioned by EIS and 73 industry respondents in the Insuretech Insight (ITI) survey sponsored by EIS, to reveal the main issues that will likely dominate agendas in the industry.
Firstly, there is a huge sense of urgency in the industry in terms of digital transformation. An overwhelming proportion of insurance professionals believe there is a pressing need to accelerate transformation. Although nearly all (99%) insurance professionals in the ITI survey agree insurers must undergo digital transformation to remain competitive, 88% say legacy systems are preventing them from transforming quickly enough. When asked how investment in digital transformation will change for their companies in 2021, just 1% of respondents said it would decrease while the majority (59%) predicted investments to increase in the new year. Not only will this help insurers internally, but it will increase their appeal to customers and improve the experience they’re able to provide.
“Despite the chaos, the pandemic has highlighted the sheer importance of digital transformation,” said Anthony Grosso, Global Head of Marketing at EIS. “The leading insurers of the future will be those who transform to enable digital ecosystems which place insurance at the heart of how consumers manage their financial lives. In 2021, we expect insurers will focus on this and invest in their ability to keep up with the needs of their customers.”
There is also a need to modernise customer experience. Across all aspects of customer experience, from omnichannel to acquisition and claims, many insurance professionals consider their own industry to be average or poor. For insurers who can simplify the buyer journey and offer more products with flexible coverage options, there is a growing market opportunity. Although most insurers believe that customer experience is vital to the future success of the insurance industry, only 26% in the ITI survey believe they are doing quite well in meeting their customer expectations. In the GWI study, 28% Policyholders cite poor customer experience as the main driver for leaving their insurer. Insurers require a flexible IT infrastructure to adapt to their customers’ changing needs in real-time, especially when 48% of policyholders told GWI they would like insurance bundles where they can adapt coverage on-demand, with a simple on or off toggle.
Finally, the personalisation of products and services is likely to be a main issue going forward. Many insurers have joined forces with adjacent businesses to provide more holistic propositions and create a sticky lifestyle and lifecycle bundles suited to building richer customer relationships compared with what protection products alone have been able to achieve. In the ITI survey, 86% of insurers feel their ability to offer their customers additional services which go beyond protection as essential to their future commercial success. This sector is finding ways to go beyond what they currently offer as 66% of insurers are actively partnering with non-insurance businesses and 26% have plans to partner with non-insurance organisations. There is certainly a consumer appetite for this type of product. In the GWI survey, 58% of consumers were interested in a mobility bundle including auto insurance, auto loans, buying or leasing options, remote monitoring, maintenance and driver safety guidance.
Yaron Ben-Zvi, Haven Life CEO said: “I’ve always felt there was more we could do for policyholders after they buy a policy to build more trust and provide more value. Something that thanks them for placing their faith in us and reminds them they’re more than just a number. That’s why we’ve put an emphasis on a customer-driven program that puts a rider to our term life insurance policy that provides extra benefits, like a digital will and award-winning fitness app.”