Spring is finally here, and with that, a time for wild animals to emerge from their winter sleep. We humans don’t really hibernate, but we can find it difficult to get out of bed to face a rather frosty environment. This applies to companies, too.
I wrote last year that European insurers were waking up to the threat of digital disruption. I should have qualified this sentence: Some European insurers are waking up to it. And even fewer are getting out of bed and doing something about it. In 2015, the gulf between digital insurance innovators and other firms is expanding.
As we researched our new report about trends in European digital insurance, it became clear that no one is really disputing the value of direct insurance. European insurers have suffered seven lean years, as premiums in property, casualty, and life insurance largely stagnated. Direct sales have often been an area that continued to deliver growth. Because of this, we expect most European insurers to step up their investments and efforts in this area.
But here is the key point: Digital technologies are much more than just a channel. They can drive a business transformation to deliver new customer value and greater operational agility. Digital technologies can help insurers in particular build more persistent bridges to their customers’ lives to address the industry’s low customer engagement and creeping commoditization.
Becoming a digital business is much more difficult than adjusting your distribution strategy. It means exploring digitally-enhanced products and services, with pressure on the company’s siloed organization and processes and outdated technology systems. Savvy insurers are recognizing that helping customers protect their assets might not be a traditional underwritten insurance policy but rather a profitable ongoing service. This is the direction that firms like Allianz, AXA, and BNP Paribas Cardif are headed, as they explore new services for the protection of digital assets, usage-based car insurance with “telematics fingerprinting,” and boosting home security through connected devices.
Why does this matter? As we wrote a few months ago, we believe 2015 is the year when traditional insurance firms lose ground to more dynamic businesses that "get" digital. So don’t be asleep at the switch.