A new study from Accenture reports that life and p-c policies sold through digital channels could account for 18% of European insurers’ total annual new business premium volume by 2016, up significantly from just 11% at present.
Over the next three years, top investment priorities for these companies include digital expansion plans for big data management capabilities (53%), unstructured data management (40%) and mobile technology (36%), according to the study.
“The drivers for growth are first and foremost changes in consumer behaviors and expectations,” says Jean-Francois Gasc, managing director of Accenture distribution and marketing services for insurance across Europe, Africa and Latin America. “More insurers are willing to align their offerings to the expectations of a significantly growing segment of their future client base.”
Although the data is limited to Europe—and even there, digital transformation is “by no means homogenous” between nations, Gasc says—the growth of a connected generation is “occurring globally,” says Bob Hartwig, president of the Insurance Information Institute (I.I.I.). “It’s only reasonable to believe that at every opportunity, a large share of them are going to seek to conduct every transaction possible online. That’s just where technology is heading.”
Gasc cites the importance of providing multi-channel options to customers, who want the choice to use “whichever device currently exists” when it comes to needs like banking or travel. And while online shopping might not be quite as pervasive in the insurance industry as in others, Hartwig agrees the industry is moving toward a “hybrid” or “fused” system, in which insurance transactions will occur through a “variety or a combination of channels.”
“Fast-forward ten years, and you’ve got people who are large consumers of insurance products and services who have grown up entirely in the internet era,” Hartwig explains. “It is completely natural for them to go online to shop, to make policy changes, to file claims—just as it would be for somebody ten years ago to get on the phone and do the same. If we went back 75 years, somebody would have walked down to the agent’s office.”
But does that forewarn a total disintermediation of independent agents, mirroring the demise of travel agencies over the last decade? The short answer is no. “In most cases, it was difficult to point to a significant and tangible value added by that intermediary in the presence of the new technology,” Hartwig says of travel agencies. “You can’t say the same for the [insurance] agent.”
That thought is consistent with a study Accenture released in April, which concluded that while U.S. homeowners and auto customers rely on digital sources for information, research and quotes, they prefer using agents to actually purchase products. And even if that changes, the agent’s unique value rests on the fact that product purchase is not the only step that matters—and perhaps not even the most important one.
“I think there’s a lot of focus on the purchase of the product, but that’s just the very first transaction in what can be a decades-long relationship,” Hartwig explains. “Beyond the initial sale, there’s going to continue to be significant demand for advice, for assistance, for every other aspect of the insurance relationship.”
Gasc agrees, noting that although the take-up of digital channels is occurring rapidly across Europe, it doesn’t mean clients want to sacrifice the expert advice of working with an agent. “They very often cherish and request a personal relationship with their advisor,” he says. “Allowing much more flexibility for clients in their choice of channel when providing service doesn’t mean the need for consuming advice disappears.”
In fact, while the digital transformation of the insurance industry will almost certainly involve channels that allow consumers to forego any kind of in-person relationship, going digital doesn’t have to be the enemy of being customer relationship-centric—something near and dear to independent agents. Gasc believes the two go hand-in-hand. “You cannot be digital and not client-centric,” he says. “It’s very important for an agent to be part of that transformation and provide the integrated customer experience that the clients want.”
According to Accenture, which is a global management consulting, technology services and outsourcing company, the biggest challenge facing insurers in Europe will be the complexities of managing changes across physical channels (identified by 85% of respondents). IT constraints and the inability to act quickly (both 81%) also received attention as significant barriers to digital transformation.
In the midst of tackling these obstacles, proving added value will be essential “for any entity to survive,” Hartwig says. “The agent continues to add value. Not just at the point of sale, but for the life of the relationship between policyholder and insurer.”
Jacquelyn Connelly is IA assistant editor.