APAC Insurers: On the Way to Digital Success (Part 2)
Our primary research identifies five key areas of focus for digital transformation for APAC insurers, as well as how they are overcoming challenges to reach these goals.
This is the second of a two-part series.
Leading insurers in Asia Pacific agree: “Being digital” is key to their future success. Although each insurer defines “digital” differently (as revealed in Part 1 of the series), all agree on five points of focus for digital transformation, including the customer experience/internal operations, partnerships, their own workforce, data mastery, and new products and business models.
To learn about the state of digital transformation among APAC insurers, we interviewed CXOs from leading carriers in the Middle East, India, Greater China, Australia, New Zealand and Japan. In Part 1, we identified key insights on APAC insurers’ digital priorities and concerns. In this concluding installment, we’ll examine the top areas of focus for digital transformation, how insurers are overcoming challenges to meet these goals, and advice they offer to maximize success.
Shifting Business Imperatives
Respondents named the following as key initiatives for their digital transformation:
Digital customer experience and operations.
Insurers will deploy design thinking and other human-centric approaches to get closer to the customer. They are willing to take a holistic customer journey-focused approach to understanding how to transform the front office and keep the back office in sync. A majority (83%) said design thinking (i.e., customer journey mapping, ethnographic research) is a starting block for digital transformation; 73% agreed that formal user experience principles must be applied to customer-facing applications. (For more on this topic, read “Human-Centric Design: How Design Thinking Can Drive Change and Deliver Value.”)
All respondents said they are actively working to digitally enable their partners, whether through partner-specific portals, co-branding exercises or mobile-enabling sales agents. To overcome adoption issues, insurers are conducting continuous training, realigning incentives, setting up dedicated help desks and leveraging modern communication channels such as WhatsApp to respond to real-time agent queries. (For more on this, please read “What’s App Insurance? Shouldn’t We Chat?”) Fully 94% of respondents said these initiatives will help reduce sales costs and improve conversions over the next 24 months.
Digitizing the workforce.
Workforce digitization has taken a back seat to customer and partner initiatives, although respondents indicate increased traction in the coming months. For example, 57% said they plan to invest in mobile apps targeted at employees in the next one to two years. Productivity improvement solutions such as BYOD and revamping internal portals for greater knowledge management are primary areas of investment. Barriers to overcome include lack of interdepartmental collaboration, inflexible workflows and organizational hierarchies.
All respondents agree that predictive data models hold a wealth of opportunity, and all are striving to become more data-/knowledge-/innovation-led enterprises. While our analysis reveals that these insurers lag behind other companies and industries when it comes to harnessing advanced analytics, half said they collect data from social networks and mobile devices and embed it into their products and services, and over one-third said they have activated advanced analytics and data science initiatives.
Digital products/business models.
Although 43% of respondents said they are focused on new products and business models, most are in the planning or experimenting phase. In their experimentation, some insurers have struggled with partner evaluation, applying the right financials, regulatory hurdles and also back-end integration. As the ecosystem matures and regulators set clear directions, focus in this area is only going to increase. We expect to see additional investments directed toward generating new usage-based insurance revenue streams.
The challenges that insurers face are spread across organizational functions and require specialized solutions in people, process, product and technology pillars. Respondents offered a few words of advice on common disconnects and how to overcome them:
Understand why digitization is better. Respondents strongly believe that in the next five years, digital products will fundamentally change business and delivery models, as well as the company’s value proposition. They identified the key pieces needed to solve the digital puzzle: understand customer behavior to create the best experience for them; remove process inefficiencies in marketing, sales, and service; and synchronize internal business units to prioritize a digital identity.
See digital as a solution to business problems. More than 75% of respondents said their digital transformation programs are strategic and not the result of ad hoc technology procurements and tactical solutions. However, 75% admitted that their technology-first approach didn’t yield optimum results, and that they need to become more holistically minded. New techniques for achieving that goal include design thinking, customer training and creating a minimum viable product.
Establish new metrics to evaluate innovation. Roughly 60% of our respondents use new metrics (e.g., the number of online quotes and illustrations generated, percentage of renewal premiums paid through payment gateways, the number of clicks on a new digital banner, etc.) to measure digital success. Even though only 30% use customized, program-specific value metrics, it was clear that the importance of a clearly defined, performance-based playbook is widely understood.
Governance is a multidisciplinary game that few are good at. Even though 80% of respondents said they lack strong digital governance structures, a majority could correctly identify the exact challenges they face due to weak program management. Some insurers have formed digital centers of excellence with equal and active participation from the marketing, product, technology, operations and distribution heads to ensure the digital roadmap is well-charted and followed.
Our research reveals that insurers are no longer fence-sitting on the digital questions asked by customers, partners and employees. However, in their eagerness to beat the competition to the punch, insurers will benefit from donning the lenses of the various participants across the ecosystem to see the big picture of what they are attempting to realize digitally.