A “wise pivot” will enable carriers to boost revenues by harnessing the power of digital disruption.
Insurers around the world are realizing that they need to make some big changes to their businesses. If they don’t, they’ll struggle to overcome the digital disruption that’s threatening their future revenues.
To succeed in the fast-growing digital economy, carriers need to pivot their businesses away to their dependence on traditional insurance practices and transform themselves into multi-facetted “intelligent enterprises”. These enterprises use digital technologies to create value across a broad range of activities. This “rotation to the new” requires substantial investment and should to be carefully managed. It needs a prudent, pragmatic approach that we term a “wise pivot”.
Already, digital disruption is curbing the performance of many carriers. A slew of new digital products and services is luring consumers away to conventional insurance offerings. The recent Efma-Accenture Insurance Innovation Awards, for example, highlighted a variety of innovative insurance products and services to carriers such as AXA, Allianz, Caser Seguros and PZU.
What’s more, growing competition within the insurance market, fueled by the arrival of tech-savvy newcomers with agile business models, is eroding the operating margins and profits of many providers. Rising insurtech firms such as Nexar, Gavin, Anorak and Cuvva are building their businesses around their ability to provide an exceptional customer experience.
Plenty of insurers are responding to the challenge of digital disruption. They’re beefing up their spending on digital technologies to improve efficiencies, hasten product development and enhance the experience they provide customers. Investments in big-data analytics, mobile technologies and the Internet of Things have been a key feature of many insurers’ change programs (illustration below).
Sixty-seven percent of the insurance executives we surveyed planned to increase investment in change programs that improve efficiency and cost-control. Sixty-one percent said they would increase spending to enhance the customer experience and the customer service their companies offer. A similar proportion anticipated pushing up investments in new digital technologies and distribution channels.
Investments in digital technologies, however, shouldn’t be “bolt-on” solutions that improve only a few aspects of the business. Instead, they ought to be part of a comprehensive strategy that effects change throughout the organization.
Insurers need to embark on a wise pivot and carefully transform themselves into intelligent enterprises. Such enterprises use digital technologies to release value locked in their established structures while also creating new sources of revenue. What’s more, intelligent enterprises can change quickly to meet the shifting demands of the digital economy. Most traditional organizations are simply unable to move fast enough to keep pace with the constantly changing requirements of the digital marketplace.
We’ve identified six key characteristics of successful intelligent enterprises.
- Hyper-relevance: They continually assess the needs of their customers and deliver services and products that are always appealing and relevant.
- Network-powered: By harnessing an ecosystem of partners, intelligent enterprises deliver a stream of attractive innovations to their customers.
- Data-propelled: Mastery of critical data-intensive technologies enables these companies to quickly develop and scale-up new solutions and customer offerings.
- Asset-smart: Their ability to optimize the allocation of assets allows intelligent enterprises to quickly seize new opportunities and shift to new business models.
- Hyper-lean: Intelligent operations, which automate business processes and decision-making, reduce costs and free resources for innovation.
- Agile workforce: Intelligent enterprises use liquid workforces that are highly flexible and adaptable to become more agile and responsive than their competitors.
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