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PERSPECTIVES


Jean-Francois Gasc QA: The accelerating pace of insurance distribution

Accenture’s Distribution & Marketing Services lead for Europe, Africa and Latin America discusses some of the highlights of the recent Distribution & Agency Management Survey.

Tell us a bit about the survey.
We interviewed more than 400 senior insurance executives worldwide, all of whom are responsible for, or involved with, their companies’ distribution function. The sample was biased toward large carriers, and included P&C personal lines and small commercial carriers, life insurers and multiline companies.

What, for you, was the most striking finding?
Well let me say first of all that the survey results confirmed and quantified most of what we’re being told daily by our clients. But I think we were all a bit surprised at the increasing pace of digitalization. For example, one in four respondents said their organization has a wholly digital sales process, in which they use human interactions only for customers who need advice. But here’s the kicker: a further 28 percent plan to be wholly digital in the next three years, and the same number have a similar ambition but expect to take a bit longer. Add them up and you’ll see that only 19 percent reject this model.

Are there other results that demonstrate the quickening shift to digital?
The results are pretty consistent. For example, P&C personal lines insurers estimate that today 21 percent of all sales are concluded digitally from end to end–in other words, fully self-service–but they expect the number to rise to 31 percent in three years’ time. The numbers for commercial lines are smaller but the growth is the same: 14 percent today, rising to 24 percent. And for life, its 20 percent rising to 26 percent. These are big increases. To achieve them there’s going to have to be significant transformation within these organizations.

I believe you also focused on the Internet of Things–is there much interest there on the part of insurance carriers?
There certainly is–45 percent of our respondents believe the IoT’s connected devices will be a major driver of revenue growth for insurers. We asked them how they’ve progressed with the launch or piloting of products and services that utilize these devices, and compared them to the findings of a similar survey carried out last year. The increases are remarkable–from double to almost four-fold. If you look at connected home or building insurance, for example, 17 percent of carriers have already or are about to launch products or services, up from 5 percent, and a further 22 percent are running pilot projects. Auto insurance is obviously the most mature of the sectors, and here we’re seeing a total of 43 percent of carriers that either have already launched or are piloting new initiatives.

Are these changes happening across the board?
The shift to digital, and the acceleration of this trend, are universal. But there is a clear distinction between a minority of carriers, whom we call the Digital Transformers, and the rest of the industry, the Digital Followers. The difference is certainly revealed by the numbers–the Transformers are outpacing the Followers on virtually every dimension of digital transformation. But it’s also evident in the objectives of the two groups. The Followers tend to invest in digital technology to enhance their current products, processes and customer experiences with the primary aim of improving their efficiency. This is good, but it’s not going to give them an advantage over the Transformers, who in addition to efficiency are leveraging digital to become more customer-centric and more innovative–searching for new ways of creating new value for their customers.

In the light of the survey’s findings, what are your recommendations for insurers?
We include a number of specific recommendations in our survey report. But two of our over-arching proposals are, firstly, that carriers should make customer-centricity and innovation the cornerstones of their digital transformation. These are indispensable attributes of any future business and operating models. And then secondly, we’ve seen a hesitancy among many carriers that reveals itself in an ongoing succession of pilot projects but not as much decisive action. We believe insurers must commit to their chosen business and distribution models, and implement the initiatives that will bring these to life. The industry is transforming so rapidly that a wait-and-see approach is no longer the safer option–it’s time to seize the moment and commit to future growth.

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