Insurers and brokers in the market are on track in exploiting technology to stay relevant or grow their business in the evolving digital landscape. Middle East Insurance Review checks them out.
With the increased penetration of internet and mobile devices, customers today have multiple channels to gather and compare information on various products and services by different insurers before deciding what products to buy.
As a result, more insurance players are investing in building digital infrastructure and platforms as customers’ expectations have been shaped by their digital experiences with sophisticated companies in other sectors such as banking, retail, media, and travel.
The fast growth of price aggregator websites has also increased customer expectations for ease of use and immediacy. In addition, other non-insurance companies such as tech giants Google and Amazon have also moved into the market.
As digital markets continue to change rapidly, one key area where technological innovation is expected to transform the insurance industry is distribution, as customers are increasingly using digital services to meet their financial goals.
Digital disruption
The rapid adoption of new technologies by mainstream society is having a profound impact on traditional value chains and business models, said Mr Derek Gemmell, Director of Intermediary Sales, Assicurazioni Generali. He noted that while the insurance industry has been lagging behind most other industries in its adoption of technology, consumers in the MENA region, according to the World Economic Forum, are adopting new technologies at a rapid rate, in particular mobile technologies.
The increasing use of digital media has affected businesses across almost every industry on an international level, said Mr Bashar Khatib, Chief Distribution Officer, Nexus Group, adding that this is especially true in the UAE, with its high adoption rates of technology and various smart city initiatives being implemented across public and private entities.
Mr Inam Ul Haq Khan, Managing Director, Galaxy Insurance Brokers, said the digital era has transformed society, including the insurance sector. “Similar to the travel industry, consumer access to 24/7, online quoting and purchasing tools have replaced a portion of the insurance industry’s roles and responsibilities.”
With the rise of new entrants from other industries in the insurance marketplace, traditional broking is being disrupted, Ms Angélique Makhdjian, Digital Project Manager/ Marketing Executive at Gras Savoye Liban, noted. “There is a need to adapt and find new ways to deliver value-added services that are critical to succeed and cannot be ignored,” she said.
Embracing digital
With the changes in customer expectations and channels of communication, it becomes critical for companies to embrace new business models and leverage digital capabilities to provide consumers with new experiences.
“Utilisation of data to maintain and grow customer bases, seamless on the move service and stronger content and portfolio management will give those companies willing to invest in digital platforms a unique edge over their competition,” said Mr Richard Morrison, Regional Head of Corporate Intermediaries at AXA Insurance (Gulf).
It is time for organisations to rethink the business and make the digital agenda a high priority, said Ms Makhdjian said. “We realise that customers are now looking online for more commoditised insurance products. They want to have a choice, and that’s what we should provide them with.”
In tandem with offline channels, digital is essential to reach new customer segments, generate more leads, deliver a satisfying online customer experience and future business growth, as well as increase the businesses’ reach and visibility, she added. “When cross-sell, up-sell and retention fail to respond to aspirations, we must consider digital to retain and grow customer value across the customer’s life cycle. If we don’t, other business organisations will,” she cautioned.
Technology can make brokers’ lives easier and their businesses more profitable, said Mr Khan. He added: “Digitalisation will reduce overall costs for insurance brokers to acquire a new client, while service-related issues can be handled in lower turnaround times.”
Implementing a digital strategy
Adapting to a new digital landscape also presents challenges in introducing new channels to the market while simultaneously remodelling traditional ones, Mr Morrison said. “While no single solution can seamlessly integrate digital into a business, there are elements intrinsic to all effective digital strategies.” Insurers, he added, need a vision that focuses on the basics, including framing the investment argument for digital, building the analytics infrastructure and embedding a culture of innovation into the organisation.
A robust digital strategy, he continued, “begins with a plan and a sound understanding of the practical realities of implementation. Each of the elements – corporate strategies, customer expectations, target operating models and enabling frameworks – will shape each other as digital capabilities develop”.
Being agile and in a position to move with trends will become essential in this digital age, Mr Gemmell said, and this will require brokers to use analytics more proactively to understand current and future needs of their clients. He noted: “The rapid take-up of mobile technology in the region is something that brokers will need to utilise to their advantage. Combining this rapid mobile diffusion with the take-up of social networking sites provides brokers with a very efficient and effective way of keeping in contact with their clients, as well as offering new lead generation platforms.
“These new digital consumers have much higher expectations for seamless interactions that are simple and smart, and the broker community will need to invest in their operating systems to ensure that they will be in a position to meet these expectations.”
Agreeing, Mr Khatib said insurance brokers should implement an effective digital strategy to support their value-added services with a comprehensive and information-rich digital presence. “This can be done in the form of interactive websites, which help customers effectively and efficiently manage their existing insurance plans to make claims or upgrade their packages, saving time and enhancing the customer experience.”
He suggested that an initial digital strategy includes newsletters, which can be distributed online to current and potential customers as a direct and efficient medium to promote products and share important business updates. Digital newsletters are a great way to reach customers and help them to recognise new needs, “which is the first step in establishing a communication line that may lead to increased sales figures”, Mr Khatib said.
Change from the top
The appointment of Mr Pierre Brunel as CEO of Gras Savoye Liban saw a rethinking of business strategy which resulted in investing, among others, in the creation of a digital job function. Mr Brunel “understood that the digital agenda is a new market force that is driving a massive chane in consumer expectations, completely reshaping the insurance sector”, said Ms Makhdjian.
Gras Savoye Liban is now building capabilities to serve customers on both the transactional and consultative sides by proposing solutions to the emergence of e-insurance. “We are thinking about how technology can enable changes in insurance not only at the point of sale, but also at all the different customer touch points: pre-sales, information gathering, advice, supporting sales, services and claims,” she said. “We are looking for new initiatives that deliver the most up-to-date services through digital marketing.”
The human factor
While technology is driving change in the insurance industry, it will not entirely replace traditional distribution relationships. Even with the simplification advantages that digital offers to customers there will, due to the nature of insurance products, remain complexity that requires both trust in the provider and a human touch.
Abu Dhabi National Insurance Company (ADNIC) believes in investing in technology to ensure the most efficient service for customers, but “our business is and always will be a people business, especially when it comes to large and complex risks”, said its Chief Distribution Officer Andrew Woodward. “We value personal ‘human’ service. Technology doesn’t replace this, it simply enables insurers and brokers to deliver service that goes the extra mile.” For example, ADNIC’s mobile medical app enables customers to locate their closest clinic online and has reduced the medical claims process from 10 days to one.
Personal service and expertise offered by brokers are still needed and wanted, Mr Khan said. “Technology is having the biggest impact on the more commoditised market for personal lines insurance, while brokers will continue to retain their share in the corporate insurance placements.”
While a limited number of commoditised insurance products can be conveniently compared and purchased online, “there are critical non-commoditised products that should not be purchased without the guidance of a trusted financial advisor”, Mr Khatib said.
He added: “Travel or car insurance plans, for instance, can be simple and easy to understand, making it possible for customers to identify a suitable plan among the packages in the market online, based on their needs. Complex insurance products, such as life and savings insurance plans, however, require thorough assessment by a qualified and unbiased insurance broker, who can guide customers towards the most suitable products, and can often design customised solutions. This level of customisation cannot be accomplished digitally.”
Customers will benefit from the expert advice of brokers and agents online, “but believing that a great digital strategy is sufficient by itself for the success of a business is a mistake; it must be in line with the traditional expertise of an institution in order to succeed”, said Ms Makhdjian.
Broker-insurer collaboration
All clients are searching for the best price when it comes to insurance, but they also want a quality service, said Mr Woodward. “Brokers and insurers need to work together to deliver this seamlessly. At ADNIC we work to develop strong relationships with our brokers, whether they are the large multinational brokers or local/ regional players, so we are able to deliver the best quality and value service that they can take to the market.”
In addition, large brokers are responding to increasing demands from customers by focusing on fewer but bigger relationships with key insurers. Mr Woodward explained: “This way, they can leverage their buying power and establish close and stable working relationships. In a competitive market, lots of insurers offer cheap prices, however, the key is to deliver market-leading services at competitive prices.”
Mr Morrison said brokers must be willing not only to strongly invest in technology, but also be prepared to work with select insurance companies, “who often have the larger resources for investment in IT and digital”. Successful brokers will be those that can invest in, develop and maintain their own digital solutions for customers and maximise their reach of digital strategy. “Companies unable or unwilling to work in this manner will face hurdles, particularly in the fields of retail and healthcare insurance, while other insurance companies make great strides,” he added.
The digital future
With consumers becoming much more engaged with their purchasing decisions and demanding simpler and smarter insurance solutions through a variety of channels, building more integrated offerings will become critical, Mr Gemmell said.
“Providing enhanced customer experience will require insurers and brokers to work even closer together at all stages of the selling cycle, differentiating their propositions by offering a higher degree of customer intimacy as opposed to the emerging B2C direct models. Collectively obtaining a deeper understanding of customers’ needs and preferences and realising better operational efficiencies will be key to future success,” he noted.
“We expect the broker market to continue to flourish, and insurers will be more focused on key broker relationships, where strong value is added,” said Mr Morrison. On the other hand, insurers are investing a lot of money into digital, B2C and B2B solutions, and are looking for strong partners who will utilise this technology and provide customers with solid solutions in both sales and service.
For the insurance broking industry, “the ‘Uberisation’ risk is real because connected objects’ manufacturers are reaping a lot of information about customers. The insurance broking landscape will continue to change by rethinking the whole distribution”, said Ms Makhdjian.
Given the continued proliferation of new technologies, it is vital for the insurance industry players to adapt their strategies in response to the challenges of digital disruption.