Insurers urged to bolster digital engagement
20 February 2017
Category: News, Asia, Global
By Asia Asset Management
An increasing number of global insurers are recognising the need to become more tech savvy, despite failing to show leadership in digital innovation, according to a new survey from global advisory, broking and solutions firm Willis Towers Watson.
The survey, which interviewed 200 senior level executives within the insurance industry with regards to their attitude to digital technologies, found that 74% of respondents felt they lag behind their financial services peers in regard to adopting digital technologies – mostly due to regulations, reluctance and cost.
The report also revealed that insurers are now prioritising digital innovation, with 49% of the insurers surveyed expecting to acquire digital technologies in the next three years, and 14% planning to make more than one acquisition.
“Insurers recognise the importance of building a sustainable digital infrastructure to improve customer engagement and as an essential distribution channel, which is likely to be addressed through a combination of internally driven innovation, joint ventures and M&A activity,” said Nicholas Chen, head of digital solutions at Willis Towers Watson, Asia Pacific.
“Insurers that hesitate could very well get left behind and fail to capture future generations of younger policyholders, who are more likely to engage via digital channels,” Mr. Chen adds.
Digital technology is expected to also disrupt the distribution space, with about 94% of the survey respondents expecting to see substantial changes in this area as a result of digital technologies, in the next five years.
Recognising the potential for digital technologies to transform the industry, 77% of the insurers expect web and mobile delivery channels to have the biggest impact on the sector in the next two years; while big data, automation, robo-advice and sensors to increase in importance over the next five years.
“The tools emerging are often so far removed from insurers’ previous experience that external innovation models are likely to be the only way of expanding digital capabilities. This is expected to lead to a wave of new M&A activity in the years to come,” says Mr. Chen.
In terms of broadening their innovation, respondents say developing data and analytic tools are the key. So far, 90% have explored technologies that allow them to gather more information directly from their existing customers, while 80% are leveraging on social network data, and more than half are looking to mine the publicly available data in new ways.
In another survey conducted by the Economist Intelligence Unit, which explores the digital transformation environment in Asia, 56% of the 126 senior financial industry executives interviewed say digital partnerships will be important to the success of their digital transformation efforts over the next three years.
Respondents see digital transformation as a means to open up new vistas, with about 83% of the respondents claiming that their firm’s digital transformation efforts have led to changes in their business model, with 74% saying their investments in digital transformation have already proven their value.
The findings also showed that about 65% of respondents reported having five or more digital partners, with the chief benefits including developing new ideas for products and services, improving productivity, and expanding reach into new markets.
However, the report highlighted a lack of management support and lack of strategy or new ideas as the biggest obstacles to go digital amongst financial institutions in Asia.
“Managers in the industry see the digital opportunity and understand the technologies, but they have little appreciation of how long it will take and the inputs required,” said Mike Usher, director of information risk and privacy at Prudential Corporation Asia. “Boards and senior management must understand that digital transformation requires a sustained effort and does not happen overnight.”