2015-07-14-Bain-Global_Digital_Insurance_Benchmarking_Report_2015_42页_8mb

Summary of the GLOBAL DIGITAL INSURANCE BENCHMARKING REPORT 2015

Core Content

This report outlines the state of digital transformation in the global insurance industry, highlighting key trends, challenges, and strategies that insurers are adopting to navigate the shift toward digital tools and processes. It identifies four main pathways that insurers are following to achieve digital success: Advanced Analyzer, Digital Distributor, Customer-Centric Insurer, and Effective Operator. The report also emphasizes the growing consumer demand for digital interactions and the need for insurers to align their strategies with this shift.

Main Points

• Consumer Demand for Digital Channels

  • 79% of consumers worldwide plan to use digital channels for insurance interactions in the next few years.
  • 37% increase in customers' use of digital for after-purchase inquiries and servicing.
  • 26% decrease in contact center use.

• Insurer Preparedness for Digital Transition

  • Almost half of insurers do not have a realistic plan for digital transition.
  • About 60% are missing key elements such as a clear vision or compliance and risk processes.
  • Insurers are expected to improve their digital capabilities over the next 3–5 years.

• Digital Channel Growth

  • New premiums sold online in life insurance: 8% today, expected to rise to 14.9%.
  • New premiums sold online in P&C insurance: 10% today, expected to rise to 22.5%.

• Product Development and Process Optimization

  • Product development time is expected to decrease from 11 months to 7.4 months.
  • Insurers are increasingly adopting auto-underwriting and auto-adjudication, with a 20 percentage point rise in the share of business that is automatically handled.

• Big Data and Analytics

  • Annualized spending on Big Data analytics is forecasted to grow by 24% in life and 27% in P&C.
  • Advanced analytics can improve customer segmentation, risk calculation, and fraud detection.

• IT Spending Trends

  • IT spending as a percentage of revenues is expected to increase from 3.8% to 5.5% for life insurers and from 3.7% to 4.1% for P&C insurers over the next 3–5 years.

Key Pathways to Digital Success

Challenges and Opportunities

• Regional Variations in Digital Adoption

  • Digital usage varies by region, with some countries (like the UK and Australia) showing higher adoption rates than others (like Germany).
  • In emerging markets such as Indonesia, a direct shift to mobile technologies is occurring, bypassing traditional paper-based systems.

• Integration of Digital and Physical Channels

  • A successful digital strategy involves combining the best of both worlds to enhance customer loyalty and satisfaction.
  • Most insurers still rely heavily on traditional channels, but integration is crucial to avoid losing sales opportunities.

• Organizational and Cultural Shifts

  • Digital transformation requires a cultural shift, promoting innovation and collaboration across departments.
  • Insurers need to invest in new capabilities and technologies while managing the transition from legacy systems.

• Customer-Centric Approach

  • Companies that focus on customer needs and behaviors are better positioned to improve retention and advocacy.
  • Examples include Discovery’s Vitality program, which rewards healthy behaviors and improves risk profiles.

• Operational Efficiency

  • Reducing operating costs and error rates is a key goal for the effective operator pathway.
  • Straight-through processing (STP) and auto-underwriting are central to this model.

Strategic Recommendations

• Insurers should focus on one or more of the four digital pathways to concentrate resources and improve execution.
• Digital transformation must be aligned with regional consumer preferences and regulatory environments.
• Building an innovation-ready culture and investing in IT infrastructure and analytics are essential for long-term success.
• Integration of digital and physical operations is critical to maintaining customer engagement and reducing churn.

Conclusion

The insurance industry is undergoing a significant digital transformation, driven by consumer demand and technological advancements. While many insurers are still in the early stages of this transition, the report highlights the importance of strategic focus, cultural adaptation, and effective integration of digital tools to achieve competitive advantage and long-term sustainability.