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02

Insurers looking to mirror Amazon's 'customer obsession'

Open-access content Thursday 21st February 2019 — updated 5.50pm, Wednesday 29th April 2020

The success of Amazon, Airbnb and other digital businesses has forced insurers to make radical technological changes as they aim to satisfy evolving customer expectations.

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That is the conclusion of a new study by market research firm Forrester, which found that 73% of insurers believe they are going through a period of digital transformation.

And "improving customer experience" was cited by 53% as the main driver of these changes, eclipsing traditional motivators such as regulation and cost savings.

The researchers said that insurers are aiming to mirror disruptors'  "customer obsession" as people change the way they shop, travel and manage their finances.

"Insurers have been shielded from digital disruption by an older demographic, underwriting expertise, and regulatory requirements, but these barriers are starting to fall," they said.

"As a wave of digital businesses reset consumer expectations, digital insurance professionals are seeing their customers bring the same expectations to insurance."

The study found that 65.9% of new motor, property and travel insurance sales in the EU's seven largest economies are digitally influenced, with this set to rise to 83.4% by 2023.

And while agents or banks dominate sales in France, Italy and the US, direct sales are the most popular method in the UK, with 64% of customers buying their insurance online.

It was also found that consumers are embracing new products and services with digital technologies at their core. 

The number of telematics-based policies in the UK jumped by 30% to 975,000 in 2017, while 12% of US life insurance customers get alerts by text message, email or push notification.

Security concerns, customer experience design and data issues were the biggest barriers to digital transformation cited by the insurers studied.

But Forrester said companies need to raise their ambition, and that developing a fully digital customer experience is the "Holy Grail".

One European insurer told the researchers: "We absolutely think of building an end-to-end customer experience: research, buy, administer, use."

While another said: "The opportunity is immense. Not many insurers offer full, end-to-end digital experience - from product enquiry to claims and renewal."


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This article appeared in our February 2019 issue of The Actuary.
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