In my role on the Digital Market Insight team at Guidewire, I spend a lot of time talking to our customers and other insurers all over the world about their digital strategies. It is clear that every insurer is investing in “going digital”. But what is really driving this investment? We ask this because our product strategy starts with the end in mind – what business value and outcomes are insurers trying to achieve, and then we work backwards from there to determine what our products need to do to enable our customers to achieve those outcomes.
From those conversations, six key digital value drivers have emerged:
- To attract, convert, and retain the next-generation insurance buyer – we are all aware that the millennial generation has grown up with digital devices as part of the fabric of their lives; they have rising customer experience and service standards because of companies like Amazon, Uber and the like. The influence of this generation is accelerating rapidly as they flood the workforce at an ever increasing pace. Insurers recognize that they need to rethink their customer interaction models to not just grab the attention but also earn the loyalty of this growing market of insurance buyers.
- To address broker ease-of-doing-business demands – despite predictions to the contrary, intermediated business still represents a significant percentage of insurance sold in Canada and globally. To become the insurer of choice for brokers, insurers must offer this community a similar level of intuitive, omnichannel, personalized, self-service access to transactions and information as they do for consumers. There is also an opportunity to offer differentiated products and services specifically targeted at this base.
- To enable agile and insight-driven business optimization – one of the key reasons that insurers are hesitant to innovate is the fact that cycle times from concept to implementation is so long, and thus it takes a courageous bet to make a significant business change – not just in hard dollars but in lost opportunity cost. If they could put in place an infrastructure that enabled quick test and learn cycles that included fast implementation of changes, coupled with analytics to provide insight to optimize, they would be able to take advantage of new ideas and iterate quickly to either achieve the desired business value or fail fast and move on.
- To leverage technology to lower expense ratio through increased self-service and optimized operations – many digital business cases can be made solely on the savings from a shift from high internal servicing costs to policyholder and broker self-service. In addition, areas such as improving vendor management and decreasing overall claim lifecycle time by improving collaboration across the claim value chain can also positively impact expense ratios.
- To leverage digital disruptions to offer new value propositions – this includes initiatives such as the use of Internet of Things (IoT) technology to reduce premium leakage and improve loss ratios through improved underwriting, pricing and targeted risk selection; and to broaden the relationship with customers by offering risk protection in addition to risk transfer services.
- To reduce implementation costs and long-term system TCO – implementing any or all of the above has the potential to dramatically increase total cost of ownership if this results in duplicated code, rules and data for each new channel and initiative. Insurers need to be able to add this capability without introducing duplication and unnecessary complexity.
These six digital value drivers offer both near-term, bottom-line benefits as well as opportunities to gain a competitive advantage with differentiation and innovation. Thus, these are the drivers of Guidewire’s digital product strategy. If you are interested in this topic, please come visit us at the Guidewire booth #27 at ICTC2016, or contact me directly at [email protected].
Editor’s Note: As Digital Strategy Director, Glynda collaborates with Product Management to develop Guidewire’s digital products strategy and is specifically responsible for bringing the voice of the customer and the market into those strategies. Guidewire is a Platinum sponsor of the 2016 Insurance-Canada.ca Technology Conference.