There is no doubt that insurers have begun to embrace the digital era, but they are doing so slowly and B2B insurers in particular are lagging behind. With a recent study indicating that insurance firms with a digital focus are 26% more profitable than firms that lack this focus, clearly this is a shift that companies must begin to make. Those that don’t inevitably risk falling behind their competitors.
So why are insurance companies typically reticent or slow to adopt? In short they are hampered by a number of factors including short-term thinking, a traditional mindset and inefficient legacy systems that are unable to cope with the digital revolution. These systems are often made up of one or two decades-worth of IT architecture, and so the notion of changing or even dismantling them can be daunting.
Planning for a digital future
The short-term thinking that is hampering some B2B insurers is not necessarily a result of poor management. The reality is that resources are limited and companies tend to focus on the most pressing issues in front of them. The shift to digital can therefore seem like a luxury amid the daily challenges of keeping a company running and profitable.
Furthermore, some insurance companies are rightfully cautious about overhauling their way of doing business for technology that may seem both untested and in a state of flux.
However, digital is here to stay and software packages exist that offer digital solutions that have room to adapt and expand as digital capabilities and best practices grow. These solutions are also significant because they are designed with an understanding of the complex legacy systems that make it difficult and expensive for many insurance companies to upgrade.
One question B2B insurers may be asking is why a digital upgrade is so critical? The statistics may show an overall increase in sales for insurance companies that have embraced digital, but does this make the expensive and time-consuming change worthwhile? Are there other benefits, and do those benefits apply to B2B insurers as well as B2C?
Well, one of the main benefits B2B insurers should be aware of with digital is the potential for gathering data. This goes beyond any sort of qualitative or quantitative customer surveys or monitoring of sales calls that companies may have used in the past. Data about customer needs and behaviour at every stage of purchasing and interaction with a company online can lead to robust analyses, which means that they can better respond to, and predict, customer needs. This also allows companies to market themselves to new customers more effectively.
Like B2C customers, B2B customers are often on the move, and mobile capabilities will ensure that they can compare quotes, file claims and conduct other business wherever they are. In addition, like their B2C counterparts, B2B customers will desire different levels of personal interaction. Some customers will prefer to operate almost entirely online whilst others will still want to have the option of being able to use more traditional channels. A company with enhanced digital capabilities can therefore offer both these options to satisfy a greater number of customers.
There are also practical benefits for B2B companies that can make the digital shift worthwhile as well. While the initial change from older software systems may require some retraining, the system will ultimately be more efficient. Cloud storage, improved digitalised claims management systems and easier access to information for agents and underwriters are just a few of the other benefits digital can provide.
Telematics is another new and exciting digital innovation that may save both insurance companies and consumers a great deal of money. Sensors can be installed throughout buildings or vehicles to note when a malfunction occurs, and many insurers see this as a shift from focusing on reimbursement to one of prevention. These sensors can also aid insurers in assessing the safety of buildings and drivers.
Social media is another area of digital expansion that can benefit B2B insurers. B2B companies do not necessarily use social media in the same way that B2C companies do, but the goals are similar.
B2B social media communications need to be as efficient as possible, but social media can still be used to convey valuable information to customers and to build relationships leading to greater customer loyalty.
Insurance companies that begin the transformational process to digital will learn that doing so is not just a matter of adding a new function onto an old system, but is a complete overhaul in how business is done. From new procedures for paying claims to increased automation for underwriters to the mindset that telematics brings, are resulting in a shift from paying for losses to loss prevention. Digital is changing nearly every aspect of how insurance companies operate.
The cautious and conservative nature of the insurance industry sends a powerful and positive message to customers that the industry is stable and trustworthy. Insurers should therefore make certain that stability does not turn to stagnation as they begin to take advantage of what digital has to offer.