Digital Transformers are leading the way in the Insurance Industry in Nigeria
As in any industry, there are a few insurance companies that have a clearly developed vision of the future of their business and are investing in their transformation to realize that vision. We call these carriers the Digital Transformers, and they comprise 28 percent of our survey sample. Most of the Digital Followers are also investing in digital channels and other technologies. But their aim is less to transform than to explore digital capabilities and to enhance existing products, processes and efficiencies. The difference is highlighted by Figure 14, which shows the extent to which Digital Transformers are outpacing their slower competitors. Across each of these dimensions, the front-runners show an appreciation of the disruption confronting the industry and the opportunities it presents. They are well ahead in deciding on their course of action and embarking on the first steps of their transformation. A good example is their response to the IoT, where the majority have launched connected insurance initiatives or are planning to do so (Figure 15).
A shift is underway in the insurance industry. Rapid, disruptive change is putting pressure on traditional sales and distribution models. Insurers have an opportunity to address each of the six areas outlined in this report, proactively positioning themselves as disruptors rather than trying to defend their current positions and their legacy business and distribution models. Figure 16 summarizes our recommendations.
The level and pace of change mandates a strategy of active investment in new and emerging technologies and business models. Pilots are an indispensable step in the process, but insurers need to move beyond successive waves of experimentation – they must seize the moment and commit to the products, models and partners that will take them to the next era. Not all of these initiatives will deliver the hoped-for results. However, the secret to long-term success is having the agility to react efficiently, abandoning the losers and capitalizing on the winners.
Make innovation and customer-centricity the cornerstones of your distribution strategy In a marketplace where product features and benefits are easily copied and price is often the primary selection criterion, does an investment in the customer experience yield a sufficient return? We believe, in fact, that customer-centric innovation is the best defense against commoditization and a solid bulwark against price competition. Advances in data and analytics are enabling insurers to develop customer segmentation models that allow them to better define customer strategies in addition to brand or product strategies. They also enable them to leverage customer insights at the point of interaction, helping them tailor the customer experience and better meet customer needs through more relevant customer engagement. In addition, the advent of the IoT and the proliferation of ecosystems are enhancing the customer experience by offering new opportunities for value-added engagement: a steady stream of novel benefits, bundled into ‘living services’ that appeal to customers on a higher level than insurance on its own ever could. Proactively define your position in new ecosystems, cooperation models and partnerships Partnerships are increasingly important to insurers’ long-term innovation and growth prospects. The spate of announcements of surprising new alliances leaves no doubt: the race is on to secure the most eligible partners. To be seen as a desirable partner, carriers need to enhance their credentials: improve their digital capabilities, optimize their architecture for cross-sector integration, and develop their partnering skills to secure a favorable role in their ecosystem of choice. Large carriers with strong brands and wide product ranges have a built-in advantage, as they are able to offer more to the group. Those with strong capabilities relating to customer-centricity, customer data management and contact centers will also be welcomed. These attributes will be important counters to the perception that insurers lag their ecosystem partners with regard to innovation, and customer trust and service. Carriers with a heavy dependence on agents also have to overcome the assumption that their service capability lacks industrialization. The ability to demonstrate a high degree of customercentricity and advanced digitization will not only increase insurers’ chances of participating in the more powerful ecosystems, but will gain them a more prominent and influential role.