Australia’s insurers need to act fast to improve their digital capabilities if they want to retain customers, a new report has warned.
Ernst & Young (EY) has released the findings of a global study called ‘Insurance in a digital world’, which show that insurers are failing to engage with digital consumers. According to the survey, 80% of insurers globally reported they don’t view themselves as digital leaders, believing instead that they ‘only play the digital game’ or are still learning to use digital capabilities.
The study also found that:
- Only 43% of insurers globally are currently providing mobile quotes, compared to 72% who provide these online
- 89% of insurance companies admit they do not leverage past interactions when recommending products or services to online customers
- Just 1% of insurers currently offer online rewards, discounts, apps or ‘live’ website assistance
- 68% of respondents said they spend less than 10% of their business and IT development budget on digital
- 80% of insurers cited legacy technology constraints as a major impediment to growth
Despite this, the majority of insurers (81%) believe they could lose competitive advantage if they fail to embrace digital, and 74% feel it may affect their ability to innovate.
Locally, EY said insurance companies were lagging well behind other Australian businesses in terms of digital service.
Digital is a massive market force dramatically altering consumer expectations
“We know that Australians are strong adopters of digital and mobile technology,” explained EY Partner, Andrew Taggart. “In fact, EY’s 2012 Global Insurance Customer Survey found Australian customers expected their use of online resources to research insurance products would increase dramatically over the next few years, more than doubling across both general and life insurance.
“In this environment, the winners will be those insurers who can integrate digital with their existing channels to deliver truly differentiated customer experiences.”
The report warned that the trend of increasing lapses in the Australian life insurance market was likely to continue if insurers did not improve customer communication and engagement.
“Digital is a massive market force dramatically altering consumer expectations across all sectors, and insurers cannot afford to be left behind.
“While many Australian insurers are using digital processes to reduce cost and drive efficiency, they still are missing out on opportunities to have a richer, more meaningful engagement with customers. Customer communication and engagement could be greatly enhanced through better use of social media, digital content, loyalty programs and analytics,” Mr Taggart said.
