Tata roundtable - Digital:the time to react is now
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Tata roundtable - Digital:the time to react is now Tata roundtable - Digital:the time to react is now Document Transcript

  • 18 | Post Magazine | 10 October 2013 Roundtable Fraud Sponsored by Digital: the time to react is now Insurers are slowly starting to embrace a digital future. Now it’s time to grasp the nettle if the industry isn’t to be left behind By Callum Brodie Whether due to complicated legacy issues or simple board-level mistrust, the insurance industry’s digital awakening is often described as being in its infancy when compared to other financial services markets. Frustrations over the industry’s tentative approach to using digital strategies to expand customer engagement and assimilate valuable back office data have been expressed by both internal and external observers. However, the contemporary consensus seems to be that insurance companies are gradually getting to grips with consumer expectations of communicating on a one-toone basis via social media channels such as Twitter and Facebook. Delegates at a Post roundtable event, sponsored by Tata Consulting Services, met to discuss the industry’s place in a rapidly evolving digital environment. Vivek Banga Director of etrading, Arthur J Gallagher Craig Beattie Insurance practice analyst, Celent While strides have been made by certain firms to invest in developing an online presence, there are those that argue more needs to be done before insurers can boast a similar digital sway to other financial services firms. C om me nt i n g on s ug g e s t ion s t h at insurers are beginning to respond to digital opportunities, Robert Ledger, head of small business proposition at Aviva, said: “The situation is difficult because of our legacy systems. Other truly digital organisations tend to be start-ups and, therefore, don’t face the same problems. “From the customer point of view, there is probably a very varied experience across the insurance industry – whether it’s life, pensions or general insurance – in terms of what a digital journey is and what a customer journey looks like. There are huge opportunities for us to do more in the digital space than we’re doing already.” Nick Frankland Digital and customer director, Legal & General Antony Grigg Head of customer experience (Europe), Tata Consultancy Services Robert Ledger Head of small business proposition, Aviva Jasper Martens Head of marketing and communications, Simply Business Nick Smith Head of strat and corporat developmen Insurance
  • tegy te t, Axa Post Magazine | 10 October 2013 | 19 Will insurers be left behind if they don’t embrace digital? www.postonline.co.uk/category/technology For Craig Beattie, an analyst within Celent’s insurance practice, insurance companies face a challenge. However, he insists the industry need not be dismayed about its public profile in regards to digital optimisation. He said: “There are promising signs, especially when you consider innovations that are about getting people involved via social media, such as LV building its own Facebook community and Aviva’s efforts with its driving app. “The perception of the insurance industry – particularlyintheUK–isofonethatissurrounded by meerkats but also one that is quite digital and is engaging through these new channels.” Nevertheless, future gains in the digital world must continue to be achieved against a backdrop of adversity. Along with internal legacy constraints, insurance companies must consider the nature of their business, which is typically centred on annual policy renewals. Lisa Woodall, head of IT strategy for UK GI at Zurich, explained: “We’re in contact with our customers once a year when they’re renewing their business. This means the level of interaction we’ve got compared with other industries is lower, but we have to address it with the same level of infrastructure and digital strategy that a big retail or travel insurer has to. “Many of our customers don’t touch us at all, they just renew. So establishing the digital footprint of our customers is a lot more challenging than it is for other industries, but we’re being forced down that path.” Olga Smith Head of operations, Bexhill UK Nicholas Thurlow Director, Text 2 Insure Paul Wishman Group ecommerce director, LV Lisa Woodall Head of IT strategy UK general insurance, Zurich Boosting the bottom line The ability to establish a digital footprint is further hampered by reluctant executives who remain unconvinced that a slick digital operation is capable of significantly boosting the bottom line of a balance sheet. Paul Wishman, group ecommerce director at LV, said: “Unfortunately there are some – with the greatest respect – luddites, who generally don’t get it. They’re very good at their jobs but until you deliver and they see the money and the bottom line, their opinions won’t change.” Ledger agreed: “There are some great examples of ex-high street retailers that didn’t invest in digital that are no longer with us. It’s about switching the mindset and about recognising digital’s the ticket to the game. If you’re not investing in digital then you will be left behind.” Jasper Martens, head of marketing and communications at Simply Business, believes customer feedback can be crucial in convincing 20 company directors to invest, but he
  • 20 | Post Magazine | 10 October 2013 Roundtable Fraud Sponsored by 19 previously had to rely on asking his CEO to make a leap of faith. “If your customers are telling you they want a certain app, or that they want to use Skype to report a claim to a claims adjuster, for example, it makes it a lot easier to start convincing the board and management team that digital engagement is the way forward,” he said. “Before I worked for Simply Business I sometimes ended up in a situation where I had no choice but to say, ‘just trust me’. This is a difficult thing to do in the insurance industry where so many other projects need to be prioritised.” According to Nick Frankland, digital and customer director at Legal & General, most firms have reached an impasse in their digital journey where they are unsure what is needed to be elevated to the next level. “It seems that everybody’s at a similar point,” he said. “We’ve all done the easy layers, we’ve done a bit of the marketing, we’ve launched a viral game, we’ve done some apps. We can probably justify that we’re all broadly successful so far, but then we turn to what comes next.” Infinite possibilities Central among the challenges is how to get the best out of a social media platform where opportunities to promote brand awareness, pursue stronger customer engagement and gather data would appear boundless. One issue facing the wider insurance industry is the balancing act that comes with contacting customers via social media. Vivek Banga, director of e-trading at Arthur J Gallagher, said: “This is where there is a bit of a dilemma. You see how the likes of Facebook and Twitter are taking over the digital environment, but personally I struggle, at times, to see where the value is. “Do we go overboard by contacting our customers too much through Facebook and end up annoying them rather than providing value?” Commenting on the appeal of certain social media channels among a younger demographic, Woodall questions whether such features hold a similar draw for older and less regular users. She said: “Half of our population is over 50. A lot of them are joining Facebook and Twitter, but are they going to use telematics? Are they going to want to contact insurance companies through this channel? “You end up with an operating model that is segmented for the different ways customers want to interact with us, so actually our landscape’s getting far more complicated. Some of our operating model needs to stay more traditional.” Do we go overboard by contacting our customers too much through Facebook and end up annoying them rather than providing value? Woodall, however, conceded that digital strategy should not simply be confined to social media interaction. “We need to recognise digital isn’t just about personal interaction,” she explained. “It’s about how we pick our digital risk, which would go into telematics and other areas. The digital world is enabling us to get lots of data in different ways.” Nicholas Thurlow, director of Ageas-owned Text 2 Insure, agreed: “Certainly in the organisations that I’ve spoken to over the last few years there is a confusion between online and digital. “My concern is that if we allow ourselves to say, ‘we’ve got a great website, we’ve got a great Twitter application or we’ve got a great Facebook connectivity and we can sell through social media’, we’re missing the bigger point.” Thurlow is equally concerned about the threat posed by external influences in relation to the wielding of digitally stockpiled data reserves, especially with car manufacturers and their position in the telematics space. “If we aren’t prepared to fail we’re not going to move forward,” he said. “People will come and
  • Post Magazine | 10 October 2013 | 21 Follow us on Facebook facebook.com/post1840 Follow us on Twitter twitter.com/insurance_post All photos: Steve Daszko eat our lunch, like the automotive companies, because they’ll come in and they’ll say, ‘we’ve got all the technology, we don’t need you because we can manage the customer and they will buy their insurance from us’.” Despite the myriad digital possibilities presented to the industry, it is possible to identify instances where oportunities and potential disruption for companies arrive hand in hand. While certain members of the insurer and broking fraternities would no doubt consider the rise of online aggregators as a precursor for how the evolving digital environment has disrupted the industry’s status quo, most would admit the interactive ‘power to the people’ element of sites such as Twitter presents a sizeable barrier. Twitter provides disgruntled customers with the ideal forum to vent their frustrations with poor service, a tool that Wishman claims needs to be handled delicately by firms. When quizzed on whether his company engages in debate with online critics, Wishman responded: “Only if it was constructive feedback relating to a claim or bad service, for example. We need to recognise digital isn’t just about personal interaction. It’s about how we pick our digital risk, which would go into telematics and other areas [We probably wouldn’t respond to] positive feedback, but negative, absolutely. “What you find is it is quite self-policing. You will get people on there who rant and they usually swear. If someone’s got a lot of followers, and got a bit of influence, you think, ‘we probably need to engage with that person and at least apologise or understand the problem and get it right’. “They tweet, and if you don’t respond within three to five hours they say you’re not listening so they put up another tweet telling their followers.” Olga Smith, head of operations at Bexhill UK, believes social media strategies can stand or fall on the selection of staff charged with responding to online interaction. She said: “Administrative structure needs to be changed because you need to reallocate resources and make sure the appropriate people react properly. [It is best to] try to find youngsters whose grammar is strong enough and whose grasp of language is good enough to reply.” Looking to the future Clearly the digital world has served to empower the consumer as much as it has served to invigorate forward-thinking insurance companies. But what dœs the future hold in this space and what will the industry’s role be in its evolution? Nick Smith, head of strategy and corporate development at Axa, believes the nature of the beast means the next game-changing development will come from outside the parameters of insurance players. He concluded: “The people who have got access to data and a brand are probably going to be the winners in this. My gut feeling is it won’t be anyone that we see today; it will be something completely different. It will be Google MkII, whoever that turns out to be. “This isn’t a two or three-year vision of the world. It’s a 10-year or 20-year plan and if you want to be an insurer in that world it’s going to look very different. Are you going to start reacting now or not?”