Talk about interesting times in the business of insurance.  The year 2015 saw the attention-getting launch of Google Compare and its hibernation about 12 months later.  Traditional insurers like Mass Mutual and Shelter Mutual got busy and launched their own direct-to-consumer digital quoting and sales businesses.  State Farm was busy filing patents for by-the-trip car insurance and the means to measure just how stressed drivers were behind the wheel and rate their insurance accordingly. Prudential recognized that previously scary diseases were now chronic conditions that could be medically managed, launching life insurance coverage for HIV positive customers. AOL saw an opportunity and is now selling insurance to its members.  And we at Forrester have been busy keeping track of over 700 disrupters across FinTech that have been capturing market attention and venture capital. Some of these firms like Lemonade are returning to the social roots of insurance.   Lemonade's founders also  appreciate that consumers are irrational economic animals and decided to hire a  behavioral scientist to help them anticipate the crazy actions of homo sapiens.  And yet some people out there still call insurance a boring industry!

Driving all of this is that five years after what Forrester called the advent of the age of the customer, empowered customers are driving disruption all over the business of insurance.  That focus on the customer now matters more than any other strategic imperative, based on a Forrester global survey of over 250 insurance business decision-makers. But success in the age of the customer requires insurers to go beyond customer centricity and become customer-obsessed.  It’s also impossible to be customer-obsessed without addressing the digital expectations of those customers, since customer-obsessed organizations live everywhere that their customers are.  In 2016, insurance digital leaders in Canada and the US must undertake four critical actions to address market forces and the digital expectations of customers and their agent and broker partners.

  • Deepen customer engagement and loyalty using new, personalized services.  There is little differentiation among insurance brands. Consumers pick policies based on price, and attrition is high.  To help their firms regain relevance to customers' daily lives, digital business teams are using digital touchpoints to engage customers in helping them protect and nurture assets like homes, wealth, and health, often through an ecosystem of partners. Digital insurance teams must reach across to marketing, customer experience, technology management, and actuarial and data science roles to guide the digital strategy.
  • Knit digital and agents together to increase sales. The greatest competitive advantage that insurance incumbents have in the era of digital disruption is when digital can be woven into the customers’ experience with insurance agents and brokers. That’s because nearly 20 years after the advent of online and now mobile insurance, there are times when customers just want to talk to someone. Digital insurance teams need to blend the empathy and smarts of their agents and brokers with the immediacy of digital touchpoints.
  • Use digital to create lasting value. Digital teams are on the frontlines in the battle to win, serve and retain customers. Digital business strategy leaders should take it upon themselves to fight back against the onslaught of digital disruptors in insurance by creating environments that prize innovation and entrepreneurship to capitalize on the opportunities that digital technologies create.  And creating that lasting value will demand new skills and new roles to better predict and react to changing consumer behavior.
  • Build digital capabilities for group, life, and small business lines. Digital business teams at firms like Allstate, Geico, Liberty Mutual, and USAA are setting a brisk pace for digital customer experiences in auto insurance.  But digital teams have a lot of work to do in other insurance lines, where they have been deploying digital capabilities at a far slower pace, as in the case of small business insurance, or have barely even started, as in the case of life and group and voluntary benefits insurance. 

Want to learn more about what's driving changes in customer and agent expectations when it comes to the digital insurance experience?  Check out our new report, “Trends 2016: North American Digital Insurance” to read more about what’s ahead in 2016 for insurers and their agent and broker distribution partners.