A large majority of insurance carriers consider their distribution capabilities uncompetitive today, and on average insurers will invest $84 million over the next three years to improve their multi-channel distribution strategies, according to an Accenture (New York) survey of 125 insurers globally, announced at the 2010 ACORD LOMA Insurance Systems Forum in Las Vegas yesterday.
The survey also found that insurers will emphasize mobile technologies, digital marketing —'including social media, such as Facebook — and channel integration over the next three years. While a limited number of insurers said that their current investments are focused on creating mobile capabilities, improving digital marketing and integrating channels (19 percent, 34 percent and 36 percent, respectively), a much higher percentage of insurers are planning or considering investments in these areas for the near future (62 percent, 49 percent and 44 percent), Accenture reports. Nearly two-thirds (63 percent) of respondents said that they did not consider their current distribution model as a source of competitive advantage.
"Increasing investment in mobile capabilities to take advantage of the growing use of smart phones, and in digital marketing to create new opportunities to influence customer choice, is necessary but insufficient in today's environment," comments Serge Callet, global managing director of Accenture's insurance practice. "Consumers are not simply replacing one channel with another but are diversifying and using more channels than ever for all of their needs."
The challenge insurers face, Callet adds, is to develop a distribution strategy that capitalizes on the strengths of each channel an that will allow them to match the right customers to the right products and services, at the right price, through the right distribution channels.
The survey also found that insurers are increasingly tailoring their marketing strategies to specific customer segments. About a quarter of insurers (26 percent) said they will customize their products, promotions, channels, services and pricing strategies to specific customer segments in the next three years. Only 14 percent of insurers currently tailor all these activities by customer segment.
"Potential buyers of insurance are changing in numerous ways, and their expectations of their providers are increasing steadily, as consumer-service leaders such as Amazon and Apple raise the bar for everyone," comments Michael Costonis, executive director of Accenture's insurance practice in North America. "Insurers are starting to realize that their products should be bought and not just solid. To do this they need to truly understand their customers, and achieve a level of segmentation that is indispensable for moving from a product centric to a solution-centric business model. The objective is to create a unique customer experience across all channels."
Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio