Many European insurance firms have failed to react to the threat of disruption by new digitally-focused competitors, according to a Forrester Research report.
The ‘Trends 2015: European Digital Insurance’ study states that incumbent insurance firms face a growing list of challengers outside of their traditional business. This includes digital startups like Friendsurance and Drive Like a Girl, as well as companies in other sectors, such as car manufacturers and utilities firms.
However, while some incumbent providers have invested in their digital services to head off the threat of disruption, many have been slow to react.
“[Only] some European insurers are waking up to it. And even fewer are getting out of bed and doing something about it,” said Oliwia Berdak, one of the report authors, in a blog post.
“In 2015, the gulf between digital insurance innovators and other firms is expanding.”
The report states that insurers will need to engage with customers who are increasingly ‘digitally savvy’, frequent social media users and interested in emerging technologies.
Some large providers have already begun to explore the potential of new technologies, such as wearables, biometric authentication and connected home devices, with the report citing the likes of AXA, Allianz and BNP Paribas. Hackathons and innovation labs have also been used to foster innovation within businesses.
The changing landscape is likely to result in an increase in chief digital officers being hired across the industry, a trend that is already being seen at insurers such as Aviva, which appointed former British Gas Connected Home boss Andrew Brem to support its digital transformation.
The report points out that customers are increasingly keen to use direct channels such as mobile and online to interact with insurance providers – an area of real growth in recent years, while property, casualty and life insurance premiums stagnate.
However, it also states that investment in digital services should not be viewed as just another way of interacting with customers, but rather to underpin wider business change.
“Digital technologies are much more than just a channel. They can drive a business transformation to deliver new customer value and greater operational agility,” the report said.
“Digital technologies can help insurers in particular build more persistent bridges to their customers’ lives to address the industry’s low customer engagement and creeping commoditisation.”
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