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Insurance Policies Sold Digitally Will Double, Says Accenture

Yet challenges in developing digital strategies remain, including systems maintenance, the company says.

Property and casualty (P&C) and life insurance polices volume sold online could reach about 3.4 billion in 2016, up from 1.6 billion in 2012, in Europe, according to a study by Accenture, based in London.

About 78% of European insurers are planning to increase investments for digital sales and distribution functions, with an expected 3.6 million to spend on average over the next three years.

Currently, 60% of European insurers confess to not having a digital strategy in place or only having a limited strategy for sales or customer interaction processes. Areas that do not have a digital strategy include product creation, underwriting to claims settlement and policy administration.

The biggest challenge cited by 85% of respondents was managing change across physical channels. The next significant barriers are the constraints of IT legacy systems and inability of the organization to act quickly, says 81% of respondents.

“The transformation is critical to attract consumers who are becoming increasingly unwilling to buy a product or service that does not provide the same levels of convenience, simplicity and speed to which they have become accustomed from many other services they use everyday,” says Piercarlo Gera, global managing director of Accenture Distribution and Marketing Services.

About nine out of ten respondents expect competition to intensify in the insurance distribution market over the next three years. About 64% feel that the competition will come from non-insurance players like Google or Amazon.

“The threat posed by emerging competitors such as Internet giants is real because user-experience improvement is part of these companies’ DNA, and this is a strategic weapon in gaining market share in the insurance distribution business,“ states Jean-Francois Gasc, managing director of Accenture Distribution and Marketing Services for insurance across Europe, Africa and Latin America.

Gasc adds, “to maximize value from digital, insurers will need to move from product-centric culture to customer-oriented mentality.”

[Read: Distribution Disruption Defies Insurers, Agents to learn more.]

Over the next three years, 67% of insurers mentioned developing mobile devices for new customer interaction channels for sales, customer services or marketing, while 59% are considering social media.

About 53% of respondents plan to invest in big data management capabilities, 40% in unstructured data management like voice and video and 36% on mobile technology.

The survey has included 78 European C-level executives involved in digital distribution strategies, as well as heads of sales and CMOs at P&C and life insurance companies. Companies from France, Italy, Spain Germany, U.K., Belgium, Austria, Netherlands, Sweden, Switzerland, Finland, Norway and Denmark participated.

Zarna Patel is a staff writer for InformationWeek's Financial Services brands, which include Bank Systems & Technology, Insurance & Technology and Wall Street & Technology. She received her B.A. in English and journalism from Rutgers University College of Arts and Sciences in ... View Full Bio

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ZoltanN907
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ZoltanN907,
User Rank: Apprentice
4/15/2014 | 9:14:14 AM
re: Insurance Policies Sold Digitally Will Double, Says Accenture
To deliver such 'smart' solutions is not easy, but it is possible and it works: we launched our product 'EMMA' smartphone app 1.0 in Hungary in 3Q 2013. It was a long journey with insurers, but by today we solved all emerging issues including regulation, requesting quotes, paying -with recurring function- policies etc. Now we aim to enter Western-European markets with our application. Today our focus is on P&C, but tomorrow we are intended to deliver solution for life as well.
Greg MacSweeney
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Greg MacSweeney,
User Rank: Author
10/17/2013 | 12:16:37 PM
re: Insurance Policies Sold Digitally Will Double, Says Accenture
It seems this online insurer was doomed from the start. It had a bad name (Leaky), it had a bad business model (screen scraping info from other insurers), then it tried to base rate data off of state insurance filings (inaccurate).

Leaky also wasn't an insurance company. It was attempting to be the expedia of insurance, just like quicken did years ago.
Becca Lipman
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Becca Lipman,
User Rank: Author
10/17/2013 | 12:12:03 AM
re: Insurance Policies Sold Digitally Will Double, Says Accenture
Agreed. As part of that generation, I have to admit I'm shocked by this report. If I was going to buy insurance for something I'd buy it online, and if that didn't work I'd just give up. I barely have time to buy stamps, let alone sit down with an agent. I want to be able to do my research on a lunch break or during commercials.

I know this is a bit off the mark, but I did buy pet insurance online and it auto-renews every year. I get an e-mail, an occasional letter in the mail, and that's that. It's about as complicated as I need it to be. If I ever need to reference the policy I know exactly where to look. I imagine property & casualty is more complex, but could life insurance be that easy?
mnasca
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mnasca,
User Rank: Apprentice
10/16/2013 | 7:38:45 PM
re: Insurance Policies Sold Digitally Will Double, Says Accenture
Lessons in Disruption: 'Expedia for Car Insurance' Shuts Down - http://www.insurancenetworking...
Greg MacSweeney
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Greg MacSweeney,
User Rank: Author
10/16/2013 | 12:39:53 PM
re: Insurance Policies Sold Digitally Will Double, Says Accenture
That is definitely one way to enter the market, but would Amazon, or another company want to get involved with an existing insurance company with all of their legacy insurance technology (and associated integration problems)?

Unless a tech firm could find an insurance company with a good, modern platform, I would think that a tech firm entering the space would rather greenfield the entire company and hire insurance expertise from around the industry to get things rolling.

That's easier said than done, of course.
IvySchmerken
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IvySchmerken,
User Rank: Author
10/15/2013 | 11:46:36 PM
re: Insurance Policies Sold Digitally Will Double, Says Accenture
In the same way that Amazon bought the Washington Post, Jeff Bezos could decide to buy an insurance co. They would then tie their digital distribution networks into selling insurance. I think they will look at insurance or securities/investment or banking as the content, which can be sold. I'm not sure how they will tackle the complexity of all the various rules. Maybe they will have a call center rep answering questions whom you can interact with via video chat or Skype.
Jonathan_Camhi
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Jonathan_Camhi,
User Rank: Author
10/15/2013 | 1:39:12 PM
re: Insurance Policies Sold Digitally Will Double, Says Accenture
Handling financial products online is now common place for younger Americans. We basically have a whole generation that has now signed up for, handled and paid their student loans, mostly online. So handling their insurance policies online probably wouldn't be far-fetched for them.
Jonathan_Camhi
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Jonathan_Camhi,
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10/15/2013 | 1:34:49 PM
re: Insurance Policies Sold Digitally Will Double, Says Accenture
Amazon has already applied for a banking license in several states to offer loans. So they definitely have an eye on financial services. I don't know if insurance would fit into their plans, but it's definitely not out of the question.
Greg MacSweeney
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Greg MacSweeney,
User Rank: Author
10/15/2013 | 1:10:04 PM
re: Insurance Policies Sold Digitally Will Double, Says Accenture
Right now, you are right. It wouldn't make sense for those companies to try to enter the financial services space.
Those companies are making a ton of cash in their sectors right now. Meanwhile, while financial services is still a profitable business, it isn't what it once was.

However, jump forward 5 years. Will the financial services industry still be suffering from over regulation, decreased margins and a weak economy? And will the high tech sector still be doing as well as it is now? What happens if an iPhone killer comes out and Apple is searching for a good business where it could diversify its revenue stream?

Financial services has traditionally been a very profitable business. It isn't very attractive right now, but that may change in the future.
Byurcan
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Byurcan,
User Rank: Author
10/15/2013 | 1:00:21 PM
re: Insurance Policies Sold Digitally Will Double, Says Accenture
Although I don't think the Apple's MS, Amazon's of the world will want to get into an industry so heavily regulated, seems like it's more trouble than it's worth, and they're doing pretty good as is. Why concern themselves with filing quarterly stress test reports or being dragged to (even more) Congressional hearings when they don't have to?
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