Insurance in a digital world: the time is now - Forbes

1 Insurance in a digital world: the time is nowEY Global Insurance digital Survey 20132 Insurance in a digital world: the time is now EY Global Insurance digital Survey 2013 Insurance in a digital world: the time is nowContents Executive summary 401 Our findings: global overview of key themes 802 How should insurers respond? 28 03 How EY assists clients digital business development 36 Conclusion 4104 Our findings: regional highlights 44 Contacts 56 This is the third in a series of EY customer-focused studies and thought leadership. Following our 2012 Global Consumer Insurance Survey, Voice of the customer: time for insurers to rethink their relationships, we launched The journey toward greater customer centricity to explore what insurers must do to become more customer-centric.

2 Both reports highlight digital s key role in meeting consumer expectations, spurring this research to find out if the Insurance sector is raising its digital game and definition of digital : an enabler, as well as a distribution channel Our scope extends beyond online distribution channels to a wide range of digital technologies: mobile (smartphones, tablets and apps); social media; cloud computing; analytics to mine business data and turn it into actionable insights; and digital platforms to interact and share information among insurer, agent and consumer. These technologies can be applied across the entire Insurance value chain, from engaging and interacting with customers and distributors to sales and marketing, service fulfillment (underwriting and payment) and studies appear throughout the report to demonstrate the use of digital applications in a variety of industries.

3 They exemplify how digital is being applied to improve the customer in a digital world: the time is now EY Global Insurance digital Survey 2013 IntroductionInsurance in a digital world: the time is nowInsurance companies face conflicting challenges. They must contend with continuing instability in financial markets, low interest rates, increasing acquisition costs, changing regulation and catastrophic losses from ongoing natural disasters. Yet the global Insurance market shows unprecedented growth potential, whether it is the sizable global population moving into retirement with greater life expectancy and health protection needs or the massive emerging markets of South America, Asia and Africa demanding the full suite of Insurance products.

4 But the toughest challenge faced by the Insurance sector is the one that is transforming consumer behavior and business models digital is a new market force that is driving a massive change in consumer expectations. It will require a different set of skills, culture and measurement. Industries such as telecommunications, consumer products, and media and entertainment have already harnessed digital to attract and retain new customers. It is time for insurers to evolve and respond: they cannot afford to be on the sidelines of the shift to light of this imperative, EY undertook a ground-breaking survey of more than 100 industry players to understand how the digital agenda is reshaping the sector and to what extent life and non-life Insurance companies are grasping and exploiting the shift to digital .

5 To complement these insights, our report outlines examples of digital innovation and, based on our experience, suggests practical areas that insurers should prioritize now to tackle the challenges a time when the speed of digital change is so fast that standing still means falling further behind, this new survey provides fascinating insights into how insurers can respond to and succeed in the digital future. We hope you find our survey results informative and Crawford Graham HandyEY Global Insurance Leader EY Global & EMEIA Insurance Customer Leader2 Insurance in a digital world: the time is now EY Global Insurance digital Survey 2013 During 2Q 2013, EY conducted a global survey with participants from more than 100 Insurance companies to understand how the digital agenda is reshaping the Insurance sector.

6 An even split of participants from life and non-life Insurance companies included large global organizations, regionally focused insurers and single jurisdiction insurers. The three main geographic regions targeted were Europe, Asia-Pacific and the Americas, with additional contributions from Africa. Within these regions, we targeted specific countries in the scope of our survey, although additional countries are represented because some companies provided a regional response. For example, while our primary focus in Europe is the UK, France and Spain, we received additional contributions.

7 The table below shows the final list of countries included in the scope of our the wide spread of companies, we aimed to weight responses to provide a balance of views from a diverse mix of insurers. Specifically, each response was given an equal weighting at the national level by company. In situations where there were multiple respondents from one company in a country, the responses for that company were averaged. To extrapolate regional views from country results, the gross written premium (GWP) of Insurance business and the purchasing power parity (PPP) of countries were used to weight the country Global Insurance digital SurveyResearch approach and methodology1 GWP data for each country was obtained from Swiss Re Sigma report (No 3/2012) for both life and non-life business.

8 The PPP of each country was obtained from the OECD website (using USD as the base currency). The GWP for all countries was then scaled by their PPP (providing an adjusted GWP ).ScopeEuropeAmericasAsia-PacificAfrica and Middle EastTarget countriesUKSpainFranceUSCanadaMexicoChil eAustraliaHong KongThailandSingaporeMalaysiaIndonesiaJa panSouth KoreaIndiaSouth AfricaOther countriesGermanyIrelandItalyNetherlandsP olandTurkeyArgentinaBrazilColombiaUrugua yChinaTaiwanVietnamPhilippinesBangladesh KenyaNamibiaNigeriaUAED igital is a catalyst for dramatic change, one that threatens rapid transformation of the competitive landscape and that established insurers are particularly ill-placed to deal in a digital world.

9 The time is now EY Global Insurance digital Survey 2013 Key findingsExecutive summary New digital technologies are irrevocably changing the way consumers engage and interact with insurers. Traditional operating structures are being disrupted, driving Insurance executives to reassess their business model. It is time for insurers to re-evaluate their future direction and make the digital agenda a high the following critical questions: how do you manage or operationalize your digital strategy; how do you establish a balance between pilot projects and exploratory initiatives versus more transformational change; to what extent is your digital program driven by opportunity realization versus risk and reputation; and how do you strengthen the partnership between the CIO and CMO to help create a compelling business case for change that convinces the CFO?

10 While the majority of insurers believe in the importance of digitalization to deliver the customer experience, many express concern that they will be left behind as shorter-term corporate priorities lie elsewhere. This survey was conducted to determine where Insurance companies are now, their approach to digital strategy and execution, their ambitions for future digital maturity and their views on what gets in the way. Our key findings 1 Insurers acknowledge their current low levels of digital maturity and the need to take trail the entire digital spectrum: customer engagement, use of analytics and adoption of mobile and social media.