October 16, 2018
Digital Transformation and the Opportunity for Insurance Brands
Posted February 16, 2018
Memo from Amazon to the U.S. insurance industry: Wake up and smell the opportunity. And, as it turns out, digital transformation and digital identity might just be the keys to taking advantage of what lies ahead.
In what’s viewed by many as a major bombshell, Amazon recently announced that it’s joining forces with Berkshire Hathaway and JPMorgan Chase to launch their own healthcare company.
Considering Amazon’s reputation as a digital-age disruptor and its reach with virtually every U.S. consumer, it’s easy to see why some in the industry might find the move unnerving. But as the dust settles, savvy insurers will see at least three good reasons to cheer as they suddenly find themselves in a unique and exciting situation.
1. Digital Transformation Gets a Major Boost
If there were any doubts about the opportunities awaiting traditional insurers that have the vision to act on digital innovation to gain competitive ground, they’ve officially been put to rest.
As Harvard Business Review points out, Amazon sees the 18 percent of U.S. GDP dedicated to health insurance as fertile ground for disruption. Not only does this validate the digital-first, omnichannel game plans that leading insurers are putting into place, but it also scrambles the playing field to their advantage.
Brand-name insurers with resources and demonstrated digital prowess stand to attract partnerships with these and other new entrants—or even outflank them. Meanwhile, emerging insurtechs are now far more likely to partner with incumbents with the reach and brand equity to gain the most traction as the industry reaches a major inflection point.
Carriers unable to rise to the occasion will cede ground to those that can—giving digital leaders the most running room for growth.
2. New Markets and Models Are Blowing Wide Open
In a sector where the winner is usually the fastest to say “yes”—to policy applicants, claims and more—it’s clear that the standouts will be those that focus on delivering digital services with the ease, speed and convenience that today’s most coveted demographic audiences demand.
To that end, many are modernizing and expanding their portfolios into micro-insurance, usage-based coverage, retail banking, wealth management and more. For digital-centric incumbents, this will prove easier than it will for many rivals—even those unencumbered by legacy systems and massive operations.
With the entry of Amazon-Berkshire-Chase, leading insurers are also looking to enact sweeping, systemic change. According to Cigna CEO David Cordani, that includes a transition away from fee-for-service medicine toward value-based approaches that focus on quality of care.
3. Customer-Centric Leaders Stand to Score Big
According to USA Today, the new company plans to pursue technology solutions to provide better health care at lower costs to the companies’ combined 1.1 million employees. And Chase CEO Jamie Dimon says it will not be motivated by profit.
Many insurers believe this bodes well for organizations focused on core digital capabilities that emulate or even rival the likes of Amazon. Chief among them is a digital customer experience propelled by fast, seamless and reliable transactions. By streamlining its own internal processes and customer-facing operations, Amazon has consistently redefined consumer expectations for ease and efficiency.
In terms of their own digital transformations, some insurers have been aggressive, some more timid. It’s clear now that those whose efforts put the digital customer journey front and center stand to build sustainable growth.
A central element to that is the ability to engage consumers, accelerate services, and detect and neutralize cyberattacks that can put customers and insurers at risk. Today, cybercrime represents a major drag on profits, driven by $250 billion a year in false claims and the threats that come when more than 1 in 10 new customer accounts is fraudulent.
The key is recognizing customers — early and often. Businesses that move fraud prevention earlier in the customer journey have been successful in not only reducing the amount of fraud, but also improving operational efficiencies and providing the personalized services customers demand.
All the Right Moves
To hear insurers tell it, this need to achieve growth and security has an increasing number of them deploying advanced, cognitive solutions that integrate digital identity-based user identification and verification.
According to carriers that have deployed them, these solutions enable instant recognition of legitimate customers and prospects, and help deliver digital experiences that are seamless, secure and friction free.
By using technologies that have been vetted, proven and refined over time, these insurers believe they can achieve sustainable business growth without the fear of seeing their brands derailed by cybercriminals.
A Pivotal Year
Make no mistake: The impact of having formidable outsiders enter the industry cannot be overstated, making for a pivotal year ahead.
But many insurers seem determined to position themselves for success by making what is quickly becoming an overdue move to digital identity-centric transformation that can help them take bold action, fend off competitors and seize an unfair share of the opportunity ahead.
We’re all about to see if they’re right.
To learn more about what digital identity-based transformation can mean for insurers, be sure to check out our new eBook, “Insurance Industry Outlook: Top 5 Digital Identity Trends for 2018“