Why digitisation is becoming a necessity for the insurance sector

In recent years, the digitisation of processes has become self-evident in many sectors. Whether it is the banking sector, real estate or even HR, the user experience has benefited greatly from these efforts.
The insurance sector is still lagging behind. However, consumers are asking for more digitisation in a sector that is accelerating. Why encourage the insurance sector’s digitisation? How can processes be digitised?  These are the questions we will answer in this article.

In the last few months, digitalisation has grown at all levels and in all sectors. The pandemic has of course accelerated its acceptance in all sectors. Despite this, the insurance sector still seems to be playing catch-up.
According to a study conducted by Opinion and Columbus Consulting dated February 11th 2021, the insurance sector has yet to unleash the power of digitisation. Judge for yourself:

• 30% of policyholders surveyed used a digital medium when taking out a car or HMO insurance policy.
• 24% of those surveyed said they had used a digital medium to report a claim.

To compare, according to a "Bank and Innovation" study conducted by the French Banking Federation, 80% of French people choose digital channels to carry out most of the actions related to their bank account. Clearly, the insurance sector is suffering from the comparison.
However, it would be wrong to say that the insurance industry has not developed the necessary tools to digitise their processes.. More and more of them are offering online services:

• Claims reporting
• Subscription
• Cancellation

The question is therefore worth asking: how to explain these low figures?

If digitisation is struggling to make itself felt in the competitive insurance sector, it is above all because insurers are struggling to get their customers to accept digitisation. The customer/insurer relationship is still marked by traditional channels: the telephone, physical meetings in local agencies, etc.

Who’s to blame ? Well, as always, all parties take a chunk of the blame. 

On the customers’ part, the digital reflex has not taken hold and the insurer/customer relationship is a fragile one: only 21% of customers are in contact with their insurers outside of key moments (contract subscription  or claims declaration).  Contacts between insurers and policyholders are rare and few of them use digital technology. On average, only 1 in 5 policyholders contact their insurer for needs other than subscription or claims, and less than 1 in 5 policyholders make contact via a digital channel.

As for the insurance sector, not all key stages in the life of an insured person are taken via a digital channel. Full online subscription is not a service systematically offered by insurance companies. In fact, only 45% of insurers offer this service.

Yet digitising the insurance sector promises increased efficiency for better results.

The world we live in is accelerating and demands agility and speed from insurers. The difference between one insurance company and another can be found in the processing times, the management of files and the services they offer. 

The adage is well known, and even stereotyped, but "time is money", even more so for insurers, who are operating in an intensifying market.

The digitisation of the insurance sector brings above all the possibility to let insurers focus on their core tasks. On average, 25% of a salesperson's time is taken up by administrative tasks.

But these administrative tasks are time-consuming and energy-consuming, and the time spent on them could be spent elsewhere. 

The real benefit of digitisation lies exactly in this area. Digitalising your processes means getting rid of low value-added tasks and focusing on your core business. It is about refocusing insurers on their core business, and offloading their administrative tasks.

The customer/Insurer relationship is special for insurers. As we have already mentioned, the physical contact between the policyholder and the insurer via the telephone or local agencies still plays an important role. 

It is therefore not a question of eliminating or reducing local agencies or contact with policyholders, but of taking on a hybrid role that would enable insurers to concentrate more on their primary tasks: customer relations.

Digitising insurance promises a future that is more agile and more in tune with today's challenges. Now more than ever, the customer experience must be at the centre of the industry's concerns. Today’s challenges are solved via a tailor-made experience where the relationship between the policyholder and the insurer is as personal as possible. 

Digitisation is the cornerstone of this transformation, as it allows all insurance players to focus on their customer  while offering modern services in line with market requirements.