The Bolt Executive Summit on May 6, 2015 brought together more than 60 senior Insurance industry executives to discuss challenges and opportunities presented by the significant changes underway in the industry. This blog post is the second in a series recapping the event and its content. In this post, we’ll take a closer look at the information presented by Celent’s Michael Fitzgerald. Please subscribe to our blog to ensure you get our updates directly in your inbox.
Mike kicked off the summit with a galvanizing presentation on change and how new opportunities are emerging amid the shifting insurance industry landscape. He also talked about how to become an agent of change through preparation, confidence, data and a strong impartial view of reality about what’s to come. Mike shared an intriguing set of research from Celent illustrating that consumers are shifting behavior patterns which in turn are affecting distribution channels.
Where are we now?
The Insurance industry has made a strong recovery, following the declines it saw in 2008-2010. This is a relief for many, but new pressures and challenges are mounting. Over the last few years direct P&C distribution has grown more than any other distribution channel.
Where are we going?
Changing customer expectations are driving the transformation we are seeing in distribution. Consumers want just enough services, just in time, and with little, or no, effort. Mike highlighted how these preferences are at odds with how the insurance industry currently does business. As a result, he demonstrated that the industry, as it stands, is designed to serve a smaller segment of an aging population, that continues to shrink in size and value. To that end, Mike quantified that the 20-44 age cohort represents $2.7 Trillion of lifetime P&C insurance purchasing value. This far exceeds the 45-64 year old cohort estimated to represent $872 Billion of remaining lifetime purchasing value.
Celent’s research also uncovered that this younger-to-middle aged demographic does not necessarily prefer everything digital when it comes to buying insurance. While many begin their buying process online, this demographic often seeks face-to-face interactions as well, especially for more complex transactions and products. These preferences demonstrate how consumers are increasingly leveraging multiple channels in the course of a single transaction, which highlights the omni-channel imperative facing the industry and further demonstrates a shift in behavior patterns.
Responses to Change
With all this change underway and expected to intensify, insurance providers are trying to adapt and prepare. Many are responding through investments in digital analytics, engaged distribution models and experimentation. According to Celent’s research, 74% of CIOs in Insurance indicate that they are already making or highly considering investments in digital technologies and 60% in analytics. In addition, Mike shared how Insurers are leveraging the Bolt Platform to enhance their distribution by: going direct, filling product and service gaps, and enhancing exclusive agent offerings. Mike also shared research that illustrates the significant opportunity for providers to deliver innovation. He called on the industry to increase their investment in experimentation to help identify new ways to better serve customers in the future.