Digital Insurance Success Demands New Metrics
Digital technologies are transforming the entire value chain of insurance, not only opening up new distribution opportunities, but also altering how insurers can assess, price, and manage risks, and creating new distribution and business models. At Forrester, we have done extensive research over the past year that involved speaking to incumbent insurers and insurance technology providers, as well as leveraging our consumer technographics data for our digital insurance strategy playbook. The playbook provides guidance that digital business strategy professionals need to formulate and hone their digital insurance strategy in the age of the customer.
We have recently published the executive overview, landscape, processes, assessment, and benchmark chapters.
For the performance management chapter specifically, we found that although digital insurance strategy executives depend on measurement to justify digital initiatives, many insurers fail to effectively and meaningfully measure the impact of digital insurance on wider business objectives. For example, while it's important to measure sales driven by individual digital touchpoints such as web and mobile, mobile-only and web-only sales metrics alone fail to demonstrate the value of customers who research insurance online but then buy through an agent, or vice versa. Futhermore, a focus on simple sales metrics ignores the importance of digital touchpoints in providing services that savvy customers value, such as being able to track the status of a claim.
The sheer scope of digital technologies' impact across multiple areas of an insurer's business makes it nearly impossible to nail down a precise return on investment for digital insurance. But building the case to justify further investment in digital is crucial and depends on having the right metrics in place. For a start, digital insurance teams must:
- Link metrics to business outcomes. Digital insurance teams should focus on metrics that connect to broader business objectives, like improving underwriting accuracy and speed, improving the volume and quality of new business that agents or brokers generate, or improving the company's combined ratio.
- Measure the impact of cross-touchpoint interactions. To measure the impact of cross-touchpoint interactions, insurance companies need to first build customer journey maps to understand how customers are accessing insurance services and monitor how they move from touchpoint to touchpoint.
Digital insurance teams are in a unique position to spearhead cross-touchpoint metrics because they are the bridge between business units and technology teams. Digital insurance leaders should take these five steps to improve their digital insurance performance management.
Having the right culture and encouraging the right behaviors are crucial to achieving digital insurance success, and this can only be possible with the right metrics in place. It's important to keep in mind that delivering a successful digital insurance strategy is an iterative process, not an overnight transformation. Digital insurance teams must spearhead the development and adoption of new metrics, and ensure that incentives are aligned with new metrics, otherwise these metrics will have no real teeth.