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European digitally-sold insurance market could be worth €25bn by 2016, says study

Out-Law News | 17 Oct 2013 | 1:06 pm | 1 min. read

As much as €25 billion worth of insurance could be sold over the internet and by other digital channels by 2016, according to a new study.

Accenture surveyed c-level executives at 78 insurers based across Europe and found that 78% of the companies are planning to increase their investment in the technology and systems used to sell insurance digitally within the next three years. Insurers will spend €27 million on average as part of this "digital transformation", it said. 

The value of property and casualty (P&C) and life insurance policies sold digitally in 2012 was €12bn, with 11% of the "total annual new business premium volume" generated in 2013 stemming from digital channels, Accenture said. That figure is expected to rise to 18% in 2016, it said. 

However, 85% of insurers said that they expected the biggest challenge they will encounter in updating their frameworks of distribution to be in "managing changes across their physical channels". 

Limitations in how legacy IT systems function and the "inability of their organisation to act quickly" were cited by 81% of respondents separately as being other significant barriers to digital selling that need to be overcome. 

Competition in the European insurance market is expected to grow, with 89% of the insurers surveyed stating that they expect to encounter stiffer competition within the next three years, with 64% anticipating competition from "non-insurance players", like Google or Amazon. 

Accenture said that only 40% of the insurers they surveyed said they had a complete digital strategy, whilst 59% of respondents said their top priority for digital transformation was that they could achieve a "a 360-degree customer view across all channels". Streamlining processes and improving customer self-service functionalities were identified as priorities by 57% and 56% of the insurers respectively, it said. 

More than half (53%) of the companies surveyed said that intend to invest in "big data management capabilities" within the next three years, whilst investment in mobile technology is planned by 36% of the insurers. 

"The shift to digital is inevitable for insurers and our study reveals that the industry is investing heavily to transform itself," Piercarlo Gera, global managing director of Accenture Distribution and Marketing Services, said in a statement. "This transformation is critical to attract consumers who are becoming increasingly unwilling to buy a product or service that does not provide the same levels of convenience, simplicity and speed to which they have become accustomed from many other services they use every day." 

Jean-Francois Gasc, managing director of Accenture Distribution and Marketing Services for insurance across Europe, Africa and Latin America, added: "To maximize value from digital, insurers will need to move from a product-centric culture to a customer-oriented mentality. The threat posed by emerging competitors such as Internet giants is real because user-experience improvement is part of these companies’ DNA, and this is a strategic weapon in gaining market share in the insurance distribution business."