Insurers across the Middle East are rapidly adopting digital strategies in order to boost outreach to millennials, according to SAP.
Insurers are in agreement that the growing customer base of millennials – generally considered those born between the early 1980s to the late 1990s – has heightened expectations for their carriers, according to a new SAP survey of 200 insurance executives at the recent IASA Annual Conference on factors motivating insurers’ innovation strategies.
In the GCC, the expanding population is driving insurance industry growth, with the market set to increase from $16.3bn in 2012 to $37.5bn in 2017, according to a report from Alpen Capital. Across the Middle East, there are 90m millennials, who comprise 40% of the region’s population, according to a report from loyalty management company AIMIA.
Fifty-five% of respondents cited convenience as millennials’ top priority when seeking insurance products, with low cost (22%) and relationships with their agent (16%) followed by brand recognition (8%).
This has forced many insurers to consider a more adaptable product strategy. More than half (52%) of respondents noted that their primary strategy to reach millennials has focused on investing in online, mobile and social technologies to reach customers across channels. Twenty-one% indicated they are tailoring products to suit millennials’ unique needs and 12% are investing in data analytics to segment and target communications.
Thirty-four% of respondents indicated that rising consumer expectations are their primary driver for new product development, followed by changing regulatory demands (22%) and availability of new technologies (20%).
Yet while insurers remain focused on the customer experience, updating their back-end infrastructure continues to be a priority as they seek to inject agility and speed throughout their processes. Fifty-one% of respondents indicated their organization has adopted cloud computing in some capacity.
While nearly half of these respondents have implemented cloud-based systems for back-office functions – anecdotally citing HR, accounting and procurement – others have adopted cloud for mission-critical functions like policy administration (18%), product development (seven%), claims processing (six%) and risk management (six%).
“Cloud computing has matured and we’re seeing insurers shift from leveraging the cloud for just back-office functions to implementing cloud across the entire organization,” said Ross Orrett, global head of Insurance Industry Innovation and Development, SAP. “Insurers are becoming more adaptable and laser-focused on meeting changing customer needs. To be innovative in its products and the way it serves agents/brokers and customers to meet these demands, carriers are investing in industrializing the back-end with integrated, agile infrastructure while innovation across these systems,” he added.
Insurers also acknowledged the barriers to cloud adoption in their organizations. One-third of respondents (34%) cited security concerns as the primary challenge for adopting cloud computing. Lack of internal buy-in was another key factor (28%), followed by budget and financial concerns (13%), unstable technological infrastructure (13%) and lack of time (12%).
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