Insurance brokers are too slow to launch products and the products they offer are not keeping up with changing consumer behaviour, according to marketing executives that work in the sector.
The research from financial services software and BPO supplier Target Group found that 76% of insurance marketing professionals believe insurers are too slow at taking products to market and 78% of products do not reflect changing customer behaviour.
The report said the insurance sector is changing with innovations in harnessing data and disruptive technologies.
John Miles, product manager insurance at Target Group, said there is a threat to traditional insurers from technology companies and other firms outside the insurance sector that have adopted modern technologies in their development and customer service delivery.
“Due to a number of prevailing factors, customers are showing signs of becoming ever more brand-agnostic in respect of their purchasing behaviour and are demonstrating an increasing willingness to purchase cover from other large recognisable and customer-centric organisations like Google, Amazon and Tesco rather than just traditional insurers,” he said.
“Clearly this poses a threat to current business models and illustrates the need for new strategies. Innovation and agility will determine the insurers who will win the new race. Slow adopters will inevitably fall behind.”
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A number of recent reports have identified insurance companies as technology laggards.
According to Forrester Research's report Trends 2014: European Digital Insurance, European companies are falling behind others elsewhere. It said startups and companies in the manufacturing, utility and telecoms markets could take business from traditional insurers.
Insurance companies should open digital labs, it said, and run hackathons, tap into internal and external talent, and partner digital firms.
"The digital race is on. Europe's digital insurance executives should respond by leading the battle against digital inertia," said Forrester analyst Oliwia Berdak.
Recent research from Accenture, of 6,000 consumers surveyed in 11 countries, revealed that almost a quarter of consumers would consider large internet companies, such as Google and Amazon, as possible insurance providers. It found 67% of 6,000 consumers surveyed in 11 countries would consider buying insurance from companies other than insurers. Some 23% cited online service providers as options.
A total of 43% said they would consider banks in their buying decision. Accenture said there could be billions of pounds' worth of policies up for grabs globally, as 40% of consumers look to change providers. Most insurance companies do not have an enterprise-wide big data strategy, despite the industry's heavy reliance on access to accurate information.
Insurers are also failing to use the data they have. This is surprising, given that their business model is about looking at trends and understanding risk. According to research from business consultancy BearingPoint, 90% of insurance firms are yet to implement a company-wide big data strategy and risk being bypassed by new, more agile data aggregators taking advantage of the digital era.