IDC Financial Insights’ latest insurance research uses the IDC MarketScape model to present a 2018-2019 assessment of 13 vendor companies servicing the insurance organizations across the globe in their digital transformation (DX) initiatives. This research is a quantitative and qualitative assessment of a vendor’s ability to enable insurance organizations to succeed in their DX initiatives and help anticipate its ascendancy.
The evaluation is based on a standardized and comprehensive framework and a set of parameters expected to be most conducive to success in providing DX services in the short and long term. The general market’s perception and technology buyers’ perception of vendors’ current capabilities as well as their attitudes to innovation to help insurance carriers and intermediaries thrive in an extremely challenging marketplace are key components of this evaluation.
All vendors assessed for this research provided detailed responses regarding their current capabilities and strategies to offer DX services to their insurance clientele. Key findings of the study include:
- Across the 12 strategy measures assessed, the criteria that were most highly rated on average were portfolio strategy, functionality or offering strategy, and client engagement strategy. On average, the lowest-rated criteria were pricing model strategy, marketing strategy, and delivery model strategy.
- Among the 19 capabilities measures assessed, the criteria that were most highly rated on average were portfolio, delivery model, and growth. The lowest-rated criteria on average were sales/distribution channels, cost management, and marketing.
- Findings show that most vendors in the market are offering a broad portfolio of DX services and offerings to their clients, backed by domain and technology expertise. Many vendors are also successful in engaging their clients by following traditional delivery models that worked well over the years. However, client needs are evolving as digital technologies are maturing (e.g., artificial intelligence or AI), and this naturally leads to an expectation for innovative use cases and DX services at lower costs. Vendors, especially large players, are yet to fully wake up to this to offer a range of flexible outcome-based pricing options and delivery models (including nearshore or onsite) to meet clients’ needs. An impact of this is that many clients prefer local, boutique players in the market to implement digital projects while continuing to use traditional vendors to manage their current portfolios.
- When technology buyers were asked their required characteristics for a DX project to be successful at a worldwide level, the top characteristics cited were “a culture or mindset change within their organization to embrace digital,” “strong strategic partnerships,” and “the right digital talent or skills.”
The findings highlight that as insurance organizations undertake a transformation journey to deliver contextual and value-centric products and services in response to changing customer expectations, they need to look for service providers that can help them address their transformation objectives at an organization level.
They will benefit from strategic partners that can help transform their omni-experience capabilities, deliver usage and value-oriented offerings, realize frictionless insurance, and build cognitive capabilities to remain sustainable in an age when traditional insurance business models are immensely challenged by market disruptions.