In a new report from Global management consulting form Bain & Company, for the global retail insurance industry, it might as well be the beginning of the millennium as the sector trails far behind other industry sectors – retail, media and retail banking – when it comes to adopting digital tools and business models.

Bain & Company, in its new benchmark survey of 70 life and property and casualty (P&C) insurers worldwide, Global Digital Insurance Benchmarking Report 2015: Pathways to Success in a Digital World, suggests the lag stems from a lack of confidence among insurance executives in their ability to execute the digital transition.

Almost half of the companies surveyed said they don’t believe they have an achievable plan, and 60 percent are missing some key elements for the journey, such as a clear vision or compliance and risk processes.

This inaction has created a vacuum that upstart disruptive companies are rushing to fill with alternative products and solutions that aim to address customers’ frustrations with traditional insurance offerings.

Consumers are setting the pace in the digital arena. A 2014 Bain survey of nearly 160,000 consumers in 18 countries found that the share of digitally active customers ranges from 35 percent to 70 percent. Over the next three to five years, 79 percent said they will use a digital channel for insurance interactions.

“Insurers are finding it difficult to simply keep up with the customer’s digital demands, much less imagine a digital future for themselves and the industry,” said Gunther Schwarz, head of Bain’s insurance sector globally and in Europe, the Middle East and Africa (EMEA) and co-author of the report. “As result, they’ve left the door open for a new breed of companies – mostly tech start-ups – to chip away at the insurance market.”

Bain’s research reveals that a successful digital transformation involves six key dimensions:

  1. Digitally enhanced customer experiences
  2. An omnichannel sales and distribution model
  3. Optimized operations using digital
  4. Advanced analytics and Big Data applied throughout the business
  5. Technology in place to enable a digital
  6. An innovation-ready organization
Harshveer Singh, leader of Bain’s life insurance sector in Asia- Pacific said, “While no one company leads in all six dimensions, certain companies do lead in one or two,” “In the very near future, all insurers will at least have to meet a minimum threshold in each to survive. Today’s innovations will be tomorrow’s standard practices, so there is little time for insurers to waste in stepping up their digital investments. The goal of our research is to help insurance executives understand where to start and how to execute their digital strategies.”