Founder and CEO of SmartFinancial.com: on a mission to make the insurance buying process more efficient.
The insurance industry has been playing catch-up in the areas of innovation and technology for some time now, but this has been especially true since the novel coronavirus pandemic began. Digital technology has already disrupted the way insurance products are bought and sold, and I believe it will continue to do so over the next few years — but as a close ally.
Many insurtech companies have now become carrier partners to fill the digital void. However, relying wholly on partners to compensate for an outdated platform is not enough. Carriers should still digitize every consumer touchpoint.
Shifting to digital processes is vital at every step of the customer experience, from delivering a quote all the way to the claims process. Carriers should also become digitally agile by offering partnership services to meet consumer needs at just the right points along the customer journey.
Data management and analytics are also important at each touchpoint. They can help improve the customer experience and predict which partners and services will better attract customers in the future. I’m not talking about a digital overlap, either. Some systems need to be technologically modernized, and a new platform will not solve all problems.
I predict that within the next few years, every step in the insurance consumer’s journey will be a digital touchpoint. Insurtech companies could become even more fully integrated into insurance carriers’ ecosystems for data collection, quoting, fraud detection and claim handling. Partners can offer relevant information and services at just the right stages to fulfill consumer needs. Meanwhile, carriers should develop their own digital capabilities internally, not only to digitize the claims process for convenience but also to manage and service accounts more efficiently.
In the future, the retention of insurance consumers will depend greatly on how well carriers adapt to new technologies and new technology partners while maintaining a human connection through their network of agents.
What’s A Digital Ecosystem?
The future of insurance will be greatly influenced by digital platforms and ecosystems. An ecosystem is a set of services that are all connected and available to users in one experience. Ecosystems are often made up of customers, suppliers, applications and third-party data service providers.
According to a 2018 McKinsey article, seven of the top 10 largest companies by market capitalization, including Apple and Amazon, have digital ecosystems, which enable shoppers to complete many tasks in one customer experience. McKinsey predicts that “12 distinctive ecosystems” will account for 30% of global revenues by 2025.
In the car insurance industry, for example, Clearcover is partnering with Snapsheet to digitize and automate the claims process. For business insurance, Hiscox has partnered with Thimble, an insurtech company specializing in short-term micro-policies. Hiscox is using Thimble’s app to allow customers to change their coverage, pause coverage or expand insureds. I think we’ll be seeing more of these ecosystem partnerships in the future.
Digitizing The Quoting Experience
Over the past two years, I’ve seen insurers working hard to catch up with comprehensive digital strategies and digital media spending. Many companies have cut print and radio advertising budgets, especially during the pandemic (paywall). I’ve seen a rise in digital comparison services and online marketplaces.
Insurtech companies are often great at generating quotes in terms of convenience, speed and accuracy. These companies (including my company and The Zebra) work with insurers and can offer quotes based on basic information customers enter on their websites. Their use of AI often enables them to gather driving records and other data that may be valuable to carriers.
More insurers are partnering or merging with insurtech companies to take the guesswork out of digitizing. Allstate, for example, acquired Esurance. Carriers should also create best practices to create a more seamless transition between lead generation and agent handoff so they can provide a more organic experience for the consumer.
The Digital Buying Experience
Even though digital insurers like Lemonade who don’t use agents have established their place in the insurance world, for the most part, I believe agents are still necessary during the buying process. A 2018 Deloitte Insights report concluded that 41% of consumers surveyed wanted the ability to research life insurance policies digitally, but they still needed agents in the decision-making stage. Sixty-eight percent of buyers surveyed wanted to speak to an agent before they purchased a policy.
While many consider the insurance agent essential for making the sale, if the consumer isn’t able to use digital platforms during the research phase, the sale could be lost. The two components, the digital and the personal, should complement each other, and the messaging about the products and services should reflect the marriage of technology and the human connection.
Digitizing The Claims Experience
The claims process is a common trigger I see for consumers to get a new insurance quote. To prevent this type of loss, convenience is everything. Consumers have new expectations and are used to the convenience of being able to access everything at the touch of a button. After an accident, they likely want to be able to upload important documents instead of stopping in at the agency to have their car photographed.
Carriers can build in-house apps, thereby creating a branded digital user experience for renewals, claims, roadside assistance and more. Insurers and agents who are still doing their jobs manually will have a hard time meeting customer expectations.
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