Compared to other industries, insurance companies have very few opportunities to connect with their customers. Typically, they only interact with clients in three key touch points: when the customer buys the product, when and if they need any changes to their policy or when they file a claim. From this perspective, customer service stands out as perhaps one of the most important aspects in this relationship, sometimes outweighing even pricing policies. In order to deliver stellar customer service, companies need to have a clear customer profile that can help them map out each of these key interactions, along with other touch points that are being requested more and more by younger generations.
These always-connected customers want to be reached in the manner they prefer. That means attracting new clients requires thinking of a multitude of digital touch points. Tech-savvy customers such as Millennials and Gen Z place a huge importance on digital transactions and accessibility.
While it may be easier for other industries to implement technology into their every process, the insurance industry has not changed that much in the last 100 years or so. But it seems they too have to adapt. After all, they serve the same clients as Apple, Netflix or Facebook.
Customer expectations in the digital age
According to the 2017 World Insurance Report, nearly three-quarters (74.8%) of tech-savvy customers place importance on the ability to send claim notifications to insurers online or via mobile. Moreover, nearly 70% of Gen Y customers value the ability to digitally renew or cancel policies. This segment of young and tech-savvy customers, or as we like to call them digital customers , are important segments in terms of incremental revenue potential. The same study shows that 42.1% of tech savvy customers are likely to buy another insurance product compared to 19.7% of non-tech-savvy customers.
"Customers are seeking more digital touch points for convenience, as customers experience in their daily lives that degree of personalization."
Keith Webb, vice president at Capgemini via CNBC
In a survey by Accenture, 77% of customers declared that they were willing to provide usage and behavior data in exchange for lower premiums, quicker claims settlement or insurance coverage recommendations. However, historically, the insurance industry has not delivered these highly personalized services. One fifth (21%) of insurance customers said their providers do not tailor customer experiences at all.
The widespread adoption of new consumer technologies in all industries has created new needs for and expectations of insurance solution and interaction channels. Incremental innovation has been helping insurers to meet most new customer expectations. But, with the demands of the shared economy, usage-based models, internet-of-things (IoT), autonomous cars, and wearables, they have an opportunity to do more radical innovations and experiment with new business models. From this perspective, customers have a need for new insurance solutions, and companies have an opportunity to provide tailored products and services for different segments.
Let’s look at some of the key areas of innovation in the insurance industry and some of the good case practices that have arised from them.
Personalized insurance offers
Once companies identify and understand the expectations of the digital customer, they can easily personalize each client touch point to ensure great customer service. Ten years ago, the customer was a middle-aged man, with a yearly household income of $20 000, three kids and a Ford Fiesta. Now, you have the ability to find out which route a specific customer habitually drives and how accident-prone that route is. Or how often a customer turns on the alarm when he leaves home.
All this data is available courtesy of The Internet of Things. With over 328 million devices being connected to the internet each month in 2016, researchers estimate that there are going to be 50 billion devices connected by 2020. Delivering a high level of personalization requires insurers to better understand their customers’ actions and behaviors, and to use this knowledge to provide more frequent and high-value interactions.
Here’s how these companies are leveraging data to create personalized insurance offers for their customers:
Metromile has developed a customer- (rather than risk-) centric value proposition for occasional drivers. It offers a low base rate and then charges a few cents per mile driven. Metromile also offers an app that provides personalized driving, navigation and diagnostic tips, and can even remind drivers where they parked. The company has also entered into a partnership with Uber that allows drivers to switch from personal to Uber insurance.
USAA has invested $24M in Automatic Labs, a telematics platform that claims it will “connect your car to your life” and provides a full suite of integrated apps (including wearables).
Sureify, a life insurance company, has developed a platform that allows insurers to underwrite life insurance based on lifestyle data inputs they obtain from wearables.
Lemonade claims to be the world’s first peer to-peer carrier, but other companies like Guevara and InsPeer have been exploring variations of the same model. Bought by Many, a startup that uses social platforms in its go-to market strategy, it helps individuals join or even create affinity groups, as well as find insurance solutions for their specific needs across different product lines.
Ping An, a leading Chinese insurer has also partnered with Bought by Many to create personalized travel insurance by leveraging social media data.
Trov is a smart insurance company, as they call themselves. Available in the UK and Australia, the company allows customers to select specific objects and devices that they want to ensure. Trov provides protection against damage, loss and theft. The smart insurance can be turned on or off for a specific object using a simple swipe on the mobile phone.
Faster claim management
Lemonade was designed with the issue of improving claims in mind. In fact, in December 2016, they received and resolved a claim in 3 seconds.
“We designed Lemonade to be instant. Buying a policy, filing a claim or switching from a previous insurer shouldn’t take more than seconds.”
Lemonade created a claims bot using artificial intelligence technology. His name is Jim. The algorithms powering AI Jim ‘understand’ the nature of claims, their severity, and whether the user is in a state of emergency. AI Jim also tries to assess the likelihood of a claim being fraudulent and even nudges people to be more honest by incorporating years of behavioral economics research into every little detail in the conversation and the UI.
Jim’s AI tracks loads of user-generated data-points to help identify suspicious activity and predict what customers need before they even know it. Brandon, the client who had his claim resolved in 3 seconds gave A.I Jim a 5 star rating, along with this message:
“I was shocked by how easy the process has been with Lemonade. I signed up for Lemonade because it was no frills, the most affordable option, and took no more than two minutes on my couch…I already assumed there was no way that I’d recover my losses: other insurers either pile paperwork or deduct tons of charges that I don’t understand. But this time was different. I signed an honesty pledge, answered a few questions, and Lemonade reimbursed me in a matter of seconds! The service is amazing and I am so happy that I signed up!”
That’s how what a happy customer sounds like.
Other companies offer guarantees for solving a claim within minutes. Intact, for example, offers a 30-minutes claims guarantee. When you call Intact Insurance to report a claim, they guarantee that within 30 minutes of answering your call, one of their dedicated claims representatives will start your claim. That means they’ll start the claims process, and will have the ability to take charge of the situation and arrange emergency support if required. If not, they offer to write you a cheque for the full amount of your annual premium up to a maximum of $1,000.
London-based Tractable uses artificial technology for automated crash damage analysis that speeds up the claim management process considerably. According to Tractable CEO Alex Dalyac, the technology will “change the way that auto claims are managed in the future” and assess collision damage based on photos.
“We have trained computers to see exactly what humans see, so that vehicle damage can be assessed within seconds and consistent decisions made. Artificial intelligence will make the process quicker, more cost effective and more efficient.”
These are convenient 24/7 advisors that provide ready access to information that can empower consumer decisions on top issues about financial planning and investment management. Robo-advisors allow you to set up a customized, diverse portfolio and can give you access to wealth management services previously reserved for the ultra-wealthy, in just a few minutes. According to consulting firm A.T. Kearney, assets under management by robo-advisors will grow by 68% annually to a whopping $2.2 trillion in the next five years.
Betterment LLC is one of prominent robo-advisor companies on the market. With over $10 billion in assets under management (AUM), it is the biggest robo-advisor, and in July 2016 it became the first robo-advisor to pass the $5 billion AUM mark. Betterment charges a 0.25% annual fee for its digital plan, which includes access to automated portfolio management, customer service and all of its web tools. This level of plan also gives customers access to one phone consultation per year with the company’s financial experts experts.
Personal Capital is another all-in-one online financial platform that provides a suite of free financial planning tools, in addition to access to a human, financial advisor. Their robo-advisor allows clients to connect their existing banking accounts to the platform to track their spending and retirement savings and their portfolio's performance.
SigFig is a great option for those already using an online brokerage because it manages existing investments. Similar to other robo-advisors, SigFig requires you to complete a risk-assessment questionnaire to customize your portfolio. The company offers two account types: its managed account and its free portfolio tracker account. In March 2017, they announced a partnership with Wells Fargo.
For the tech-savvy digital customer who is still young and doesn’t have too much capital, robo-advisors are a great product. They are able to serve younger investors with small balances because they rely on technology instead of pricey human advisors to guide clients.
Augmenting existing capabilities with strategic relationships
“There is no doubt in my mind that the future will be won on the basis of the alliances, partnerships and joint ventures formed by insurance companies today.”
Sam Evans, Global Insurance Deal Advisory Lead Partner via
The increased connectivity brought on by technology advancements and the shared economy has made partnerships a key element of growth and customer success. Joint ventures and partnerships are a good way for the insurance industry to to augment existing capabilities and meet consumer expectations.
Companies are already seizing the opportunity. BIMA Mobile, for example, has partnered with mobile telecoms companies to provide life insurance solutions to uninsured segments in less developed countries. It offers simple life, personal accident, and hospitalization insurance products on a pay as you go (PAYG) basis for a set time period (usually just a few months). Policyholders can obtain a pre-paid card and activate and manage their policy from a mobile phone.
AXA is another great example for strategic partnerships for the client’s benefit. The company has acquired an eight percent stake in Africa Internet Group for EUR75M, opening new opportunities for the company in unpenetrated markets. New B2B2C entrants also are helping forge mutually beneficial relationships.
“We expect Africa’s e-commerce and online businesses to develop rapidly as a result of the strong growth of the middle class coupled with the increasing mobile phone and internet penetration. With Rocket Internet’s extensive background in online business models, MTN as leading mobile carrier with its broad African presence, and now the partnership with AXA in insurance products and services, we are in a great position to continue to innovate and connect businesses to the fast growing consumer demand.”
Another interesting partnership is the one between Allianz and Flock, a UK based InsurTech. They are set to launch the first pay-as-you fly drone insurance later this year for the UK market. The coverage can be tailored to each flight through the Flock app at the touch of a button. To access flight data , Flock has partnered with local aviation and weather providers to aggregate real-time info on flight data, operator profiles, and hyper-local weather conditions. Flock’s algorithm then utilises this data to quantify the risk involved on a flight by flight basis and Allianz provides the underwriting on the spot so that you can spend your time flying, and not worrying about insurance.
There are many opportunities to be seized as technology becomes such an ubiquitous part of our lives. Insurance companies now have the necessary data to stay on top of their fast changing consumer needs. The real struggle is in analyzing that data and translating it into personalized products and satisfying interaction through each customer touch point. The key to customer success is not to be the most hyped or high-tech company, but to have the best client-fit, and happy clients at that. To meet the needs of millennials and Gen Z buyers, insurers should provide digital, mobile-first access, 24/7 customer service and a seamless, cross-channel experience. Simplifying the customer journey from the initial contact to the claims process and putting innovation at the center of business strategies will be critical.
This consumer-centric approach to insurance will only be possible by building interaction with customers. Devise more points of contact with customers throughout the product life cycle, especially for long-running policies such as life insurance. Use new technology, such as artificial intelligence, social media and strategic partnerships to stimulate consumer engagement. According to Peter Manchester, EY EMEIA Insurance Advisory Leader, “Creating an effective customer relationship is less about intimacy and personalization, and more about ease of access, ease of contact and ease of fulfillment.” (2017 European insurance outlook)