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Here’s why I prefer digital-only insurance policies

10 October 2017
Rogier Tolboom

Insurance is probably one of the least popular industries. One of the reasons why is that people have a hard time understanding how the insurance business actually works. The second reason is that filing a claim can be a real nightmare when you’re stuck in a bureaucratic process or being held to the small print in your policy. But there is still hope for a better and brighter future and I think digital-only insurance policies are a big part of that.

Today I rarely go to the bank anymore. If something extraordinary happens, then I do, but I haven't been to the office of my bank in two and a half years. The same happens with my favorite grocery shop, they just deliver. So when if I end up in hospital and have to settle healthcare bills, or if I’m careless and drive into my garage door without opening it, I would love it if I did not have to come down and visit the insurance office.

Digitization is one of the topics I’ve often referred to in many of my articles, especially when talking about the Internet of Things. The Internet of things or IoT, in its simplest form, can be explained as the complete connection of all one’s personal items and devices to the Internet. This new digitized world relying on social media, mobile, and real-time has contributed to the digital lifestyle that we, as consumers, embrace as second nature. It’s not just a Millennial or a Generation Z thing, it’s everyone who uses a smartphone, a tablet, or any smart device. When I interact with a product or service I’m expecting a real-time Internet of Me that is fully responsive and that offers total personalization, regardless of the industry.

I’m a digital customer

My expectations as a consumer have been shaped by my digital experiences with companies such as Facebook and Amazon. If I can order food at home in a matter of seconds, I expect to file an insurance claim the same way. My brain has come to expect fast and personalized experiences without taking into account what industry is providing that product or service and how digitized that industry may or may not be. With these expectations come many disappointments when I have to talk to several people, go to a physical office or fill-in form after form.

Insurers need to keep up with these consumer trends. We need them to become real partners in making insurance-related choices by leveraging data-driven personalized advice and insights embedded within web, mobile, and voice-based platforms. The great news is that some insurers are trying to meet this challenge by creating an ecosystem of such services, with emerging initiatives taking many forms. AIG, for example, has invested in Human Condition Safety, a technology start-up developing wearable devices, analytics and systems to improve worker safety. These tools help workers, managers and worksite owners prevent injuries in manufacturing and construction. Another example is AXA Germany’s partnership with RWE to minimize flood damage and provide fast support using RWE’s SmartHome automation system.

As an example of how digital enables a new level of customer-centricity, one UK insurer eliminated around 20 million calls per year by introducing an app that allowed customers to make direct changes to their policies (McKinsey). Imagine if the whole process is digitized? You would have automatic algorithms that calculate premiums on the fly. And I would be a very happy and loyal customer.

I am well aware of the fact that cutting age technologies such as augmented reality, Internet of Things and wearables are still a long way to go before becoming the norm in our day-to-day lives. However, there is one step forward that I think all insurance companies should take and that is digital policies. And it’s not just my humble opinion. Accenture Financial Services’ Global Distribution & Marketing Consumer 2017 Survey gathered the views of 32,715 insurance customers across 18 markets. 51% of the digitally active respondents who participated in this survey reported to have purchased insurance through an online channel. What’s more, 58% said that they would see an online channel as a preferred way to purchase.

I’ll have a digital-only insurance policy, please

Digital policies are key to improving customer-centricity in insurance. They provide the solution to the two reasons why most people hate insuring companies, providing transparency and better customer service. They give me the possibility of ordering an insurance just like I would a book. And they introduce online customer service to help with claim management, just like I would expect when ordering from Amazon.

It’s painfully obvious that the old way of managing claims and convincing customers that they should stick with their insurer are not working the way that they used to. And how can they, if we’re all connected 24-7 to a web of everything we could possibly need to know about all your competitors? When we have so many platforms where we can voice our concerns and complaints and try to connect with our insurer? Like in these instances:

If I have to make 3-5 actions in order to talk to someone about an urgent issue and then they ask me for my name and phone number I would be more than unhappy as well. Imagine having a Facebook group created by people who hate your company. How would that make you feel? Where does that fall on your NPS or Customer Satisfaction score?

What if these people had a digital insurance policy that could have made it easier for them to file a claim, stay updated on the changes in their risk status and have everything handled for them by an automated system? A system that wouldn’t give them excuses, ask for their contact information or make them wait, but instead would handle their issue promptly. What if my personalized digital policy enabled an instant money transfer if liability was confirmed at the scene of the accident?

This is no longer a future trend-kind of recommendation. It’s the new reality made possible by innovative tech startups such as ONE. ONE is on a mission to completely redesign the insurance industry, according to Group CEO Julian Teicke, and their App based platform is coming to smartphones everywhere in the EU this year. In fact, you can already join me on their waiting list before their official launch. ONE wants to offer coverage in minutes, 100% online, instant. You can log into the app, personalize your policy and off you go. If anything happens, you can submit your claim online and your money is deposited directly to your bank account.

Putting the customer at the center of all processes is key to designing a great digital experience and removing many of the frictions associated with an insurance process. Us digital consumers want easy, fast, convenient websites and mobile apps, and, so far, few insurers have been able to design digital tools that meet these expectations.

In the latest research report by Bain, you can see how the share of digitally active customers is expected to increase over the next three to five years:

Insurance has never been that popular because people have a hard time putting their trust into something that they don't understand or that doesn’t give them immediate ROI. But one of the great advantages (and challenges) of the digital age is the increased transparency into everything. If I’m looking to buy insurance I have access to so much information that I’m more motivated to understand it and see the value for the money I’m paying.

As an insurance company, you have to make sure that you have the digital tools to make this transparency a reality and offer me, the digital consumer, an experience that breeds trust and loyalty. Ultimately, as Brent M. Kelly puts it, you can’t make customers love insurance, but you can help them enjoy the experience.

Tjip-MachineLearningAlso read: The Fundamentals of Machine Learning [whitepaper]

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