Insurance firms must play digital catch-up after COVID-19
Insurance companies have been slow to uptake digital delivery systems. Now COVID-19 is here, they have little choice but to comply, says a new report.
Insurance companies have mainly relied on more traditional paths of approving claims and new products. But, says a report from , they must now embrace the digital age and move with the times, because the landscape has altered irrevocably.
Traditionally, insurance firms have shown resistance to the idea of complete digitisation. Rather than offering their services via mobile apps and online application forms that garner swift results for the customer, they have relied on phone-in call centres, personal visits to carry out assessments, and approval wait times on products.
All these elements are now taking them behind the curve in terms of deliverables to customers.
The global business industry has changed – and although this has been accelerated by the pandemic, customer requirements had already begun to change prior to COVID-19. Consumers want swift, digital responses to queries and they want access to insurance products with the immediate deliverability that apps provide.
Indeed, only those insurance companies that have embraced the digital age have seen unprecedented growth in the past year.
For example, companies turning to digital solutions and systems globally have risen 20% over the past year alone. To put that in perspective, it’s almost four times the compound annual growth rate of the previous four years.
Also, when leading insurers in the US, UK and Australia did adopt a digital strategy, the Bain survey showed that this forward-thinking move meant they were more likely to have a cutting-edge website.
The study also showed they were almost three times as likely to offer both instant online approval (a much-valued customer objective) and video communications as a face-to-face option.
Essentially, their customer services were better than other insurers relying on more traditional means.
At a time when the majority of companies globally are looking to streamline their operations and create a more resilient working environment, the implementation of digital services makes financial sense too.
Improving the online experience, whether it is via website or app, reduces the need for labour-intensive phone calls and in-person visits. Quick and seamless online interactions also earn greater loyalty from customers in most locations, but especially for those seeking P&C products.
A slow uptake
Unfortunately, despite all the evidence pointing towards positive outcomes for companies adopting digital procedures, the uptake has been (and continues to be) slow. Only an estimated 20% of insurance brokers in the UK, US and Canada provided any type of online or mobile service portals for their products.
The Bain study suggests four ways insurance companies can combat the slow transition to digital servicing.
- Streamline customer service: Many insurance companies have procedures that annoy, rather than attract customers. For example, too many enquiry calls, forms being incorrectly filled in and delays in approving policies.
- Introducing customer-led systems: Embrace the self-service options that put the customer in control and provide digital support, like a chat communication facility. Avoid delays and additional in-office work by aiming for straight-through-processing.
- Reduce unit costs: By simplifying procedures, the costs to the company will fall. Pass that onto the customer as an added incentive.
- Go digital with sales: Lots of online portals offer insurance deals through digital brokers that have online application forms for products.
- Use social media: Companies have reported large upticks in profit and sales simply by investing more in their Facebook marketing.
Ultimately, the companies that are currently thriving in our pandemic-stricken world are those that have provided customers with more ideal shopping and service portals. Moving with the times, however tough they may be, will result in better growth and profits.
4 ways to digitally enhance an insurtech customer experience
Insurtechs run the risk of cannibalising their own mission to boost coverage by getting sidetracked focusing on the latest and greatest technology.
These folks may advertise an end-to-end digital experience, but behind their slick customer-facing portals, they struggle to overcome the same problems that established insurers still face: a broken customer experience.
If an insurtech platform delivers a digitised version of a broken process, shoppers may be deterred by the same pain points that they were hoping to avoid by going with the more modern insurer. This might mean that shoppers are required to fill out a series of confusing forms that don’t apply to their industry or even be required to pick up the phone and wait in a queue to secure the quote they got online. Spoiler: neither experience leads to conversions.
As the Chief Marketing Officer and company co-founder, I’m a fervent advocate for putting small business owners and their customer experience (CX) at the center of insurtech product design. At B2Z, we provide digital, self-driven business insurance to small business owners by amassing digital intelligence through vast amounts of data, then leveraging it to streamline their insurance experience. That’s because our audience doesn’t have time to pick up the phone and wait to talk to an agent or chase emails over days or weeks waiting for a coverage decision.
1. Excel where others fall short
To understand where you can improve your CX, start by auditing the current insurance experience for potential customers in your target market. By identifying the common touchpoints and locations along the customer journey where the competition falls short, you can also find opportunities to pull ahead.
At B2Z, we found that most policy offerings were cumbersome and incomplete, but there were two major pain points we saw time and again:
- Irrelevant questions led shoppers to question whether they were applying for the right product. Small business owners could receive a quote after answering questions in an online form, but the process wasn’t tailored to their business. For example, pet retailers would be asked about liquor sales at their establishment.
- Shoppers couldn’t complete the process entirely online. Even after they were promised a completely digital experience, too many small business owners were required to follow up over the phone to secure coverage.
Why are these such serious issues? Small business owners are busy people. More than 70% of them work more than 40 hours per week as they fill a variety of different roles across their organizations.
This disjointed process left busy entrepreneurs with coverage gaps or uninsured altogether: over 70% of small businesses are underinsured, and 40 percent aren’t insured at all. And having the right kind of insurance can be the difference between a business shutting its doors or enduring. This landscape created an opportunity for thoughtful technology to improve the customer experience.
2. Use technology to solve pain points
In the property and casualty space, insurtechs can shrink expense ratios to almost 40% lower than those of traditional insurers. But they don’t do this by implementing technology for technology’s sake. Instead, they identify and target specific areas where tech can improve the customer experience and they strategically design the right solution for their customers’ needs.
Our work with chatbot design is a great example of how insurtechs can leverage innovative tech to differentiate their products and services.
Most insurtech chatbots are equipped to answer simple, formulaic questions you’d find in the FAQ section of their website. While this type of bot helps shoppers and customers access the right information at the right time, their limited natural language processing capabilities too often means customers must input the exact keywords to get a helpful response.
After examining where other chatbots fell short, B2Z developed Diya, a digital guide to small business insurance. During the application process, Diya chimes in at potentially challenging moments to ensure small business owners quickly secure the right coverage.
For example, when asked to select their business classification code, customers can type, “I cut hair” and select from relevant codes for barbershops or beauty salons.
By being purposeful about implementing new technologies, insurtechs can streamline the customer experience and differentiate themselves from others in the space.
3. Align your CX with customer expectations
The pressure is on for insurtechs to match the digital experience customers now expect when they shop for groceries or refill their prescriptions.
The COVID-19 pandemic changed behaviors and accelerated customer expectations for entirely digital experiences (which have existed since at least 2015). In the US, 73% of customers have tried new shopping behaviours since June 2020 and over 75% intend to continue them.
To achieve this, insurtechs must leverage data to streamline the customer experience. At B2Z, we leverage our digital intelligence to help small businesses quickly identify the right coverage options based on the risks within their industry.
For example, to gauge the right level of coverage for a contractor, we need to know whether their employees regularly work on platforms more than 15 feet off the ground. Rather than asking the business owner to provide this information, we leverage third-party data, and our algorithms review county records of similar businesses.
Then, by collating this information with millions of other contractors across the country, we can automatically match their business up to an existing model from an underwriting perspective. This leaves the customer with fewer questions to answer manually, streamlining the customer experience and shortening the application process to as little as five minutes.
By drawing from all available data sources, insurers can deliver a speedy, fully digital customer experience while holistically evaluating customer risks.
4. Every digital touchpoint is an opportunity to enhance the customer experience
As insurers rush to adopt new technology, incumbents and insurtechs don’t consider how their decisions will impact the customer experience.
By taking stock of the competition, implementing new tools that are designed for a specific purpose, and using data to gauge customer expectations (and design to meet them), you can keep your customers at the centre of an increasingly digital experience.
About the author: Stephanie N. Blahut is CMO and Co-Founder at B2Z Insurance. B2Z Insurance is a new small business insurance company that provides coverage for on-the-go business owners: simple explanations, easy application, digital quotes, and mobile claims. Stephanie is a seasoned digital marketing professional whose experience spans the insurance, publishing, and software industries. As B2Z’s CMO she leads their digital-first customer acquisition and marketing strategy.