By Barbara Peterfi and Manisha Bhargava
In recent years, insurers have sought to digitalize their processes and improve their customer experience, making it more seamless and tailored to the needs of today’s consumers.
Many major carriers have partnered with insurtechs and invested in technology platforms to digitalize their selling or claims management process, establish virtual payment options or improve their websites’ usability with chatbots.
Although digitalizing parts of the customer journey was a great initial step, it did not address the industry’s core problem. That is, adopting a truly digital-first mindset, instead of offering unchanged products with an online quote and bind journey and putting Band-Aid solutions on outdated business models.
Silos Across Business Lines And Distribution Channels
Purchasing insurance products is a cumbersome process. Most consumers use both offline and online channels to research their options and gather the necessary information before they are confident of making a purchase.
For this reason, digitalizing processes should not be seen as a replacement for the existing agency model. On the contrary: Digital technology should help insurers to automate standard processes and enable the agent as they advise the client to add an extra layer of personalized services.
From a productivity perspective, digital technology can free-up the human workforce to focus on more value-added tasks and extend the capability of selling insurance at the point of sale or through nontraditional partners, such as for valuables coverage, travel insurance, mortgage insurance or SME risk covers.
Consumers are merely covering their risk to insulate themselves, their families and their lifestyles from potentially disruptive events that may impact them financially. They are not seeking to buy “insurance.” Innovative Insurers should put their customer first as they build products, with the changing customer lifestyle at the center of their offerings.
To achieve that, insurance companies have a lot of customer data on their hands. The trouble is that it is siloed across multiple legacy systems. For example, when it comes to the integration of online and offline distribution channels, a 2019 McKinsey survey concluded that in the vast majority of cases, insurance customers who switch between digital and nondigital channels still cannot continue their journeys online.
In other words, even though many insurers have some type of lead routing from their landing page to their offline sales and service channels, this usually remains a one-way street, leaving customers with a broken digital journey due to the lack of channel integration. Those who have compared product offerings online and then called an agent to seek in-person advice no longer have the possibility to get back to the digital buying journey that they started in the first place.
Source: McKinsey & Company: Moving to a user-first, omnichannel approach, January 7, 2021.
Strong Demand For Digital-Native Insurance Products
As E&Y points out, the penetration rate of both life and nonlife insurance segments already was declining years before COVID-19, especially in the U.S. The number of policies sold has fallen, as products that were once attractive to consumers no longer meet their needs.
Traditionally, large insurance carriers operate with separate business lines, based on the type of risk that they cover. This operational logic does not reflect our current lifestyle, where we make decisions in a digital space and expect to have instant access to information.
As consumers are getting used to seamless online journeys such as ordering products on Amazon or signing up for Netflix based on their individual preferences, it is logical that they would expect the same experience when looking for insurance coverage online.
Despite the increasing demand for digital-native products, the percentage of insurers who offer more complex insurance products for purchase online remains low, according to another recent McKinsey’s research for the European market.
McKinsey also finds that approximately 66% of insurtechs specialize in select parts of the value chain, such as data collection, while fewer than 10% aim to disrupt the full business model. If we add the fact that most of the industry still relies on face-to-face interactions, we can see that there is a huge opportunity for digital disruptors and those who are willing to embrace new technology.
The Relevance Of No-Code For Insurers
The key to maximize customer lifetime value and increase conversion rates, is reducing the complexity of the buying journey for customers and agents alike. This is where no-code platforms come into play.
If an agent or broker wants to scale their business, it is no longer sustainable that three different customer calls’ data would land in three different customer relationship management systems. To connect the dots across those data silos, insurance companies need software that could sit on top of all their legacy systems.
Because of hard-coded legacy systems that incumbents depend on for specific product lines, their adaptability is painful and expensive. A no-code platform has a pivotal role in making this digital transformation smooth and incredibly fast. When you adopt a broader, turnkey solution, an insurance product becomes nothing but a data model. And the moment you abstract the process this way, you will be able to make systematic improvements and break silos across the whole value chain.
Overall, no-code technology presents an untapped opportunity for the insurance industry, as insurers can have all their business lines, agents, brokers and customers in one platform, creating an omnichannel experience. With the help of no-code, carriers can configure private and public channels and define which functionality is available to each one of them. This provides the flexibility to combine and package various products to their customers.
If insurance companies truly want to get closer to their customers and cater to their needs, then it is crucial to increase the frequency of touch with their end customers, and understand that customers are looking for an effective, secure and easy way to cover their risk. They want products that offer holistic coverage, and they expect insurance providers to be proactive in risk prevention, by using the data available in their possession.
True digitalization in insurance means to deliver on the 5Es (excite, educate, enable, execute and empower the buyer) through the buying journey without the need for any physical interaction.
Barbara Péterfi is content marketing manager at Innoveo. Barbara may be contacted at [email protected].
Manisha Bhargava is head of global sales at Innoveo. Manisha may be contacted at [email protected].
© Entire contents copyright 2021 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.