In our previous blog, we introduced the key challenges that insurance carriers are facing. Winning insurtechs are those that tap into these challenges to accelerate digital transformation. In this post, the first of seven different flavors of winners in fintech insurance, we look at insurtechs that drive superb customer engagement.
Customer engagement leaves much to be desired. Most insurers still have low Net Promoter Score ratings. In spite of the efforts and investments in the last few years, customers continue to experience friction throughout the customer journey. What’s even more challenging, rising consumer expectations are more and more difficult to meet. The frame of reference is set, not by the service offered by other insurers, but by what customers experience when they reach out to other brands, for instance when using their smartphone.
There are a bunch of reasons why customer engagement is the first flavor we’re exploring in this blog series. We believe customer engagement is the key to turning digital transformation efforts into a lasting competitive advantage.Customer engagement is the key to building trust. This is what research told us: trust is built by excelling in the daily provision of services. Things like touchpoint performance, the perceived quality of customer-facing employees, and the ease of doing day-to-day business are the most important elements in building or reinforcing trust. Customer engagement offers new points of differentiation. Since virtually every financial institution is simplifying its product range and individual products, it will become increasingly difficult to differentiate from competitors on a product level. Consequently, the points of differentiation of financial services will shift to the way the company engages with customers (for example, in service and customer experience). Service is becoming a much more important purchase driver. In the past, you shared your thoughts and experiences with your neighbors over your backyard fence. Nowadays, people exchange their thoughts and experiences over a virtual fence empowered by smartphones and social media. Peer to peer information sharing is almost always about the service quality. This has a huge impact on our decision-making process. We are decreasingly choosing solely on price, while increasingly (and within a certain price bracket) choosing on service. Service is becoming a much more important purchase driver. Lack of customer engagement results in loss of value. Every day, thousands of insurance and financial products are purchased that don’t completely match the needs of the customer. The cancellation rate in life insurance is proof of this. Sunk costs include billions of euros in intermediation costs, and even more important of course, huge loss of value for customers. Customer engagement is a primary source of profit. Ample research shows customers who have had real, positive experiences will drive revenues and profit in a variety of ways: they are more open to other products of that company, they will be less sensitive for offers from competitors, the costs to serve will decrease, and they are more likely to advocate your services to friends and family. New entrants set new standards to engagement. Not all new entrants will survive, but they will definitely set new standards. Despite the fact that they differ quite a lot in nature, they have one thing in common: every new entrant is attacking the frictions and complex processes customers have to deal with when working with financial institutions. Incumbents need to step up to the plate to keep up. Regulators scrutinize how the industry engages with customers. During the first couple of years ‘after Lehman’, the various supervisory authorities have focused on the way money was made and the quality of financial products. We now see that this focus has widened to just about every aspect of customer engagement, such as sales, advice, service, even advertising. Regulators are forcing insurers to have a 360º view of customer engagement to treat customers fairly.
Address the pain points
The challenge is to close the gap between the insurer and the customer; moving from transaction to interaction, from one way communication to a dialogue, and from interaction to intimacy, taking the dialogue from exchanging information to proactive actions. Too often, customer engagement is mistaken for creating a Disney-like experience. We think the opportunities are much closer to home. In our work for insurers, we have learned that customers across the globe more or less experience the same pain points:
- ‘They do not really know me. They do not understand my situation.’
- ‘I’m not convinced they act in my best interests.’
- ‘They do not treat me nice. I don’t think they would walk the extra mile.’
- ‘Their information confuses me.’
- ‘They don’t make it easy for me.’
- ‘I’m not sure what I’m covered for, and what the overlap with other policies is.’
- ‘It’s not clear what the status of my claim is.’
- ‘I’m not sure what I’m paying for exactly. It seems very expensive.’
- ‘It takes ages to get an answer, and too often I’m not getting any.’
- ‘What the call agent says is different from what the broker told me.’
- ‘They don’t treat me fairly.’
Just imagine what would be accomplished in terms of customer engagement if all of these pain points were resolved. Furthermore, insurance is still about averages, products, one-size-fits-all, paper, brokers and agents, which isn’t always in sync with changing customer preferences and what technology is able to.
In fact, customer engagement technologies that are widely accepted in other industries are still hardly used in insurance. Take the use of video, for instance. Research shows that only 7% of a conversation is about words, 38% is about tone of voice, and 55% is about body language. We’ve seen quite a few successful WebEx implementations, for example bank employees that assist customers in the complex process of purchasing a mortgage, with application-to-proposal conversion rates increasing from 10% to 35%, and proposal-to-signed contract from 50% to 75%.
Another no-brainer is the use of YouTube channels to explain what customers should do when a particular event takes place. It’s an extremely effective medium for explaining more complex consumer electronic products, but it’s hardly used in insurance. Think of the application of social data to simplify the underwriting and onboarding process of new customers (and consequently higher conversion rates), or to log in to certain information to simplify the customer experience. Or take the poor state of FAQs at many insurers’ websites, while a company such as Zendesk is able to launch a tailored state-of-the-art solution in just a few weeks and at very low costs.
The Tripolis communication platforms allows companies to take personalization to a next level, deploying real-time, relevant, dynamic content in (for instance) email campaigns. Customers receive personalized, real-time information and offerings that anticipate their context, the time of day, where they are – not when the email is sent, but at the moment the email is opened. Obviously, this improves the impression of a one-to-one, intimate relationship with the brand. While the use of such solutions is increasing fast in other industries, this is hardly the case in insurance.
Fortunately, more and more insurtechs are helping insurers to make a leap in customer engagement, to become much more effective at every step of the customer journey. Of course, we also see new entrants that are attacking specific frictions, complex processes, and product and pricing imperfections customers have to deal with when working with insurance companies. Trendwatching.com coined them ‘Clean Slate Brands’: a whole new breed of exceptional, new brands living by the rules of ‘Business 3.0’, which are newer, better, faster, cleaner, more open and responsive; brands that consumers are therefore attracted to (also because they can’t have sinned yet).
Superb customer engagement
Here’s a line-up of 10 insurtechs that drive superb customer engagement in various stages of the customer journey:
PolicyGenius addresses the uncertainty of consumers with regard to gaps and overlaps in the various policies they’ve purchased over time. PolicyGenius offers a highly tailored insurance check-up platform, where consumers can discover their coverage gaps and review solutions for their exact needs. PolicyGenius’ online store includes solutions from life and long-term disability to pet insurance. Quoting engines offer side-by-side comparisons of tailored policies.
Trōv offers customized home insurance by allowing coverage of individual key items rather than a one-size-fits-all coverage set with average amounts. An app-based platform enables customers to discover and track the real-time value of their belongings. They simply upload the items they own to a digital locker, either by scanning a product UPC code, entering an auto VIN number or a home address, or looking up individual items in an in-app database. Trōv (backed by fintech VC Anthemis) has partnered with a wide variety of proprietary data sources such as Zillow (US real estate), Blackbook (US autos) and Symantics3 (global consumer products).
Erste Digital taps into the fast-growing use of social media and mobile to purchase products and services – quite neglected by traditional insurance companies. Erste Digital is a B2B digital broker platform selling ‘add on’ insurances. The Scan2Insure mobile app allows customers to scan a barcode to instantly get a quote to insure the product. To sell through social media channels, Erste Digital has integrated its platform into YouTube, Instagram, and Facebook.
Bima offers microinsurance in 14 emerging markets in Africa, Latam and Asia using a mobile-delivered model. Traditional insurance companies find it difficult to service those living on less than US $10 a day. This is a shame, because insurance is a powerful tool that can prevent families from falling back into poverty in case of illness and injury. Bima gives customers access to microinsurance that’s paid for using prepaid mobile credit or postpaid billing. Policies start from $0.23 a month and Bima pays out within three days of receiving a claim.
The company serves more than 18 million customers, and recently decided to enter the health sector. In emerging markets, people need to travel far and spend many hours in waiting rooms to see a physician. Bima’s mobile health services make it easy, quick and affordable to access medical advice from a qualified doctor via a tele-doctor service. Memberships are available in 3-, 6- or 12-month prepaid packages, and include an unlimited number of phone consultations with a qualified doctor for the whole family. (More about Bima’s fascinating business model in one of our next posts.)
Cuvva introduced a mobile app that enables the user to sign up, get a quote and buy cover in less than 10 minutes. This is quite different than what customers experience when they apply at the average insurance firm. Basically, it’s a completely digital experience run from a smartphone. What’s also addressing a customer need is that it gets customers covered for only as long as they need it, from a single hour to a whole day, rather than the usual single option of a year.
Another imperfection (at least in the eyes of customers) is the cost of deductibles. insPeer enables users to share insurance deductibles with their friends and family members. Collision damage waiver and loss damage waiver on rental vehicles are also always expensive. Insuremyrentalcar provides the solution with a package that starts from $5 a day to $93.99 a year.
Embroker says it aims ‘to revolutionize the way businesses buy, manage and understand insurance’. The company combines the service and expertise of the best-in-class brokers with an innovative technology platform. The 100% online solution enables you to optimize insurance spending with policy benchmarking tools, provides a real-time interface to track and manage claims, among many other beneficial features.
Claim Di and Snapsheet are about making the most important ‘moment of truth’ of a car insurance, when an accident takes place and the claim process that follows, less of a hassle. The Claim Di mobile app ‘shake and go’ feature facilitates communication and claims between parties in an auto accident and their insurance companies. The drivers can shake the phone near the phone of another party who also uses Claim Di, allowing them to make an insurance claim without waiting for a surveyor from their respective insurance companies to arrive at the scene (which is common practice in Thailand). Claim Di also includes roadside assistance, a call service for insurance companies and a module to facilitate payment to claimants.
Snapsheet provides insurers with the process and technology to optimize virtual claims operations. Claims adjusters get the tools they need to provide a seamless experience; a mobile solution enables customers of insurers to settle a claim completely virtually. The solution simplifies claims adjusting, reduces the cycle time and increases customer satisfaction. Consequently, Snapsheet’s solutions are transforming claims organizations into a customer-first experience and cost-efficient operation.
Bauxy’s offerings remove hassle and frustration in a very different way. They enable consumers the ability to file their claims simply by taking a photo of the invoice. This means no more queuing on the phone to talk with insurance company call agents, asking when the money will be reimbursed, and getting frustrated in the process. Bauxy submits the claim on the consumer’s behalf.
RenewBuy offers the simplest way to renew car insurance in a couple of minutes, providing quotes. It focuses on car and bike insurance, and aims to offer the lowest premiums and issue your policy instantly. The platform works in real-time and provides the best available price specific to the vehicle model.
What these insurtechs have in common is that they cut two ways. On the one hand they solve frictions and dramatically improve customer engagement. On the other hand, they simultaneously improve operational efficiency. In our view, this is what makes an insurtech company a winner.
In our next post, we’ll focus on the second flavor of winners in fintech insurance; insurtech solutions for dramatic cost savings. Stay tuned!
– This article is reproduced with kind permission. Some minor changes have been made to reflect BankNXT style considerations. You can read the original article here. Main image: carterart. Free Vector Design by: VecteezySee event: DIA Barcelona 2016