The digital revolution has lent new urgency to insurers’ need to reimagine what they do and how they do it.
Across industries, the bar has been raised on customer expectations. Digital giants such as Amazon and eBay have set new standards for convenience, speed, value and ease of use. Some insurance customers now want an Amazon-like experience whether they’re buying a car, opening a bank account or shopping for an insurance policy.
In some markets, insurers have made strides in delighting their customers through digital channels, particularly mobile. In China, Malaysia and South Korea, for example, life insurance customers who use mobile channels are more delighted than customers using other channels.
Overall, however, insurance customers who rely exclusively on digital channels tend to be less loyal than those who use multiple channels, including agents. Compared with multichannel customers, digital-only customers give their insurers lower marks in the areas of personalization, understanding their needs and trust in the company’s ability to resolve an issue.
Within digital, the biggest opportunity lies in personalization—an area where insurance lags behind other industries, such as online retail. By collecting data systematically, making it accessible across the organization and applying artificial intelligence, carriers can emulate retailers and create bespoke offerings.
By knowing more about their customers, insurers can better target them at the moment when they are ready to buy. In the US, for example, Progressive’s Name Your Price program offers customers individualized proposals based on how much they are willing to pay.
The bigger digital threat to traditional insurers may come from tech giants. In China, these companies have created vast digital financial platforms that include banking, payments and insurance—and they plan to take this approach to other markets.
Automaker Volkswagen, for example, has expanded into insurance, and Tesla is testing a package that offers customers an insurance contract with the purchase of a new car.
While insurance customers in Nigeria continue to relate with their insurers through traditional channels, some of them want to use digital channels to complement these channels.
The insurance companies need to find a way to create these mixed experiences within the insurance ecosystem or risk losing out in the emerging insurance market with non-traditional competitors.
