For Insurance Carriers: 3 Emerging Strategies To Capitalize On Digital Customer Experience Innovation

Technology is impacting the insurance industry and necessitating digital transformation for carriers, especially in the customer experience arena. 

Are you tired of hearing about the tsunami of digital transformation breaking over every industry under the sun, transforming how we do business while simultaneously blurring the lines between them? If you’re anything like me, you might jump out of your chair if you hear another reference to the disruption being wrought by platforms such as Uber, Airbnb, Facebook, and Amazon Marketplace.

That being said, the rapid proliferation of local device technologies (i.e. smartphones, tablets, digital watches, smart speakers, and IoT devices with telemetric sensors) combined with advances in cloud-based technologies (5G networks, AI, elastic computing, and big data) is creating unprecedented challenges and opportunities across the map — including for traditional insurance carriers. The way people interact with their carriers is changing, as are the services being offered and the entire customer experience of the insurance industry itself.

In order to remain competitive amidst these changes, insurance carriers must not only embrace new technology, but harness it in creative ways. In this article I’ll outline three strategies we see our insurance clients employing to achieve digital transformation of the customer experience.

3 Customer Experience Innovation Strategies in the Insurance Industry

The insurance industry is changing fast. As outlined in the 2019 Insurance Innovators report, the rise of data and predictive analytics, combined with connected devices and related technologies, are allowing carriers to get “closer” to customers than ever before. This means they can – and should – add more value for their customers. It also means their offerings are changing, and extending to encompass complimentary services that fall outside a traditional insurance product.

Carriers are also being forced to rethink not only how they are selling, but to reexamine the existing model itself. Now that many risks can be predicted, calculated and preempted with new technologies, premiums are declining. Carriers need to find alternate streams of revenue and offer an experience that goes above and beyond to retain customers and upsell for add-ons.

So what can you do to stay ahead of the game? Having a strong digital customer experience strategy is a good place to start.

For Differentiation: Complimentary Lifestyle Benefits

Our insurance clients are increasingly seeking out opportunities to add more value to their policyholders in the form of digital lifestyle benefits. Carriers can harness mobile technologies to add value or eliminate hassle for customers, which makes their product more valuable to a buyer and can also benefit the provider. For example:

• A large insurance carrier consulted with us recently about improving the experience of managing a long-term disability policy for new mothers. In accordance with FMLA, women take advantage of long-term disability coverage when on maternity leave. Understanding how PTO, short-term disability, and long-term disabilities will interact while on leave is challenging, leaving women unclear about how much money they will receive and when. This is particularly suboptimal given the stresses associated with caring for an infant.

Many life insurance carriers are also releasing wellness apps to their policyholders. These apps help promote healthy living practices, while also providing life insurers valuable information about the health-related behaviors of its policyholders. These digital lifestyle benefits can increase preference and, in some cases, help carriers either reduce risk or more accurately underwrite it.

For Shrinking Risk Pools: Agent and Policyholder Self-Service

Many of the largest risk pools underwritten by the world’s insurance brands are shrinking precipitously due to a number of factors. For example:

• The number of preventable accidents such as home fires and car accidents are steadily declining, which is a good thing for all.
• Vehicle ownership continues to fall and will likely decline even more quickly as autonomous vehicle technology continues to advance and become mainstream.

In the face of decreasing demand and increasing commoditization (in part driven by aggregators), insurance carrier margins will continue to be squeezed. For these lines of business, digital innovation in the customer experience will drive success; user-friendly interfaces for agents and policyholders will become the difference between profitable and unprofitable insurance products. These interfaces will drive every aspect of the customer lifecycle, from awareness and initial research, to quoting, binding, claims processing, and finally renewal. For agencies in particular, it will become necessary to integrate the most common software packages to streamline workflows.  Agent and customer systems will need to “talk” to each other, so agents are not forced to copy and paste data between systems.

For Emerging Risk Pools: Streamline Distribution

While many traditional risk pools are declining, others are just emerging. These new risk pools offer opportunities for providers, but as the more nascent pools develop, they walk a fine line between a necessary offering and strain on financial resources. For example:

• Coverage for autonomous vehicles such as drones, which are being implemented in many industries. Energy companies, for example, are increasingly using drones to survey oil fields and, as a result, require coverage to protect against any damage drones may cause in the result of a crash.

The challenge in offering this type of new policy for carriers is the premium volume is still very low. To make the distribution model work, the effort undertaken by brokers to sell drone insurance must be minimized to the bare minimum of manual steps. There is simply not enough commission available in the deal for most commercial brokers to educate their policyholders on the policy, produce a quote, and generate and bind a policy without significant automation.  A native digital experience is a must to cover these growing, but still small risk pools in an efficient manner.

These strategies should help you achieve digital transformation of your customer experience, which is becoming increasingly essential today. Learn more about our work innovating digital customer experiences in the insurance industry.