Data strategy
Big Tech in insurance paving way for personalized pricing
Tesla, Google, Apple and Amazon have something in common – hitching a ride on the ‘insurance business’ train. Big Tech is disrupting the otherwise laid back insurance industry, forcing incumbents to up their game. The lack of physical ‘advisor - customer’ interactions (because of pandemic-related restrictions) has also furthered this move.
COVID-19 got people across the world to sit up and prioritize their insurance investments. The resulting information overload has customers appreciating in-person and personalized advice.
While the face-to-face distribution channels are not as accessible given social distancing norms, they seem to play a significant role in the distribution of insurance policies. In fact, new research shows a quarter of respondents prefer talking to an advisor, versus digital options when buying life insurance.
In the face of such dynamic change, the insurance industry is:
The hybrid model’s success however, comes from the advisor having access to powerful insights about customer behaviour, preferences, needs, etc and using technology to nudge the customer at an opportune time, freeing them from activities that don’t add value.
This empowers the advisors to focus on building trustworthy customer relationships – fundamental to the insurance industry’s success.
Insurers need to tap evolving customer needs and meet the rising demand for personalization. This can be done by setting up incubators and lab environments to foster product innovation, and strategic partnerships focused on designing differentiated offerings. Insurers will also be able to collect real-world responses to innovative offerings, improvising with agility.
These efforts will result in consumer-oriented programs. For example, Allstate Insurance, USA piloted their Milewise program that ensures a rapid response to improved driving habits, by correspondingly adjusting (drivers’) insurance rates every week.
For instance, UK’s Aviva Insurance and USA’s Liberty Mutual Insurance launched ‘skills’ - an app on Amazon’s Echo voice-activated device. Both insurance companies now benefit from access to new customers and a new brand experience for existing customers. Insights from such interactions also help advisors offer hyper-personalized solutions for customers.
Making use of available data — both structured and unstructured — can expedite underwriting and policy issuance. This boosts customer experience and therefore conversion. Additionally, technology-backed processing and first-time-right resolutions can eliminate the inconsistencies of manual processing.
For instance, Kyobo Life Insurance in Korea launched new AI-based underwriting platforms that employ machine learning technology to process large amounts of natural language data. We are also seeing more insurers leveraging technology like blockchain for risk assessment, and actively collaborating with diagnostic centers, financial regulatory bodies and more.
It also bodes well for insurers to empower their advisors with, and train them in the use of tech tools while also incorporating efficient remote engagement models.
For instance, user-friendly mobile digital platforms promote peer engagement amongst advisors, and if they were to leverage gamification tech, it would help advisors learn and retain relevant information much faster. Such platforms can also be set up for frequent feedback on new processes, efficiency of tools and customer experience.
Instead of thinking of technology and in-person interactions as mutually exclusive, insurance companies would do well to consider them complimentary. And, in the process, empower their advisors with state of the art technology to offer superior and personalized customer experiences.
We believe this symbiotic relationship between (the strengths of) tech and people will have valuable impact in areas like sales, product differentiation, long-term brand experience and the evolution of the insurance industry itself.
COVID-19 got people across the world to sit up and prioritize their insurance investments. The resulting information overload has customers appreciating in-person and personalized advice.
While the face-to-face distribution channels are not as accessible given social distancing norms, they seem to play a significant role in the distribution of insurance policies. In fact, new research shows a quarter of respondents prefer talking to an advisor, versus digital options when buying life insurance.
In the face of such dynamic change, the insurance industry is:
- Identifying novel ways to attract and retain customers
- Leveraging digital and emerging technology for business model innovation
- Strengthening customer relationships in spite of fewer avenues for face-to-face interactions
- Optimizing the value of face-to-face interactions
The hybrid sales experience
A hybrid sales experience offers customers the best of digital and human interactions. The self-service digital component gives customers access to relevant information anytime, anywhere. And, the human interaction with advisors allows for more complex discussions about the policy fine prints and costs.The hybrid model’s success however, comes from the advisor having access to powerful insights about customer behaviour, preferences, needs, etc and using technology to nudge the customer at an opportune time, freeing them from activities that don’t add value.
This empowers the advisors to focus on building trustworthy customer relationships – fundamental to the insurance industry’s success.
The hybrid sales advisor-support framework
Our framework demonstrates the value a tech-enabled advisory can offer. It identifies the four key areas that advisors seek support in from the insurers – product innovation, lead generation, business enablement and stakeholder engagement.
Product innovation and solutions
In the last 30 years, the insurance industry created, on average, less than five new product classes! The business models in today’s times are evolving to rely, much lesser, on physical assets to drive market value. Insurers have to quickly pivot to redefine their value propositions, remain market relevant and keep up with emerging trends.Insurers need to tap evolving customer needs and meet the rising demand for personalization. This can be done by setting up incubators and lab environments to foster product innovation, and strategic partnerships focused on designing differentiated offerings. Insurers will also be able to collect real-world responses to innovative offerings, improvising with agility.
These efforts will result in consumer-oriented programs. For example, Allstate Insurance, USA piloted their Milewise program that ensures a rapid response to improved driving habits, by correspondingly adjusting (drivers’) insurance rates every week.
Lead generation and nurturing
Last year, 30% of advisors told McKinsey that their biggest challenge was lead generation. Our recommendation is for insurance companies to explore non-traditional sources for leads, and prioritize them into specific nurture cadences.For instance, UK’s Aviva Insurance and USA’s Liberty Mutual Insurance launched ‘skills’ - an app on Amazon’s Echo voice-activated device. Both insurance companies now benefit from access to new customers and a new brand experience for existing customers. Insights from such interactions also help advisors offer hyper-personalized solutions for customers.
Business support and enablement
By leveraging tech-enabled underwriting and onboarding, insurers have the opportunity to create customer delight and long-term loyalty.Making use of available data — both structured and unstructured — can expedite underwriting and policy issuance. This boosts customer experience and therefore conversion. Additionally, technology-backed processing and first-time-right resolutions can eliminate the inconsistencies of manual processing.
For instance, Kyobo Life Insurance in Korea launched new AI-based underwriting platforms that employ machine learning technology to process large amounts of natural language data. We are also seeing more insurers leveraging technology like blockchain for risk assessment, and actively collaborating with diagnostic centers, financial regulatory bodies and more.
Virtual skilling and engagement
Implementing hybrid sales experiences requires a technology-led approach alongside a trust-based partnership between insurers and advisors. This calls for virtual skilling and stakeholder engagement to be key characteristics of the sales management process.It also bodes well for insurers to empower their advisors with, and train them in the use of tech tools while also incorporating efficient remote engagement models.
For instance, user-friendly mobile digital platforms promote peer engagement amongst advisors, and if they were to leverage gamification tech, it would help advisors learn and retain relevant information much faster. Such platforms can also be set up for frequent feedback on new processes, efficiency of tools and customer experience.
The way forward
Implementing successful digital transformation in a post-COVID future for insurance companies, centers on enabling hybrid experiences through the co-evolution of both technology and humans.Instead of thinking of technology and in-person interactions as mutually exclusive, insurance companies would do well to consider them complimentary. And, in the process, empower their advisors with state of the art technology to offer superior and personalized customer experiences.
We believe this symbiotic relationship between (the strengths of) tech and people will have valuable impact in areas like sales, product differentiation, long-term brand experience and the evolution of the insurance industry itself.
Disclaimer: The statements and opinions expressed in this article are those of the author(s) and do not necessarily reflect the positions of Thoughtworks.
