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The Future of Insurance: A View From the Driver’s Seat
Check your rearview mirror. Who is back there? Look out of your windshield. Who is in front of you? Can you see yourself in the visor mirror? Who is staring back?
For two weeks now, we’ve been looking at our own insurance companies in the mirror, while at the same time we’ve been checking out the competition — those insurers who are in front of us and the ones who we can see chasing us in our rearview mirrors. It’s a scary spot to be in. It requires some strategic organizational introspection. We have to be brutally honest with ourselves. Do we have the right strategy, the right priorities and are we doing the right things to power our path to the future? To catch up with our conversation, check out last week’s blog or get the complete perspective in our latest thought-leadership report, The Future of Insurance: Future Leaders Setting the Bar in Meeting New Customer Demands and Products in a Multi-Channel World.
We have uncovered some incredibly optimistic insights found in Majesco’s four 2019 primary research surveys including the SMB, Consumer, Strategic Priorities and InsurTechs. But we’ve also uncovered some glaringly-obvious blind spots. Last week we shared that 46% of SMB buyers have used smart speakers in their business. How many insurers are offering services via smart speakers? Just 4% of insurers are currently using smart speakers as an engagement channel. Insurers who see the market implications are looking out the windshield, wishing they could catch up to the customers they are missing.
We should acknowledge at the outset that all insurers are not created equal. They all have their specialty products and their niche markets. But regardless of their focus, they all should be preparing for a future of insurance with very different risk needs and engagement expectations. For our analysis purposes, we were able to classify insurers within our surveys as Leaders, Followers, and Laggards, based on their level of preparation for the future of insurance. In our previous blogs, we highlighted many of the differences between these three groups. In this blog, however, we’ll see that in some areas, all three groups are similarly positioned and are somewhat behind important trends.
If we, as insurers, are in the driver’s seat, chasing competitors and customers, what else do we need to be doing to accelerate into the future, to catch customers and put competitors behind us? While we are sitting in the driver’s seat, let’s look at our real position against customer trends, technology trends and the growth of non-traditional competition.
“Peering” into the future
Peer-to- peer insurance digitally joins together people with similar insurance needs, who then pay into one insurance pool. Companies like Lemonade are charting the unexplored waters of social involvement insurance products that give back to charities and communities, while they are simultaneously riding a wave of strong interest in peer-to-peer models. The result may return some facets of insurance to its mutual past.
In our consumer and SMB research, we found year over year growth in social and peer-to-peer interest. Both joining or forming a group to share the costs of insurance premiums and small claims, and joining or forming a group of people with a similar unique insurance need to get specialized coverage at a more competitive rate are gaining in interest across all segments.
More importantly, all Buyer segments (consumer and SMB customers) outpace Sellers (insurers) by nearly 100% in their level of interest versus insurers’ level of preparation. The Buyers are ready for social and peer-to-peer offerings, but the Sellers are not. Insurers that can effectively serve individuals by helping them to form affinity groups with common interests, needs and access stand to gain a whole new market as peer-to-peer gains momentum.
Going “bigger” with value-added services
Customers are time-crunched. This negatively impacts insurers in a host of ways. As customers interact with businesses, they are continually asking, “Who can simplify my life?” But are insurers answering with, “We will do that”? Value-added services are an area of tremendous opportunity for insurers. They can help insurers expand their brand footprint while giving Buyers new options. In our surveys, all generations of Buyers share a high level of interest in purchasing or receiving additional services from Sellers (59%-67%) — just like Amazon keeps expanding what they can offer and now Uber with Uber Eats, simplifying customers’ lives. However, Sellers are not keeping pace planning or developing value-added offerings (23%-43%).
For Sellers, the interest in value-added services is an extremely positive sign and offers great market and growth opportunities. Those that choose to pursue business model changes that include more value-added services will be seeing more competitors in the rearview mirror — both traditional and new competitors.
Multi-Channel offerings to improve placement and speed
Every minute spent in the sales cycle is like sitting in a traffic jam for customers. They are looking for the nearest exit and normally, it’s just a short click or a voice message away. Many insurers don’t consider how multi-channel engagement isn’t just about placement, but it is also about speed in the sales cycle and keeping the customer on the brand highway.
The challenge for Sellers in creating the digital journey is that not all of the distribution channels they’re using rise to these new demands. In some cases, the distribution channel actually diminishes the speed and immediacy within the process. Digital technology, data and the social/mobile phenomenon can all be leveraged to connect insurers to prospects at the point of interest. They can also create more effective triggers that can reach customers and prospects at the right time and in the right context.
Unfortunately, the reliance of insurers, particularly Followers and Laggards, on the traditional agent channel, or on any one channel, creates a misalignment to Buyer expectations and inhibits progress to a multi-channel model that is critical in the future of insurance. Let Buyers buy and service the way they wish to buy and self-select the channel with which they feel most comfortable. This will still include agents and brokers as a vital channel. When insurers optimize their channel options and create a seamless journey, they become the driver for the customer’s ride — transporting the customer to the experiences they have chosen on their own, going at the pace they wish to go, buying with comfort and ease.
Innovative channels enhance the adventure
Just because multi-channel offerings are important, doesn’t mean that every channel is created equal. For a quick look at buyer channel usage, see page 8 in Majesco’s Future of Insurance report. Insurers need to look closely at the up-and-coming channels. Sellers that establish an ecosystem of partnerships and use new, innovative channels, will be taking advantage of current of Buyer needs, events and lifestyles. This is why innovative channels are so interesting and potentially game-changing if they are properly located along the path of Buyers’ journeys.
Insurer Leaders and InsurTechs are currently aligned to Buyers and are nearly 50% ahead of the rest of insurers when it comes to offering insurance through innovative channels, offering channel options such as marketplaces, embedding insurance in other businesses at the point of sale, integrating with comparison sites and direct distribution. Buyers are strongly open, for example, to using new products, services and business models at the point of purchase, where insurance is part of the transaction or embedded in the purchase. In particular, well over 50% of Gen Z and Millennials would purchase insurance via these options … with some nearing 70%.
All of these channel efforts, however, are linked to digital transformations. Majesco meets this need for insurers with our Digital1st InsuranceTM platform solutions that help insurers establish ecosystem connections and take advantage of opportunities for distribution partnerships.
Insurers can stay competitive with tech giants
Just as online players and retail giants upset the retail cart, insurance could be disrupted by “Tech Giants” jumping into the insurance market. What experience do these players (Amazon, Google, Apple, Netflix and others) provide that will lure customers away from your offerings and toward theirs? The list is long! Incumbent insurers should be concerned because over 50% of Gen Z and Millennial Buyers (consumers and SMBs) already have Amazon accounts. In addition to convenience, competitive prices and a huge variety of products, Amazon also accepts purchases via digital payment methods, which Buyers favor. Amazon’s strong brand and customer trust could make Amazon Insurance a highly attractive option for customers — especially Prime customers looking for a more valuable insurance offering. Could Uber, who provides Insurance to their drivers today, extend that to personal needs, particularly to help retain their most valued drivers?
From the driver’s seat, even though there are tech giants on the road ahead and tech giants on the road behind, insurers should stay focused on the customer. A connected, engaged customer is the key to staying in the driver’s seat. That may mean partnering with Amazon or Google channels or it may mean providing offerings that are far more compelling through other routes.
All roads lead to the future
While there are three paths to the future of insurance — modernize, optimize and create a new business — there is only one destination for the next generation of insurance leaders — a digital future. Insurance leaders must place their organizations on the road to modernization, optimization and the creation of new business models as quickly as possible. Digital transformation, though fraught with challenges, is far less risky than the alternative. Digital insurers will be rewarded with market opportunities and feel far less constrained by a limited set of product and service offerings.
Majesco is at the forefront of digital transformation for insurers. Our Majesco CloudInsurerTM , P&C Core, L&A and Group Core and Digital1st InsuranceTM platforms are exposing insurers to new markets, new products and new paths to growth. Join us next week as we look at Majesco’s forthcoming thought leadership report, The Future of Insurance: Optimization, Growth and Innovation.