While the insurance industry as a whole has made some strides in deploying technology to achieve efficiencies, the area of employee benefits is underserved. Generally, employee benefits remain mired in traditional low- or legacy-tech ways of administering these all-important amenities, hindering the industry’s ability to create much-desired modern solutions and elevate experiences to levels we are all accustomed to across banking, ecommerce, entertainment and more. 

Employee-sponsored benefits such as health insurance and retirement plans  play an essential role in American life, yet they are hard to access and use. Just 9% of employees understand benefits terms like coinsurance; meanwhile, choosing the wrong health plan can be a $2,000 mistake. 

A recent Harris Poll consumer survey of 2,000 employed adults with employer-sponsored insurance benefits reported that nearly half the respondents cited frustration when using their insurance benefits because they are hard to understand. Meanwhile, two in five indicated they have received inaccurate bills, been unable to access care or been harmed to delays because of errors in their insurance coverage.

In an era when consumers expect a seamless experience across the board, insurance carriers must focus on elevating the customer experience to keep pace. This shift is forcing stakeholders to apply more “hands and heartbeats” to achieve that experience – when much of that work should be automated and streamlined, and personal touches could be better applied to functions that truly require and benefit from human intervention and care.

Sources of Resistance

Why is benefits lagging? In a single word: acquiescence.

The status quo is often the sector's biggest hurdle; accommodating a lack of technology and services with workarounds hinders the industry's ability to innovate. Paper-based systems and manual data entry dominate industry workflows, making it very challenging for benefits software, insurance carriers, brokers and employers to keep key employee information in sync.

Other barriers to digital transformation in the benefits industry include:

• Slowness in developing a connected industry mindset; data is typically thought of in silos
• A lack of a single group or person being accountable for improving outcomes
• General lack of awareness that technology serves data but that people should serve customers

Factor in the inherent difficulty of adapting older systems to receive a high volume of data while ensuring the integrity and cleanliness of that data, as well as managing security and privacy concerns, and you’ve got a significant amount of industry inertia to overcome.

See also: Digital Insurance 2.0: Benefits

Embracing a Tech-First Approach in Benefits

The opportunity lies in adopting  a tech-first approach to benefits design and delivery. Legacy manual approaches need to be contrasted with everyday processes like opening a bank account, applying for a mortgage online or moving money to/from a 401(k). There is a need to boost efficiency, replace antiquated processes and upgrade to more modern systems. In 2023, carriers continue to rely on paper, web portal entry, email, phone and electronic data interchange (EDI) for data exchange to support important functions of enrollment and member changes. This is unacceptable. 

Everyone across the industry is being asked to do more with less — while advancing the business. Sometimes, this means using fewer employees or deploying new technology to realize efficiencies. However, technology can be costly, as well. The ideal balance is to identify those areas where technology can be effectively implemented, such as handling the synchronization and validation of data. Doing so frees up “human hands” to focus on activities that create the experiences that drive net promoter scores, boost customer satisfaction and instill brand loyalty. 

Taking a tech-first approach that prioritizes modern data management will boost efficiency and help create enhanced, frictionless benefits experiences. These will include customized benefits options, a streamlined buying process and the deployment of people to the “human side” of the business. With a tech upgrade, the industry can do more with less and ultimately create better outcomes for all.

Customers expect great experiences, yet they’re often getting the opposite. According to Broadridge’s 2023 CX and Communications Consumer Insights report, only 11% of policyholders think their insurer is among the best in providing a good experience when compared with other companies they do business with.

Customer dissatisfaction can directly affect the bottom line. In fact, the majority of surveyed consumers (65%) have cut spending with companies that don’t meet their customer service expectations. What’s even more alarming is that the dissatisfaction trend continues: 69% of consumers indicated that most of the companies they do business with need to improve their customer experience (CX). That’s up from only 35% in 2019. 

There are steps you can take to improve your CX while controlling costs. But before doing so, it’s critical to understand two vital components to enhancing the customer experience: communicating with policyholders how they want, and then leveraging technology to deliver communications how and where they want them.

First and foremost: Keep things clear

Communications play a central role in overall customer experience. For instance, policy documents, premium invoices, claim notifications, policy updates and renewal reminders may collectively represent a policyholder’s most frequent points of interaction with an insurer.

Perhaps most importantly, communication affects a consumer’s perception of a company: About three in five consumers (61%) judge a company’s level of innovation based on the communications they send. Consumer feedback on the clarity of communications across industries indicated that insurers rated poorly, with more than a quarter of policyholders confused by communications from their carriers. 

Considering that more than two-thirds (69%) of consumers look elsewhere for similar products or services after just two to three poor experiences, you must ensure that policyholder communications are clear and have a modern design.

See also: Payoff From Great Customer Experience?

The role that digital can play for policyholders and insurers

Consumer appetite for digital communications has grown, but so have consumer standards. 

Only 41% of policyholders reported receiving paperless insurance communications, but a further 11% would prefer to. Many insurers would prefer that their paperless adoption rates get even higher than that. While some policyholders will always prefer to hold on to paper, we found that 82% of consumers would go paperless if they found the digital experience more engaging.

How can insurance companies provide more value to their policyholders? Eighty percent of consumers want companies to customize their experience based on what the company knows about them. Nearly a quarter would like an interactive summary of important billing or statement information directly within the emails sent to them, instead of being prompted to log in to company websites. 

These are just a few ways you can do more to harness the power of customer data. And, by leveraging technology to provide this level of customization, you can provide policyholders with the value they seek.

Customers want simple interactions

There’s work to be done in making insurance communications more useful. Ninety-two percent of consumers said it was important to have a simple way to interact with companies across all channels – with 57% considering it very important. Yet only 35% of consumers believe the companies they do business with are actually providing a simple way for them to engage across channels.

When asked to indicate what was most important in the print and digital communications they receive from companies, respondents had three simple requests:

• Use plain language
• Summarize important information
• Let customers choose how to receive communications

With these findings in mind, insurers may want to consider: 

• Using simplified language — a sixth-grade reading level is recommended
• Taking a policyholder-first approach to how communications are organized and presented
• Offering a good preference management tool for policyholders to set their communications preferences

In the words of one survey respondent, “Keep it simple, be honest, be informative and tell me the most important things first.”

Keep customer data a secret (but don't hide your security efforts)

Enhanced digital experiences and trust go hand in hand. Privacy and data security are top of mind with consumers, especially when they’re deciding whether they can trust a company. In fact, 42% said they stopped doing business with a company because of a hack that exposed consumer data. 

It’s not surprising that 62% of consumers agree that the use of digital identity security measures — like Face ID and PIN codes sent via email or text — would make them more likely to engage digitally with a company. Another survey respondent said companies should “provide more electronic security” to improve the experience. 

It’s vital for insurers to not only provide adequate data security, but to communicate about those measures to reassure customers. Almost a third of respondents said the most important feedback they’d give to companies is to be more open about how they protect consumer data and privacy. The more you can tout the steps you take to keep customer information safe, the likelier they are to hear you.

Look to the leaders

To get better at communications and CX, look at who’s doing it well. Insurers looking to elevate their CX may want to consider what banks and credit card companies are doing. Specifically, survey respondents said that these industries: 

• Make it easy to navigate account details online (43%)
• Communicate clearly (43%)
• Make it easy to talk to a real person (41%)
• Send notifications when there’s something important to look at (34%)
• Allow customers to select how they want to receive communications (25%)

You don’t have to reinvent how you communicate with your policyholders. Instead, consider how these best practices would fit within your organization. Much, if not all, of the top-scoring traits are replicable across industries. Mutualized solutions can help here: They allow you to free time and resources while providing you with market-leading tools to make your communications ecosystem run more efficiently, leading to the ability to create better experiences.

See also: 'It’s the Customer Experience, Stupid'

Takeaways for insurers looking to elevate their CX

Taking these steps can be a win/win for insurers and policyholders alike. For instance, leveraging technology to streamline processes through automated solutions can make an insurer more efficient, while improving the policyholder’s CX. And the Broadridge survey indicated that insurers don’t have to shoulder the financial burden alone. In fact, 44% of consumers indicated their willingness to spend more to receive a better customer experience and service. 

Carriers can also turn to outside vendors to help create the solutions that both insurers and policyholders need. Outsourcing this function can help them gain economies of scale, workflow efficiencies and cost reductions — while leveraging the latest technologies to enhance CX.

Insurers that take the right steps today to provide a better customer experience will benefit from enhanced policyholder loyalty — and the resultant higher persistency rates, which are key in today’s challenging economic climate.

Deloitte's just-released, annual survey on corporate travel included a startling statistic: Although major companies worldwide expect workers to continue to return to the office, they aren't expecting anything like the old normal. The survey of 334 travel managers and other executives with control over travel budgets predicts that work-from-home will decline sharply from the 3.9 days a week during the pandemic to 2.2 -- but that would still be more than three times the pre-pandemic work-from-home pace of 0.7 day per week.

That number gets to a question we've all been wrestling with since the start of the pandemic: What will the new normal look like at work? 

Much has been written about how the pandemic forced every industry, including insurance, to radically accelerate digitization, and I don't think there's any turning back. Customers appreciate the access to self-service at all hours of the day or night, on weekends as well as weekdays, and they appreciate the efficiency and speed that digital processes can provide. 

But what does that mean for how insurance will be sold? Agents and brokers have turned back all the talk of disintermediation and firmly established their role in the process, but will we now head back to all the face-to-face meetings that were de rigueur in the "pre world," before COVID? 

Snejina Zacharia, founder and CEO of Insurify, thinks not. 

In this month's interview, she argues that agent-customer interactions will increasingly migrate to the phone, supported by a thoroughly digital back end, and that face-to-face is done. She certainly has a bias here: Digitization has been the Insurify playbook since it opened for business in 2016, and its agents all work remotely. But the world will keep moving in Insurify's direction as we all become more digital, not less, so I suggest that it's worth hearing her out.

P.S. Here are the six articles I'd like to highlight this month for agents and brokers:

DON'T SETTLE FOR BEING A TRUSTED ADVISER

You're better offer being a decision coach, helping clients make better choices themselves rather than following a plan you, the adviser, lays out. 

DIGITIZATION AND ENABLEMENT OF AGENTS

Disintermediation didn't happen. Agents won. Still, agents who fail to adapt will have their lunch eaten by agents who do.

THE VALUE OF INDEPENDENT AGENTS

Savvy insurtechs are recognizing that agents and brokers are a dynamic part of the market ecosystem--but there's still considerable room to improve.

HOW TO PREVENT AGENT GAMING

Despite the severity of the problem, agent gaming has been difficult to detect and mitigate. Fortunately, insurers have new technology that can help them.

IS MY ORGANIZATION ACTUALLY INNOVATIVE?

The best place to look for innovation is in the quality of decisions being made. Here are three ways you should evaluate your performance.

INSURTECH: NOT DEAD BUT DIFFERENT

Some insurtechs will struggle, and there will struggle, and there will even be some fatalities, but most are making the necessary adjustments and operating successfully.

ITL:

I’d ultimately like to get your thinking on how digital insurance sales can become and how much face-to-face interaction customers will want. I’m also curious about your thoughts on the role of comparison sites, given your recent acquisition of Compare.com. But I’ll ask you to start us off by telling us a bit about the Insurify journey.

Snejina Zacharia:

Insurify started in 2016, with the mission to demystify insurance in the U.S. and make it super easy for anyone to search, compare and buy insurance in one place. We built the platform with all the intelligence and technology in place to provide the best matching of consumers with carriers based on their risk profiles and appetite and to let customers do online, digitally, what they would do with an agent on the phone.

We are set up as a full-service insurance agency, and our mission is to be the preeminent and most trusted virtual insurance agent in the industry. I really hope that, at some point, we drop the “virtual” part because I believe we are building the future of insurance agencies in America. We are very much an agency at our core. We just happen to be exceptionally data-driven and technology-driven.

ITL:

While lots of people talked about disintermediation in the early days of insurtech, that talk has gone away. How has your thinking evolved about the need for human agents?

Zacharia:

We don't force people into experiences. We enable the types of experience that they prefer. If a customer is interested in doing everything fully digitally, then it's our job to make that experience as quick and easy and intuitive and data-driven as we possibly can. However, I also believe in the power of human agents and of building relationships.  There is a segment of users that will always prefer to have that personal touch with a human agent, so we have a full-service agency. They all work from home, which lets us grow at the fastest rate and look for the best agents with the greatest expertise without the limitations of a specific location.

So, if you ask how I think about the future of agencies, I think that, number one, they're all going to be very digitally savvy. They will all provide tools that allow for users to do a certain level of self-service to the extent that they're comfortable digitally.

Then there will be the hybrid model, where people can do part of the work online, then continue with a personal experience. Or they can just do it all on their phone.

The one piece I am skeptical about concerns face-to-face interaction. Video, yes, but maybe not face-to-face. I think people are very, very busy. They value their time. So, the more we can automate that agent experience, the better for the agent and the better for the user.

What we have focused on is making sure the work of the agents is not order-taking but value creation. We want, whether by using prefilled data or other methods, to make buying a policy take minutes, not a half-hour or an hour on the phone.

ITL:

What is your geographic footprint, and where do you see yourself going from here?

Zacharia:

We are about 150 people. About 40% of us are in Boston. We have a large concentration in Richmond. We have some concentration in Seattle. And we have the Bulgarian hub, as well.

ITL:

I find it interesting that you think face-to-face is maybe never going to be necessary. That certainly is my preference. The more I can do on my own, the better. More generally, what would you describe as your vision for agencies, say, five years out?

Zacharia:

I believe the industry will continue to grow organically, but there will also be a lot of consolidation. Compare is the first company we've acquired, but we are definitely looking at making more acquisitions in the next few years.

For us, our goal is to have all types of insurance policies in the U.S. that could be served and purchased through Insurify. Today, we are mostly P&C. We also have a life insurance comparison product, which is doing great, but our vision is really to be in all personal lines and including some small business commercial in five years.

We will be looking also to potentially evaluate internationalization opportunities. We are super excited to bring on the Compare team, which is a pioneer in comparison shopping, and also Admiral as a board member. Admiral has extensive experience building out international businesses like Insurify across different countries.

With optimization of AI and generative AI, I think there will be more tools available to companies like Insurify that are a little bit more technologically advanced, to optimize the user experience for purchasing across a plethora of different insurance products.

ITL:

Thanks, Snejina.

About Snejina Zacharia

Founder and CEO of Insurify Snejina Zacharia has over 18 years of experience in entrepreneurship with consumer internet and enterprise software companies. Previously, Snejina was at Gartner where she established and grew three lines of business, each with millions of dollars of annual revenue across the USA and Europe, the Middle East, and Africa. Before that, Snejina led Sales and Marketing at different technology start ups from mobile web messaging to CRM systems in the financial industry. Snejina holds an MBA from MIT Sloan School of Management.

Introduction: Transforming insurance sales

Transformation of sales in this digital era has come slower in the insurance industry than in other industries. Significant financial benefits brought by digital transformation remains to be seen. Online to Offline (“O2O”) distribution strategy enables insurance companies to transform traditional agency, and massively improves the agent’s productivity.

O2O here means leads generated online are assigned to insurance agents, who in turn close the sales over offline meetings. This distribution method combines the best of both world - data analytics in the online world and human touch in the offline world to build the trust which is most needed for life insurance products.

The success of the O2O distribution strategy has 4 key factors:

• A diversified lead partner ecosystem which is a source of quality leads.
• A lead management platform which funnels the leads to the insurance agents.
• Data insights for better customer experience and maximize conversions.
• A specialised O2O agency to nurture and close the leads.

There are many use cases of this model especially with different lead sourcing partner. One interesting use case is with virtual bank/digital bank. There are more virtual banks/digital banks around the world which have no physical presence, and only present in the digital world. The O2O model fits well and is a transformed way of bancassurance. Another use case is with insurtech and insurance companies can benefit from their capability to penetrate specific segment and to innovate on the customer journey, servicing and products. I believe the O2O distribution strategy will become another mainstream distribution channel in the near future.

O2O Four Major Pillars

1. O2O sourcing ecosystem for effective lead generation

Lead sourcing can come from many different sources: social media platform, different loyalty platform, online shops, forum, inforce customers from other lines of business (e.g. corporate business, general insurance business), companies from other industry. The best way is to develop a lead partner ecosystem, where it includes companies from different industries (not just those related to the financial industry, but also some retail brands). It can be win-win as the insurance offer can either be drawing more traffic to the company or the gift is product / voucher from that company. Especially as an insurance company, we have both life and general insurance to offer, and general insurance can be more easily be embedded into customer journey of our partner, while life insurance has more budget to support the campaign. On this lead partner ecosystem, we can analyze different customer footprints not just on financial aspects, but also lifestyles, family, personal traits, etc. All these information is valuable inputs into the lead generation platform which can ultimately improve the conversion ratio.

Next, the lead quantity and lead quality are almost like an art. How to strike a balance between lead quantity and lead quality can only be achieved through multiple tests. End-to-end conversion tracking and reasons of success and failure are important to evaluate for each campaign. All such analysis can drive to improvements in lead generation. For different customer segments and different types of insurance products, we have to do a lot of A/B testings to see which one works better. What is A/B testing? For example, we test two different advertisement messages on the same customer segment, or we test same advertisement message on different customer segments. Different customer segments can react very differently to different messages. We have a savings product, and our key message is breakeven as early as Year 6, and your policy value doubles every 10 years. We found the advertisement is not very effective, so we did one A/B testing, one message is on the product key edge on breakeven year and its return, and the other message is plan your retirement, with a visual with one man eating burger and one man drinking wines. The new advertisement on retirement message works much better. Of course, it is not true for every customer segment.

2. O2O lead management platform from lead to sales

Golden rule in contacting your customers is to contact him/her within the first few minutes he/she shows the interests. As a result, a lead management platform is almost essential for the O2O model. Leads with clear identification of the lead source, campaign details, customer digital footprint and customer contact information are instantly feed to different agents to follow up. Each agent is equipped with an app so they are instantly notified upon assignment. Any follow up action or notes by the agents can also be registered for each lead. Call reminders will automatically setup in case the agent has not called the customer.

One point to note on the platform design is to have the least manual tracking as possible by the agent. Otherwise, you will face the problems of either not enough data points, or fake data points. Try to automate the tracking as much as possible. In our case, our lead management system is connected to sales quotation system, premium payment gateway, and core administration system, hence, when the agents act on other platform, the activity will trigger lead status changes on the lead management system. Apart from the objective indicator to estimate the actual pipleines, we are also working on adding subjective indicator for the agents to rate each lead. All the high potential leads will then be closely followed up by the sales manager

With all the different agent activities collected on the platform, dashboard of conversions by campaigns, by agents, by customer segments, by products, by lead source, etc can be prepared.

3. O2O data insights for best customer experience and maximize conversion

With a diversed lead partner ecosystem and a lead management platform, you can gather a lot of data. All such data, such as campaign, customer, agent, product can help us to further optimize the results. Testings in changes in the assignment rule is much harder to achieve as there are so many factors affecting the conversion. Especially this time, it involves two humans in the process – the customer and the agent. It is expected to observe a longer time to really understand what assignment rule can drive a higher conversion. It will be easier to start with a general industry rule engine with Artificial Intelligence, and throughout learning of different agent behavior, slowly fine tune the rule engine to test if that improves the conversion results. This engine helps on the agent assignment, appointment timeslot setting (the best time to connect based on the customer behavior), product that may be of interest to different customer segments, scipts that can more easily resonance with the customer, etc. With these insights, when the agent calls the customer, he/she will be more prepared and also with a script which is more tailored to the customer (this can be based on customer’s digital footprints or predicted persona based on the Artificial Intelligence model). From the customer perspective, there is less drop off during the customer journey as the script will make the customer feeling more understood and as a result, easier to build the trust. All these not just result in higher conversion ratio, but also improve the customer experience on the first contact with our agents.

4. O2O agency management to optimize lead nurturing and conversion

Our agency model is a specialized one to only work on O2O leads assigned by the Company to the agents. The compensation model includes fixed monthly salary with variable allowances. We also set high standards when recruiting agents. They must be experienced with good productivity in the past. We have to ensure our leads are passed to experienced agents who can convert them. Then these agents are trained on the O2O model starting with first phone call with a customer. So far, most of our insurance agents are earning much more than they were in their previous insurance companies due to increased productivity. Our average productivity by agent is also a lot higher than the average in the industry.

When a lead is passed to an agent, the objective of the first call is to build trust with the customer and fact-find to understand customer needs. Usually, this nurturing time will vary tremendously by lead source and the lead management platform is a tool to ensure discipline in agency to keep nurturing potential leads.

One should not just rely solely on the agent to nurture the leads. Usually the agent will be tempted to only focus on leads that are ready-buyer and can be closed within short period of time. Lower quality leads will easily be put away with low attention. It is not that easy to have a constant flow of ready-buyer leads. Hence, how to ensure agent is giving enough attention to those lower quality leads, which require them to constantly invest time for nurturing such leads, becomes essential. The lead management system needs to be equipped with management capability such that agent behaviour can be closely monitored. Apart from monitoring, the Company can also help the agents to nurture the leads by different ways, for example: insurance education email, product promotions offer, offline events to ensure the customers remain engaged. Since we have also gathered different customer insights on our data collection, different nurturing tactics should be targeted to different customer segments.

Next is to sell an insurance policy. With all the previous efforts, conversion rates can be improved, and the case size of the policy can be maximized. With proper fact finding, the agent may be able to close more than 1 policy – either different products to serve the customer different insurance needs, or products to serve not just the customer needs, but also his family members’ needs. Some other steps which are important in this phase is referral. With the trust built and a good product, customer will be willing to introduce to their friends. Word of mouth is crucial and the conversion rate on such referees are high.

Any drop off along the lead progressing will be analysed to understand the pain points and look for improvements. Drop off reasons should be clearly marked by the agents, and customer survey should be considered to get customer feedbacks at different touchpoints.

O2O Three Key Enablers

1. Consistency in message across all customer touchpoints

There must be consistent message when the lead customer is moved from online to offline. Otherwise, it has no difference from a cold call. That’s why customer digital footpints before the lead is assigned to an agent is crucial information, and suggested scripts from the lead management platform tailored to the specific scenario is also helpful for a smooth transition from online to offline. For example, the first call scripts to a lead coming from a product push message, or a more lifestyle message related to retirement, or purely a bargain offer can differ a lot. As mentioned before, there will also be lead nurturing by the Company. Again, the message, tone and style should be consistent. All these subsequent touchpoints will create a consistent impression and help the agents in closing the sales.

2. Personalised and timely customer offer

Offering the right product at the right time to the right customer can be done through data analysis. Sometimes, just hearing from our customers is not enough. No one customer will tell you they need an iPhone until iPhone is developed and sold well. We have to study customer behaviour to understand their motives behind and then we can start the prediction. Lead generation is the same, blasting to everyone without any targeting is not going to be effective. We have tested premium voucher as one of the customer offers. Initially, we use this as one of the hook for lead generation, however, conversion is close to zero. Later, we tried at touchpoints which are later at the lead progressing journey, and the conversion is significantly improved.

3. Embedded Insurance

Embedded insurance is an excellent way for lead generations. Through embedded simple general insurance products along different user journey of our lead partner, we naturally gather customers of similar attributes or with common topics. The seamless experience brought by the embedded insurance can also help to strengthen the brand image of the insurer. The general insurance products help insurer to increase the touchpoints with the customers, which in turn increase the opportunities of further upsell of higher revenue life insurance products by the insurance agents under the O2O model.

With the different data insights collected, this can drive product innovation in the company, and the embedded insurance is the best way to get non-financial industries to be interested in collaborations with an insurance company. The data insights collected by an insurance company can also be beneficial for product development in those non-financial companies too.

Case Study

1. Virtual Banks

One of the use cases for the O2O distribution model is bancassurance with virtual banks.

Normally, in traditional banks, they have physical branches, and many customers walk into these physical branches for different bank facilities and there are sales staff in the bank branches to sell investment and insurance products. As the bank sales staff has all the customers’ wealth information, banking habits, etc, introducing the right product to the customer during the bank branch visit is one of the key success factors. Besides, customer’s trust in banks is also key for the success in bancassurance. With all the customer data, banks can also have detailed customer segmentation and conduct outbound calls to high potential customers.

The picture becomes very different when it comes to virtual banks. In Hong Kong, virtual banks cannot have physical branches, and as they are very new (the longest one has only passed its 2nd anniversary recently), they only have a small share of wallet for the deposits or loan products. Their customer view is not conclusive for the customer wealth or banking habits. Hence, bancassurance with virtual banks can no longer follow the traditional way. Either go fully digital and sell some simple insurance products or go O2O. When go O2O, customer analytics on the virtual bank customers become a combination of those under traditional banks, and social media platform. Financial data of the customer is not comprehensive enough to draw a conclusion, so it has to be combined with different behaviour statistics or to attract customers of different personas by different campaigns. For example, customer purchase behaviour, app browsing pattern, take-up of other bank products including loans or time deposits, etc. These customers can then be passed to the O2O funnel and be followed up by insurance agents. As both the virtual bank and insurance company are in the financial services industry, the digital engagement between the two companies can be even more integrated. The O2O process should not just end there when the online lead from a virtual bank is passed to an insurance agents. There should be constant re-engagement by the virtual bank at different stages of the lead progressing. For example, when the face-to-face meeting appointment is arranged, the appointment details and agent profile can be shown on the virtual bank app and appointment reminders can be pushed to customer. When the agent is not able to close the case despite multiple attempts, share of voice of relevant insurance advertisements / push notifications / relevant promotions can be increased for that particular customer, and a relevant customer offer can be pushed to him/her to create some urgency. The O2O model will be a more digitally integrated one.

The advantages of working with a virtual bank instead of other lead source partners are: 1. Inherit the trusts of clients on virtual bank to insurance sales; 2. Combine related bank products with similar insurance product (e.g. savings plan with time deposits, tax benefit annuity plans with tax loan).

There will also be new conflicts to manage. In traditional bancassurance, the sales staff are the bank employees and under direct control and management by the banks. So usually, the stress point is at the insurance product and product promotions. However, for the O2O model with virtual banks, the sales staff are the insurance agents in the insurance companies. The stress point is at the agent quality, agent conversion and agent management. Hence, a lead management platform with data analysis and pipeline & activity management capability is important. A long-term win-win strategic partnership with transparency between the two companies is key to make this work.

2. Insurtech

The other use case is partnership with Insurtech. By partnering with them, it helps insurance companies to excel in product innovations and customer experiences. We choose to start the journey in general insurance as the regulation is less heavy and there are more rooms to innovate. Each time, we identify a specific segment, create a community and then understand their concerned risks, and design a product to address that risk. For example, we identify runners as a group of customers and then we design a microinsurance for them that talk the same language, where the premium unit is per KM.

General insurance also has the benefits of increased touchpoints, especially at time of claims. Claims moment is one of the key moments that affect future life upsell. By partnering with Insurtech, we can also provide a more streamlined claim process. The whole experience starting from insurance purchase, activiating on-the-go insurance coverage with different gamifications, and claims experience give customers a fresh image of insurance.

The data that we collect through providing coverage for microinsurance (e.g. sports habits, health data) provides additional customer insights for any personalized insurance offering or simplified underwriting offer. We can then combine the right message at the right time to selected customers in the community. As customers in each community share common interests, it is easier for promotion message to talk the same language and pitch at the angles that suit these customers.

Conclusions

Traditionally, insurance sales have been dominated by agency, bancassurance and brokers. Digital channel has recently started but was still small in terms of market share. The Online to Offline distribution strategy has combined the edges of digital channel and agency and the use cases of this model are immense across retail shops, online forums, insurtechs and virtual banks. O2O model is an effective way that leverage the data insights to create new customer experience that results in high customer satisfaction and insurance sales.

This article was originally published by the International Insurance Society and RGA 

Diversity, equity and inclusion (DEI) has been a point of emphasis in the corporate world, including insurance, for years now, but we still have a very long way to go. As a for-instance: Just six of the CEOs of Fortune 500 companies in 2022 were Black. Only 53 were women -- and that's actually a record high, marking the first time women have occupied more than 10% of the top spots. To understand more about how far we've come and how far we have to go, ITL Editor-in-Chief Paul Carroll posed some questions to Amy Cole-Smith, Director of Diversity at The Institutes.

ITL: 

DEI, at least in my mind, traces its roots at least back to the 1960s but has been picking up steam over the past decade-plus in the business world as companies hold themselves more accountable and report on their progress. How are we doing? How much progress has been made? 

Amy Cole-Smith:

I believe that the early stages of DEI can be traced back a little bit further, to the 1940s, with President Roosevelt’s executive order that banned discrimination based on race, color and national origin within the federal government. With that being said, I do believe that a lot of progress has been made, but we could still be a bit further along than we currently are. In 2023, it is strange to me that we are still experiencing “firsts” such as the first woman to achieve a goal or the first African American to become a CEO of a company that has been around for 100 years.

ITL:

How much further do you think we have to go, and can we get there in the next decade or so? 

Cole-Smith:

We do have quite a ways to go, but I think that the situation can only get better in time. It's refreshing to see potential and current employees, as well as younger generations, hold a lot of these businesses accountable when they claim that DEI is a part of their core and current strategy. Hopefully, this accountability can bring about major change to current policies and practices within the next decade or so.

ITL:

How is the insurance world doing, in comparison with the rest of the corporate world? 

Cole-Smith:

I’ve only been in the insurance world for 1 1/2 years, but from what I have seen so far, the industry seems to really see the importance of DEI. The industry has acknowledged the huge talent gap, and to see the industry working to get more diverse talent into the seats is refreshing. While getting the talent in the seats is important, we must also remember the importance of representation at the top. It's always good to see someone who looks like you at the top, as I believe that aids in retention; specifically with diverse talent.

ITL:

As someone who's covered business for a long time and seen how slim a difference there can be between success and failure for a product or service, I've thought it obvious that there are great benefits to be had from introducing a wide variety of perspectives into decision making. But I wonder if you could offer a few examples from your experience that would illustrate the benefits. 

Cole-Smith:

I believe that having a diverse perspective has so many benefits. It allows one to think about matters from the eyes and experiences of someone else. One example that comes to mind was at a past position where my team and I were deciding on colors for a new logo. Once we finalized our decision, we were all set to go with our design, and our internal/external stakeholders were onboard. Then a colleague, who wasn’t on the design team, pulled me aside and suggested that we do a test run with a group who were colorblind. I honestly would have never thought of the idea had she not said anything. Due to her efforts, we ended up changing the color scheme for the logos so that it would be more colorblind-friendly.

ITL:

What a great example.

Thanks, Amy.

The collective wisdom in sales coaching recommends that agents aim to be their client’s “trusted adviser.” Timothy Gallwey, the famous peak performance coach, contends that there’s a more effective role for salespeople to play.  He says agents are more likely to succeed by being their client’s “decision coaches.”

Just as sports performance or acting performance can benefit from coaching, so can a client’s decision-performance. A client’s decision process is “inner.” It happens inside the client between their ears. It’s ultimately this decision-process that determines if the salesperson gets the sale. That well-known saying in sales coaching, “the goal of selling is buying,” is very true. Agents won’t get a sale unless their client decides first that the agent will be getting the sale. 

Coaching is about increasing a client’s self-empowerment. Decision coaching empowers clients to achieve their full decision-making potential. Coaches help clients get in touch with their own ability to find solutions.

Advising, on the other hand, isn’t dependent on a client’s ability to find solutions. The adviser proposes the solution. The adviser becomes solely responsible for the quality of whatever solution they proposed.

This big responsibility comes with potential pitfalls. Advisers often make the mistake of thinking that a solution that would work out well for themselves should also work out well for their client. When an agent generalizes this way, it could be  a mistake. Clients may not share the same set of beliefs and values as the adviser.

A coaching approach invites clients to get in touch with their own beliefs and values. These beliefs and values become an integral part of the purchasing decision. This is, in fact, crucial for insurance-related decisions, because insurance decisions require that clients buy in to a commitment that may keep their policy in force for many decades.

Securing client buy-in is also important for policies that can also be used as savings instruments. Each month, a client needs to decide how much they will contribute toward savings. An agent won’t be present at that time to advise the client about what to contribute. A coaching approach taps into the client’s own personal convictions about what they want for themselves. This results in a more sustainable buying decision. A coaching approach ensures that a policy’s usefulness is more likely to be optimized by the client.

Decision coaching requires agents to gain an understanding about their client’s relationship with themselves. For example, a decision coach may need to determine their client’s degree of self-confidence with making financial decisions. A client harboring self-doubt could make an inappropriately conservative decision. 

See also: 3 Key Themes for Check-ins With Clients

It may seem like decision coaching would require more effort from agents. Advising clients about what they should do seems easier and more direct. However, the extra effort involved in decision coaching comes with advantages that could save agents time in the long run.

Decision coaching is a powerful rapport builder. Clients appreciate when agents take the time to learn where they’re coming from. Clients also appreciate when agents invite them to take charge of their own finances. If you were an insurance client, wouldn’t you prefer an agent who helped you feel more empowered to discover what’s best for you?

In contrast, taking an agent’s advice relies upon clients feeling disempowered enough to take the agent’s advice over their own instincts. Empowering clients to discover new capabilities is one of the most powerful ways an agent can offer value. It’s the gift that keeps on giving beyond the agent’s visit.

Agents who think a client trusted them enough to take their advice are missing the full picture. Clients don’t trust agents unless they first trust their own ability to decide if they can trust their agent. In other words, to be a trusted adviser, the agent still must rely on some coaching. Customers need to feel empowered enough to decide if they can take the agent’s advice. To succeed at trusted advising, an agent will need to apply some decision coaching skills.

Agents seeking their client’s trust will be more successful by also recognizing the importance of their clients’ self-trust. Facilitating self-trust for better decision performance is a hallmark of coaching. That decision the client is making could be about purchasing a policy. That decision could also be about how much they can trust their agent. Agents who gain coaching skills are better equipped to serve their clients as well as themselves.

The announcement that Lyft's founders are leaving the company spurred Wired to say it "signaled the end of the gig economy dream," and I think Wired is right.

The luster has been dulling for a good couple of years now, and it's probably time to reset our thinking. Gig work will still exist. It just won't rewrite the rules of the economy. We won't have a gig economy. We'll have the same old economy, just with more gigs available in it. 

That reset will have implications both for how insurers organize their own work and for what they insure.

The Wired article focuses largely on the "dream" part of the "gig economy dream." It talks about the good vibes that the founders wanted to create when they "recruited anyone with a license, a vehicle and a willingness to affix a pink fuzzy mustache to their car and greet strangers with a fist bump, welcoming passengers into their front seats." The article also describes how the founders wanted to reinvent urban planning by removing the need for "too many parking lots taking up space that could become parks or playgrounds or housing" and hoped to "help many people escape the tyranny of car ownership by letting them use other peoples’ vehicles occasionally instead." The article laments the dashing of those dreams in favor of a new CEO who is solely focused on "the realities of turning a failing enterprise around."

But the article also notes that "we are still learning about the complicated effects of decoupling service work from benefits like health care and sick pay" and, in general, tees up what I think should be broader concerns about the gig economy itself--not just the dreams it was supposed to enable.

Uber and Lyft certainly captured our collective imagination as exemplars of what the gig economy could be, and back when interest rates were essentially zero, they could raise all the money they wanted and just throw it at problems. But economic reality has a way of setting in, and it has. 

When two colleagues and I did some consulting work five years ago for a major company trying to understand how autonomous vehicles might fit into the ride-sharing market, one of the scenarios we laid out for them had Uber and Lyft going bankrupt by now. An executive at the client had dismissed the companies as being great "for people who don't understand depreciation," so we laid out what might happen when drivers had to face up to the wear and tear they were causing for their vehicles, rather than just looking primarily at what they were paying for gasoline.

We saw that there could be other problems, too. Startups tend to begin with a "land grab." In the case of Uber and Lyft, that meant lining up as many drivers and customers as possible, as fast as possible. But startups have to move beyond the land grab phase to become real businesses, so Uber and Lyft were always going to start taking a heavier cut of the fares and begin raising those fares. That would mean fewer people deciding to spend their time driving, as well as more people deciding to find other means of transportation or just staying put. 

It wasn't clear — at least to my two colleagues and me five years ago — where the equilibrium would be, but it was always clear that the luster would dim. (I wrote at length about the arc for e-commerce startups back in January, in case you're interested in reading more.) While there is still considerable uncertainty about just what the future holds for ride-sharing, especially with autonomous vehicles on the horizon, anecdotal evidence is mounting that ride-sharing will matter much more for those needing to summon a ride somewhere off the beaten path rather than becoming a dominant form of transportation. 

I did my own little test a few weeks ago when I landed at Washington National Airport. While I had reflexively reached for my Uber app, I went to the cab line and saw that a taxi to Georgetown would likely cost me slightly less than the fare I was being quoted by Uber — and sure enough, it did, for a car that was right there rather than for one that would arrive in seven minutes. 

This is the normal course not just for visionary startups but for big ideas. Remember the fuss about crowdsourcing, crystallized in a 2004 book by James Surowiecki? The book was certainly thought-provoking, but the notion is now relegated to niches. Even the political prediction markets that were all the rage have turned out to be interesting but not overly reliable. How about the notion that customer reviews would provide piercing feedback on products and companies? There's certainly some utility, but so many fake reviews get posted that you have to be careful if you're going to glean useful information from Amazon, Yelp, Glassdoor, etc. Or, how about wikinomics, popularized by Don Tapscott in a 2006 book with the grand subtitle, "How Mass Collaboration Changes Everything"? That idea just never played out. Instead of having the great minds of the world collaborating on pharmaceutical breakthroughs, we have low-level gigs being offered on Craigslist or via Amazon's Mechanical Turk, which an academic study in 2018 found pays $1 to $6 an hour. 

So, where does the gig economy go from here?

The key issue that doomed wikinomics and that insurers need to consider as they think about incorporating gig work into their businesses boils down to transaction costs, the expenses incurred when buying or selling a product or service. 

That notion takes me back to the late 1990s, when, in the first flush of the internet boom, tech evangelists talked about how it would eliminate transaction costs and break down the walls erected by major corporations. Companies, the thinking went, would increasingly be organized like major films in Hollywood. A group of talented people would get together for a time, work on a project and then head off to work with others on different projects. 

It happened that I had a connection with Ronald Coase, who had come up with the notion of transaction costs in a 1937 article, "The Nature of the Firm," that eventually led to his being awarded the Nobel Prize in Economics, so I decided to go to the source and ask what he thought. Coase was in his late 80s at the time but was tuned in to the potential of the internet. (He lived to 102.) He agreed that the internet should slash transaction costs and said that some $2 trillion of expense in the U.S. economy could be targeted (giving me my headline for the magazine, Context, that I edited at the time). But he also cautioned that "one man's transaction cost is another man's revenue." In other words, those being targeted weren't just going to roll over. 

Coase's breakthrough idea in "The Nature of the Firm" was that the size of a company depends on an equilibrium based on transaction costs. For instance, it might seem to be more efficient to have few or no permanent lawyers on staff, but if you have to hire them on a per-project basis, you run into transaction costs. You have to vet your prospects. You may have to wait a bit until the right ones become available. You have to bring them up to speed. You have to allow for some misfires. And so on. So the size of your internal legal department depends on a comparison between the cost and utility of having people you know quickly available and the cost and utility of relying on external resources. And that same sort of calculation affects every part of every business. That's why wikinomics didn't work: Coordinating resources on complex projects was just too slow, too complicated, too expensive.

Insurers already have considerable experience coordinating with outside resources, especially with agents but also with adjusters hired on a contract basis, with underwriters at MGAs, with third-party administrators and so on. Insurers are also increasingly using technology to deal with customers directly in ways that used to require an employee or a gig worker — for instance, having customers take their own pictures of the damage to their car after an accident or having them do a guided walk through their home in lieu of a traditional home inspection.

So, I think insurers are already pretty well-positioned for where the gig phenomenon will end up. They don't need to consider reinventing their businesses. They just need to focus on using technology and lots and lots of discipline to continually become more efficient about coordinating all the resources that go into a sale, into underwriting or into handling a claim.

Keep chasing away those transaction costs.

Where insurers might want to do some rethinking is in terms of how much they're gearing up to handle the risks of a gig economy that won't materialize. Lots of auto insurers have been innovating to cover ride-share drivers, but I don't think that market will be as big as many have projected. Yes, loads of writers and software programmers will continue to freelance from home, but, in general, the movement is back toward the office. Companies would love to dodge health insurance costs and other benefits by recategorizing employees as contractors, but a legal backlash seems to be gaining momentum against that tendency.

I often tell people that I've been watching the same movie on digital innovation for decades, since the Wall Street Journal put me on the computer industry beat in the 1980s, so I'm pretty sure I know how this story ends. The gig economy will be seen as a great term and an idea that animated a lot of progress but that didn't mark a fundamental change.

Cheers,

Paul    

Road safety is increasingly coming under the spotlight across the U.S. – at both a state and national level. Latest statistics from the National Highway Traffic Safety Administration (NHTSA) estimate 20,175 people died in motor vehicle traffic crashes in 1H 2022, an increase of about 0.5% from the first half of 2021. The human cost is huge, and the cost of overall motor vehicle crashes to American society is a worrying $340 billion per year, according to recent insights from the NHTSA.

Reducing these overall figures is very much in the sights of the U.S. Department of Transportation. In the words of Secretary Pete Buttigieg: “These deaths are preventable, not inevitable, and we should act accordingly. Safety is our guiding mission at the Department of Transportation, and we will redouble our efforts to reduce the tragic number of deaths on our nation’s roads."

The safety policies are being put in place

At a city-by-city level, more than 45 communities have committed to “Vision Zero” in the U.S. – a strategy to eliminate all traffic fatalities and severe injuries, while increasing safe, healthy, equitable mobility for all. Vision Zero acknowledges that many factors contribute to safe mobility -- including roadway design, speeds, behaviors, technology and policies. It sets clear objectives to achieve a shared goal by engaging stakeholders that span local traffic planners and engineers, policymakers, and public health professionals. 

Technology aids road safety – fleets need to get “on board” with AI 

But policymaking alone will not deliver on the journey to shrink road deaths. There needs to be buy-in from fleet operators and the helping hand of some tech-led innovations. Of course, we aren’t talking driverless vehicles yet, but the NHTSA sees driver-assisted technologies next on its Road to Full Automation.

Artificial intelligence (AI) has a growing role to play within the fleet sector to help improve driver performance, support duty of care and cut costs. Particularly in new developments, AI video telematics is expected to transform how vehicle operations approach road safety. In the broadest sense, AI is about using machines to perform tasks that would typically have required some form of human intervention and demonstrate behaviors associated with human intelligence. Powerful in-vehicle AI video telematics will make it easy to identify key areas of risk, reduce collisions and near misses and ensure employees get home safely.

AI-enabled cameras go beyond the cab 

AI-powered vehicle cameras, using Advanced Driver Assist Systems (ADAS), Driver Status Monitoring (DSM) and Blind Spot Detection (BSD) technologies, are now enabling fleet operators to maintain safety levels for both their drivers and other road users. By automatically monitoring hazards on the road and high-risk behaviors, these devices make it possible to provide real-time feedback straight to the driver. 

Distractions such as cell phone use, eyes away from road, smoking, eating and drinking, can be detected alongside other fleet risk, such as fatigue, tailgating and nearby vulnerable road users, so drivers can be encouraged to change potentially dangerous habits. In fact, in one international deployment of AI-powered video telematics, installed across 16,000 public sector vehicles, there was a reduction in risky driver behavior of over 80% within the first three months.

The latest intelligent detection cameras can even identify and track vulnerable people where driver visibility is poor and risk of injury high. These devices can establish the severity of risk dependent on the proximity of a worker, pedestrian or cyclist to the vehicle, activating internal and external alarms when they enter virtual exclusion zones. This provides the driver with increased time to react and warns other road users of the potential risk. 

See also: 3 Ways AI, Telematics Revolutionize Claims

Humanized AI at work

Moving forward, advances in Vulnerable Road User (VRU) perception technology will enable AI-powered cameras to provide a nuanced understanding of human behavior. Using machine learning techniques, it will be possible to train devices to accurately predict a person’s actions and provide drivers with potential collision warnings that give them vital moments to avoid an incident. Backed by a dataset of hundreds of millions of human behaviors, the edge-based software analyzes age, direction, speed and distraction to deliver a much higher degree of accuracy than traditional ADAS technology.

Real-time analysis and decision making when incidents occur 

Fleet managers can use the added insight provided by AI video telematics to better understand risk within their vehicle operations and take steps to address issues before they result in a driving incident. However, no vehicle operation has the time and resources to manually review every triggered collision, near miss or driving event, when video uploads can exceed hundreds per day. Due to the size and weight of many vehicles – especially vans, trucks and specialist vehicles – dashcams require highly sensitive g-force settings to detect a collision, which results in large levels of generated events data.

The now….

Computer vision algorithms can now be used to review huge amounts of data, which means fleet managers are only being presented with information that requires immediate intervention. AI post analysis can, for example, help overcome the challenge of manually checking hours of downloaded footage by automatically validating in seconds whether a collision occurred and determining if any action is required. The technology will continue to evolve in the future to detect, monitor and analyze near misses and driver behavior, which will support data-driven safety decision-making and problem-solving.

AI post analysis uses advanced object recognition software to identify different types of vehicles, cyclists and pedestrians, making it possible to distinguish between collisions and false positives that can be generated by harsh driving, potholes or speed humps. This added layer of analysis enables rapid intervention and the ability to quickly summon emergency assistance, resulting in enhanced duty of care and driver welfare, as well as reduced insurance claims costs.

The tech delivery

There are two types of technology – edge- and cloud-based – that will see AI delivery become increasingly embedded in video telematics hardware and software. For edge-based solutions, the processing takes place close to the data source, such as a connected camera device, to provide real-time insight. Cloud-based solutions collect and process information in a centralized data center for powerful post analysis.

See also: How Telematics Improve Fleet Safety

Driving toward a safer future 

The new generation of AI video telematics will ensure fleet operators can access the right information at the right time, presented in a way that enables them to achieve significant change and encourage drivers to operate in the most responsible manner. By automating management processes, data analysis and incident detection, they can take advantage of intelligent solutions to keep drivers, road users and pedestrians safe and reduce the number of collisions.

The U.S. DOT Fatality Analysis Reporting System (FARS) shows large trucks account for nearly 13% of fatalities on the nation’s roads, so there is an opportunity to embrace AI innovation and immediately save lives – and we must not ignore its ability to reduce cost to society, as well. We all want a future where no one is killed or injured on U.S. roads, and fleet technology such as AI has a significant role to play in safer transportation for all.

Carriers are looking to adapt to technological advances, but digitalization across the board is even more challenging when undertaken by a smaller life insurer with limited resources.

Many small carriers and fraternals have limited or outsourced IT resources. The prospect of modernizing their aging policy administration systems and implementing digital sales and service solutions can seem difficult, if not impossible. But it can be done.

Why is digital transformation critical to carriers with limited resources?

Disruption and change are inevitable, so smaller insurers must use the resources they do have to adapt to changing market forces and keep up with the evolving ecosystem.

1. It's important to keep up with stakeholder expectations

Digital transformation is driven by the needs of stakeholders such as members, agents and insurance regulators. And, as insurers grow, they face increasing regulatory challenges. For instance, NSS Life is a small company in terms of headcount, totaling fewer than 30 employees. But they have grown from $52 million to $1.6 billion in assets in the last 15 years. And now, they find themselves in the difficult position of being a small organization that is treated as a large insurer by the regulators.

Easier access to data and adaptable reporting makes it possible to stay compliant even with few resources to assign to the effort.

2. Digital transformation can be a point of differentiation against competitors

Texas Service Life, for example, started looking at digital conversion as a way to differentiate themselves as a very small company against competitors that were 30x larger.

The insurance industry has been slow to catch up with technology. This means that companies that undergo digital transformation sooner rather than later can stand out against other and potentially larger competitors that take more time.

3. Consumers are already enjoying the benefits from digital experiences in other industries

Whether it's personalized concert suggestions sent by music audio streaming companies or subscription-based meal deliveries, consumers are exposed to highly personalized and efficient experiences in almost all industries. Life insurance consumers expect no less.

Like all insurers, smaller carriers risk losing potential customers, especially in younger generations, if they can't deliver real-time and online service, straight-through processing of applications, accelerated claims resolution and a host of other transformative solutions that consumers have come to expect.

Digital transformation isn't just a nice-to-have option for life insurance companies -- it's a requirement if they are going to stay relevant to consumers. Automating manual processes also addresses labor shortages.

You don't have to boil the ocean - companies can undergo digital transformation one step at a time.

See also: Beyond the Digital Transformation Hype

Set your North Star

One key piece of advice for resource-constrained carriers undergoing digital transformation is to define your vision for it. Irrespective of size, it's important to have a vision for your digital transformation. It will enable you to map out the process and take small steps that are always moving the company in the direction of its end goal.

Thousands of important calls will have to be made as conditions evolve during the modernization journey. Not all those decisions will be clear-cut, easy or even a choice between good and bad outcomes. Your digital transformation vision makes priorities clear and gives you a North Star to guide you toward your destination, no matter how convoluted the path may become.