Twitter feeds of industry influencers lit up about ZhongAn’s recent $1.5 billion stock offering. There was a feeling in the air that the P&C insurance industry had finally turned a corner, reaching for direct-to-consumer distribution with open arms.
However, customer satisfaction studies from J.D. Power indicate that U.S. insurers aren’t quite there yet. While more consumers shopping for auto coverage use D2C channels for quoting, only 10% of those quotes
turn into new business.
Consumers have high expectations when purchasing products through digital channels, so insurers need to provide more than a pleasant experience. They need to provide a wow moment.
We recently conducted a survey of P&C insurers. What we found is that the “wow” experience is eluding many. While 68% say they view digital distribution as the most important aspect of their future growth, fewer than 25% are fully happy with their efforts to date.
The elusive “wow” factor is holding many insurers back from realizing the benefits of going direct-to-consumer.
What are they missing?
Raising Acquisition Rates in P&C Insurance
Insurers that aren’t online are missing the chance to engage with nearly 70% of the market
That’s the number of consumers who prefer to use online channels to research coverage.
Turning a casual observer into a customer depends on the strength of your D2C capabilities. Some websites are off-putting. They speak primarily about the insurer, provide a complicated quoting process and fail to advise customers on coverage gaps. In this digital environment, the customer feels like a pawn, being moved through a complex series of maneuvers to determine product pricing or to purchase insurance coverage.
If we turn this scenario around to one where the website speaks to the customer, provides easy quoting of insurance products and advises the customer on coverage gaps, we see a more personalized shopping experience emerge.
See also: 3 Ways AI Improves P&C Economics
In case you’re wondering how open consumers are to this type of digital advisorship, Accenture has an answer. It recently polled more than 32,000 consumers
and found that 74% are open to advice about insurance from digital sources, and many find that it’s faster, offers greater convenience and delivers more impartial guidance
A comprehensive direct-to-consumer strategy plays a strong role in acquisition rates. A leading D2C insurer expanded its digital capabilities and saw new business increase 8% in the quarter the enhancements were made.
Supporting Customers in their D2C Experience
While consumers are keen to embrace digital, what happens when they have a question that can’t be answered online? They are going to need an agent, but after experiencing the top-tier digital bliss of your D2C channel they aren’t going to be inclined to purchase if the agent is slow or less personal.
Industry influencer John Cusano
said that to complement digital distribution channels, and remain relevant to their customers, insurance advisers need to use an array of digital tools
to efficiently manage routine tasks as well as to service increasingly demanding and knowledgeable customers.
That means uniting siloed systems and giving agents a single view of the customer across products.
When insurers get this right, it plays a big role in generating new business, as is evidenced by a prominent insurer in the D2C space. This insurer recently enhanced the digital experience for its consumers and internal agency. As a result, conversion rates rose to 35%, and sales doubled year-over-year.
Customer Loyalty Is Possible in P&C Insurance
Bain’s recent survey
of 172,000 insurance customers confirmed what many in the know have been indicating for a few years now. Frequent interactions generate loyalty.
Historically, insurance has been a low-touch business. Insurers send out renewal papers with a request for payment every six months to a year and, beyond that, only engage with customers if there is a claim.
Consumer demand for high-quality touch points goes back to digital pioneers like Amazon. They’ve constructed a business out of putting customer needs at the forefront and generating a “wow” experience from the first interaction.
As customers make their way across a site, they are guided by product recommendations and pricing comparisons. Each of these touchpoints make customers feel central to the buying experience, and they come back for more.
This is where D2C comes in for insurers. Digitizing customer information makes for more efficient data retrieval and better application of consumer analytics. The insights derived can pinpoint interaction opportunities, including cross-selling moments, all in real time.
According to Bain
, the more touchpoints the better, as insurers that master the art see net promoter scores that are 15 points higher than other insurers.
D2C Adds up to Stronger Acquisition, Retention and Loyalty
In our survey, 77% of insurers are seeing demands for direct-to-consumer channels of engagement. That’s because consumers have grown accustomed to interacting through the channel that is most convenient in the moment, and they like the simplicity of purchasing online.
Insurers with strong D2C channels send a clear message to consumers. It says they are in touch and ready to put their customers at the center of their business strategy. Customers deliver loyalty in return, driving up retention rates and buying more products.
See also: P&C Insurers: Come Out of the Dark Ages
To better serve customers and encourage retention, a top customer-experience leader recently improved its direct-to-consumer offering. Despite increasing its advertising budget, the insurer reduced its expense ratio and increased conversions 4% in a single quarter.
Are you still searching for a digital identity? If so, what are the main impediments you’re facing?