Tag Archives: e-commerce

Insurance in UAE Ready for Big Leap

The insurance industry in the UAE is relatively young. The oldest insurance company in the country is less than 50 years old. The Insurance Authority, the regulatory body, was established as recently as 2007 to protect the interest of consumers.

The industry is going through rapid change. By the end of this decade, personalized insurance covers will replace the one-size-fits-all products currently available. Most of this change is a result of the consumer shift toward digital channels.

E-commerce in the UAE is booming. It is currently at more than $16 billion a year and is expected to grow 23% annually for the next couple of years. This shift has opened the doors to digital distribution for the insurance companies.

Consequently, sales through the digital channel on web platforms run by brokers, insurers and aggregators are growing by leaps and bounds. In the UAE, about five years ago, online car insurance sales accounted for less that 1% of the total motor insurance. Today, the channel contributes about 5% to 7% of the motor insurance market.

In countries such as the U.S. and India, online platforms have already become a preferred channel for purchasing both life insurance and general insurance products. According to a PWC report, 47% preferred buying insurance through one or another digital mode in India.

The COVID acceleration

The COVID-19 pandemic is an inflection point for the insurance industry in several ways. It has put life and health insurance front and center in the minds of people all over the world. The pandemic has made digitization an almost necessary condition for survival for the insurance industry. With restrictions on travel and the fears associated with even intercity mobility, the online sales channel has become paramount for insurers.

As the UAE marches toward digitization, there are some speed breakers. Despite the adoption of insurtech, there is still the need for some amount of manual paperwork during insurance purchases. For example, medical tests and policy issuance still require offline paperwork. To become truly digital, insurers need to invest more in technology.

Bumps on the road

While internet penetration in UAE is among the highest in the world, the UAE has an insurance penetration of just 1.9%; average global penetration is 6.1%. The insurance industry in the UAE is expected to grow at a compound annual growth rate of 4.2% between 2019 and 2024.

I believe that greater consumer awareness and tailored products could be the game-changers in the long term. In the shorter term, we need to accelerate digitization — in particular, in the post-transaction phase to allow for instant issuance of the policy.

Quickly building and marketing a strong digital infrastructure is a challenge faced by many distributors. As the industry grapples with this challenge, we also need to re-engineer our operations so they can be run remotely, free from the limitations of confined office space.

See also: 4 Post-COVID-19 Trends for Insurers

What the future holds

Once the changes and innovations become widespread among insurers and distributors, consumers will start benefitting immensely. New, improved and custom-made insurance products to suit the various consumer life stages and financial goals would provide optimum protection against the uncertainties of life. The whole process of buying insurance would shift to digital mode — from telemedical or video-based medicals examinations to digital fulfillment processes. Premiums will go down thanks to cost-efficient distribution channels.

As the industry moves toward an automated, technology-based marketplace, a plethora of opportunities will arise for progressive insurers and distributors to gain market share. The industry would have more data to assess and analyze individual risk factors, while distributors will have more efficient means to communicate with customers. The insurance industry in general will be able to provide a vastly superior consumer experience.

6 Lessons in Trust From Retailers

When it comes to digital transformation, the insurance industry lags woefully behind other industries, and it is not just a question of technology. Even as the industry advances technologically, developing digital capabilities that rival other industries–from chatbots to IoT–selling insurance direct to consumers (DTC) has proved a difficult code to crack. Even Geico, the darling of online auto insurance sales, still closes the majority of its new policies on the phone, via an agent.

The retail ecommerce industry on the other hand has proven to us that there are very few things consumers are not willing to purchase on the internet. From buying groceries to booking airline tickets, consumers are comfortable conducting all kinds of transactions online, from the very simple to the most complex. Every day, millions of people even do their banking online. So what is the deal with insurance?

At Cake & Arrow, we have conducted hours upon hours of primary research in the insurance industry, talking to hundreds of consumers, carriers, agents and brokers in an effort to help our insurance clients answer this question and, in turn design better products and experiences. Throughout this process, we have learned a lot about how customers think and feel about insurance, perhaps our most lasting insight being a lesson about trust. The main reason consumers don’t want to buy insurance online directly through a carrier? They don’t trust insurance companies. This is why, even in the golden age of digital commerce, consumers continue to opt to purchase insurance through brokers and agents.

On the surface, fixing this problem may seem simple. All carriers need to do is to gain the trust of their customers, right? Easier said than done. While earning trust may seem like a simple enough idea, it is an issue most carriers don’t even know how to begin to tackle.

In my experience, when you want to learn to do something well, the best thing to do is to emulate an expert. In the case of consumer trust, it’s the retail e-commerce industry that has, over the past two decades, mastered the art of consumer trust. Each and every day, millions of transactions happen online, and most consumers don’t think twice about ordering their groceries, electronics, clothing, books and everything in between over the internet. This hasn’t always been the case! Gaining the trust of consumers has been a hard-won battle, and those who have done it well (Amazon) are ruling the industry. If imitation is the highest form of flattery, what lessons can the insurance industry learn from the retail industry that can help them foster trust with consumers and drive a truly digital offering?

1. Establish consistent workflows.

The retail industry has the benefit of a consistent process across products, stores and platforms. For the most part, everyone basically understands the standard steps in a checkout flow. Select your product, fill in your shipping and billing information and purchase. And while there are of course optimizations that can be made to make an experience better, in general, consumers know exactly what to expect when purchasing a product online.

The same cannot be said for insurance. Unlike a book or an item of clothing, insurance is not a static product sitting in a warehouse with a price tag. Insurance products are complex. Coverage and prices are variable based upon any number of risk factors, and complex underwriting rules and changing regulations can make it difficult for consumers to understand what exactly they are buying and how it is priced.

This leads to confusion in the process of quoting and buying insurance and to a lack of standardized practices across the board. From a user experience (UX) and design perspective, one of the first steps the industry can take toward gaining consumer trust is to simplify and standardize the quoting process so that consumers know what to expect when buying insurance online and understand each step of the process.

And while underwriting rules and regulations will need to be streamlined to establish an effective industry standard, insurance companies can start by being more transparent with users about what to expect in the quoting process, including informing users about how their personal information is being used. This will help customers better understand the quoting process, feel more comfortable dispensing with personal information and give them general confidence in the process by establishing clear expectations.

See also: Top 10 Insurtech Trends for 2018  

2. Invest in quality visual design.

Over the past two decades, we’ve seen retail ecommerce design evolve, following a general trend toward customer-centricity. Flash sites, cluttered home pages and flashy fonts have given way to clean, simple designs that streamline the shopping process, communicate the brand and are organized around customer needs, interests and behaviors.

The insurance industry needs to follow a similar path, leveraging user-validated design to create trust with customers. A modern, usable, well-designed website is a signal of legitimacy. It tells customers that a real company is behind a product, and this company cares enough about its customers to invest in the experience.

A strong visual design that implements best practices removes that cloud of doubt in the mind of a customer and builds confidence and pride in the end product. In the same way that a strong brand is a promise of quality, a great visual design is an early demonstration that a carrier cares enough about a customer to invest in a quality digital experience that will translate into a quality product.

3. Implement a killer content strategy.

Content strategy is just for news sites, magazines and blogs, right? Wrong. Content is an important piece of the sales process. For our retail clients, we have learned that crafting and executing a killer content strategy is critical to helping customers learn about a product, understand occasions for using products and gain insight into the actual value of a product. Effective education about products and services demonstrates a company’s willingness to keep its customers informed. And the more a customer feels he understands what a company does and what its products are about, the more he will trust it.

While we often see short marketing messages on insurance carriers’ sites, few insurance companies invest in content on their website to help explain to their customers the value of a product or the differences between products, and to educate them on when and where to use the product so they feel empowered when making purchasing decisions. Educational and informative recommendations will help insurance companies establish a rapport with consumers as a trusted adviser. Companies must even be willing to tell customers when a product isn’t right for them and demonstrate that they care about more than a sale, but about helping their customers make informed decisions that benefit them. A killer content strategy will help insurance companies do this effectively.

4. Enable the right level of customization.

The best retail experiences allow for just the right amount of customization. When buying clothing online, for instance, we can choose colors and sizes and have a choice of different delivery options. Subscription services like Trunk Club allow shoppers to input information about personal style preferences, including color and pattern preferences, set price points and decide on frequency to receive a custom selection of clothing recommendations when, where and however often they desire. This kind of customization breeds customer loyalty and, like a good content strategy, can help customers being to think of a company as a trusted adviser with their best interests in mind.

Insurance companies should explore enabling similar types of customization. While easy packages are just that–easy–they don’t drive stickiness with customers. Giving customers the ability to modify and tweak plans according to their unique needs and circumstances will drive a connection between a customer and a product. In the same way that these types of customizations breed loyalty in retail e-commerce customers, giving customers more control over choosing the kind of coverage they need at a price they can afford is a powerful way of building loyalty and competing with other carriers on something other than price.

And while enabling customization is important, it is really critical that companies don’t take things too far, allowing customers too much customization and, in the process, sacrificing the experience. In speaking recently with a carrier, I learned of a story of customization gone wrong. The carrier’s data showed that customers who were able to customize a package were more likely to purchase a policy. Emboldened by this piece of data, they created a new quoting page that allowed customers to customize every aspect of their policy. Lacking the qualitative info on how and why people were more likely to convert when customization was enabled and without user testing on the new custom design, they missed some essential information. Allowing their customers to customize everything about their policy made the experience overwhelming, and conversions ended up falling off significantly.

I tell this story as a reminder to companies that testing and validating every design decision with users is critical–and one of the reasons the e-commerce industry has been so successful at digital.

5. Play around with promotions.

Promotions are one of the most reliable and time-honored means of staying competitive for retailers. Promotions can make or break a business. Free shipping on big orders, Black Friday sales and BOGO (buy-one-get-one) offers are all commonplace in the retail e-commerce industry, and are incredibly effective at creating consumer loyalty and trust.

While, in the insurance industry, it is nearly impossible to offer dynamic pricing or let customers actually play with coverages to get a fully custom price due to regulations, discounting isn’t something to be overlooked. Bundling is a real thing, and customers are more likely to purchase a policy if they see a real deal–and understand its benefits.

For example, I’ve seen many insurers combine rental insurance with auto insurance at a discounted price. When customers see deals like this, they oftentimes don’t understand the full benefits of the deal. For example, they may not know that rental insurance protects not only their property but also against liability and, considering the coverage, is incredibly affordable. Developing a robust content strategy to better inform customers about deals and the benefits of coverage will not only increase sales and stickiness, but help customers begin to truly appreciate the value their insurance company is bringing to their lives.

6. Leverage user-generated content.

When shopping online and in store, we have come to rely on ratings and reviews to help us evaluate products and make purchasing decisions. User-generated content, such as Instagram posts of real customers wearing clothing or jewelry, can help us see how a dress might fit a certain body type or how a piece of jewelry looks in context. This level of transparency sends customers a clear message that as a company you have nothing to hide–further inspiring trust.

See also: Sharing Economy: The Concept of Trust  

Just like in retail, user-generated content can be integrated into your content strategy and can do the work of educating customers about your products–explaining the difference between certain coverage offers, for example, or why as a carrier you stand out from other companies offering similar products.

Real content generated by other customers helps customers understand how a certain policy works–what the service is like, what the claims process is like, what kinds of scenarios are covered. It can be scary to leave your company and offering open to negative user feedback, but, if you are doing your job, it will end up being more useful than it is harmful.

Insurance companies still face many hurdles to getting consumers to trust them and to earning the kind of rapport with customers that the retail industry has established over the years. Anything short of a truly standardized process across all carriers and products will continue to cause confusion and suspicion among customers. But there is nothing stopping insurance carriers from taking strategic steps toward customer-centricity, emulating more mature industries like retail e-commerce that have done it well.

This article first appeared on the Cake & Arrow website, here.

‘Smart’ Is Everywhere, but…

The connected world is here. Everything is “smart.” And for insurers, the implications are huge. Whatever you insure can now be connected, monitored and analyzed. People, places and things, moving or stationary, living or non-living—are all becoming smart. Think that is an exaggeration? Consider the following products announced or displayed at the Consumer Electronics Show (CES) 2016, just a few of the thousands of smart products:

  • Smart air vents to monitor and adjust temperature in each room, detect for early signs of mold, etc.
  • Smart drinking glasses to monitor hydration and caffeine intake
  • Neuro-stimulation devices to block chronic pain or alter moods
  • Smart appliances that manage energy efficiency, anticipate failures, conduct e-commerce, etc.
  • Wearable patches to monitor UV rays, toxic exposure and biometrics
  • In-car cameras that monitor a driver’s pupils for signs of stress

Add to that list smart belts, umbrellas and smoke alarms among many other things, and it’s difficult to find anything that doesn’t have a “smart version” today. And it’s all pretty exciting stuff. But here’s the rub—in many cases, the technology is way ahead of the desire and ability of consumers and businesses to use it. A few important considerations emerged as central themes at CES:

  1. Value propositions need more work. Many of the products at CES were narrow-use, high-priced items that work in isolation.
  2. Customer experience is still king. Products must be easy to install, easy to use and engaging. Progress is certainly being made here, especially among wearables, but some of the smart home and car products need to take the experience to the next level to get beyond the early adopters.
  3. Platforms and standards progress are required. Competing platforms for smart home hubs, connected car capabilities, intelligent infrastructure and other areas may impede adoption. The competitive environment is healthy, but widespread adoption will require more interoperability standards and a shakeout of players.
  4. New ecosystems and partnerships are rapidly evolving. Industry boundaries are disappearing, and new industries are emerging. Success in the connected world will require active involvement in various ecosystems as well as a flexible partnering strategy.
  5. Analytics and cognitive computing will be the differentiators. Embedding chips, sensors and devices into everything is creating vast oceans of data. The value will increasingly be based, not on owning proprietary data, but on the ability to gain actionable insights. Cognitive computing goes even further by automating real-time learning, reasoning and recommendations.

These five considerations along with other factors will affect adoption rates and opportunities for businesses and consumers. But it would be a mistake to conclude that there are too many complications or barriers to progress. In fact, the opposite is true. Advances are being made at breakneck speed, and barriers are being knocked down on a regular basis. If anything, this means that insurers need to be even more diligent and aggressive in shaping the future.

So, innovate to create new value propositions. Seize opportunities to transform the customer experience. Weigh in at relevant standards and platform discussions. Join new ecosystems and seek partnerships with unconventional allies. And build up your enterprise analytics expertise and capabilities.

The digital, connected world is here. If you want your company to thrive in this new era, you must jump in with both feet. The possibilities are endless, but you must play a role in shaping and capitalizing on them.

Home Is Where the (Smart) Hub Is

The smart home was all the rage at the 2016 CES (Consumer Electronics Show). The exhibit space and products devoted to smart homes was absolutely mind-boggling.

Well-known products such as the Nest Thermostat, the Roost Smart Battery for smoke alarms and Amazon Echo were displayed alongside a wide variety of other products to make every “thing” in your home smart. Want your refrigerator to assemble a grocery list for you by bar code scans of items about to run out? No problem – the Samsung Family Hub Refrigerator can do that. Looking for a bed with biometric sensors to track your sleep, monitor physiology and make adjustments to improve your night’s rest? Look no further than the Sleep Number-it bed. Need to separately monitor and manage the temperature and environment for each room? The Ecovent system has that capability – and can even alert you if your home is at risk for mold. The list could go on and on.

Given unlimited time and money, you could truly make your home an Internet of Things showplace with smarts everywhere you turn. Of course, you would probably not have enough room on your smartphone to manage all the apps that control the smart things. So how to make sense of all the options? And how should insurers capitalize on the smart home trend? For starters, it is useful to think of smart home devices in four categories:

  • Security/Safety: Existing home security companies are all evolving to provide smarter systems using wireless technologies and more sophisticated sensors. In addition, companies like Ring and Glue provide smart locks and doorbells for secure entry. Others focus on safety through monitoring and pre-emptive alerts for leaky pipes, smoke alarms, failing sump pumps and other things.
  • Entertainment/Information: Smart TVs are already a fixture in many homes, with availability from a variety of suppliers. The Amazon Echo responds to voice questions and prompts to provide news, weather and information, among other capabilities. Devices for gaming are incredibly powerful, and virtual reality headsets are gaining in adoption.
  • Energy/Environment: The Nest Thermostat device has led the way in providing a smart, connected way to monitor and manage the temperature and environment throughout the home for comfort and energy efficiency. Others, such as Lutron, offer controls for lights, shades and temperature, aimed at saving energy.
  • Commerce: The Amazon Dash Button may seem to be a gimmick, but it has opened up possibilities for e-commerce by allowing homeowners to reorder items with literally the touch of a button. Smart appliances and embedded touch screens automate the ordering of parts before they fail or common supply items before they run out.

Then come the questions about how (and even if) all of these devices will work with each other. There is a great deal of overlap and potential interaction between devices both within and between these categories. Enter the smart home hub. There are a number of companies and devices purporting to be hubs to connect the smart things in your home. Some operate well within just one domain – coordinating security-related devices, for instance. Others are broader and have the capability to connect a wider range of smart devices. The Apple HomeKit, Samsung SmartThings Hub and Amazon Echo are a few of the well-known hubs, but others are emerging.

The take-home is that insurers should consider three actions to better understand the smart home space and its potential opportunities and threats.

First, monitor the evolution of the companies and products in the space and the product adoption trends. It probably goes without saying that this is easier said than done.

Second, make sure your tech guys follow the standards, communication protocols and tech issues as they progress (especially related to data-security concerns).

Finally, actively partner with and invest in companies in the smart home space. First-hand learning and experimentation is paramount if you want to gauge the opportunities to offer new insurance product offerings or services that will set you apart from your competitors.

5 Tips for Success in Cyber Litigation

Many insurance coverage disputes can be, should be and are settled without the need for litigation and its attendant costs and distractions. However, some disputes cannot be settled, and organizations are compelled to resort to courts or other tribunals to obtain the coverage they paid for, or, with increasing frequency, they are pulled into proceedings by insurers seeking to preemptively avoid coverage. As illustrated by CNA’s recently filed coverage action against its insured in Columbia Casualty Company v. Cottage Health System, in which CNA seeks to avoid coverage for a data breach class action lawsuit and related regulatory investigation, cyber insurance coverage litigation is coming. And in the wake of a data breach or other privacy, cybersecurity, or data protection-related incident, organizations regrettably should anticipate that their cyber insurer may deny coverage for a resulting claim against the policy.

Before a claim arises, organizations are encouraged to negotiate and place the best possible coverage to decrease the likelihood of a coverage denial and litigation. In contrast to many other types of commercial insurance policies, cyber insurance policies are extremely negotiable, and the insurers’ off-the-shelf forms typically can be significantly negotiated and improved for no increase in premium. A well-drafted policy will reduce the likelihood that an insurer will be able to successfully avoid or limit insurance coverage in the event of a claim.

Even where a solid insurance policy is in place, however, and there is a good claim for coverage under the policy language and applicable law, insurers can and do deny coverage. In these and other instances, litigation presents the only method of obtaining or maximizing coverage for a claim.

When facing coverage litigation, organizations are advised to consider the following five strategies for success:

1. Tell a Concise, Compelling Story

In complex insurance coverage litigation, there are many moving parts, and the issues are typically nuanced. It is critical, however, that these complex issues come across to a judge, jury or arbitrator as relatively simple and straightforward. Getting overly caught up in the weeds of policy interpretive and legal issues, particularly at the outset, risks losing the organization’s critical audience and obfuscating a winningly concise, compelling story that is easy to understand, follow and sympathize with. Boiled down to its essence, the story may be—and in this context often is—something as simple as:

“They promised to protect us from a cyber breach if we paid the insurance premium. We paid the premium. They broke their promise.”

2. Place the Story in the Right Context

It is critical to place the story in the proper context because, unfortunately, many insurers in this space, whether by negligent deficit or deliberate design, are selling products that do not reflect the reality of e-commerce and its risks. Many off-the-shelf cyber insurance policies, for example, limit the scope of coverage to only the insured’s own acts and omissions, or only to incidents that affect the insured’s network. Others contain broadly worded, open- ended exclusions like the one at issue in the Columbia Casualty case, which insurers may argue, as CNA argues, can vaporize the coverage ostensibly provided under the policy. These types of exclusions invite litigation and, if enforced literally, can be acutely problematic. There are myriad other traps in cyber insurance policies—even more in those that are not carefully negotiated—that may allow insurers to avoid coverage if the language were applied literally.

If the context is carefully framed and explained, however, judges, juries and arbitrators should be inhospitable to the various “gotcha” traps in these policies. Taking the Columbia Casualty case as an example, the insurer, CNA, relies principally upon an exclusion, titled “Failure to Follow Minimum Required Practices.” As quoted by CNA in its complaint, the exclusion purports to void coverage if the insured fails to “continuously implement” certain aspects of computer security. In this context, however, given the extreme complexity of cybersecurity and data protection, any insured can reasonably be expected to make mistakes in implementing security. This reality is, in fact, a principal reason for purchasing cyber liability coverage in the first place. Indeed, CNA represents in its marketing materials that the policy at issue in Columbia Casualty offers “exceptional first- and third-party cyber liability coverage to address a broad range of exposures,” including “security breaches” and “mistakes”:

“CNA NetProtect fills the gaps by offering exceptional first- and third-party cyber liability coverage to address a broad range of exposures. CNA NetProtect covers insureds for exposures that include security breaches, mistakes and unauthorized employee acts, virus attacks, hacking, identity theft or private information loss, and infringing or disparaging content. CNA NetProtect coverage is worldwide, claims-made with limits up to $10 million.”

It is important to use the discovery phase to fully flesh out the context of the insurance and the entire insurance transaction in addition to the meaning, intent and interpretation of the policy terms and conditions, claims handling and other matters of importance depending on the particular circumstances of the coverage action.

3. Secure the Best Potential Venue and Choice of Law

One of the first and most critical decisions that an organization contemplating insurance coverage litigation must make is the appropriate forum for the litigation. This decision, which may be affected by whether the policy contains a forum selection clause, can be critical to potential success. Among other reasons, the choice of forum may have a significant impact on the related choice-of-law issue, which in some cases determines the outcome. Insurance contracts are interpreted according to state law, and the various state courts diverge widely on issues surrounding insurance coverage. Until the governing law applicable to an insurance contract is established, the policy can be, in a figurative and yet a very real sense, a blank piece of paper. The different interpretations given the same language from one state to the next can mean the difference between a coverage victory and a loss. It is therefore critical to undertake a careful choice-of-law analysis before initiating coverage litigation, selecting a venue or, where the insurer files first, taking a choice-of-law position or deciding whether to challenge the insurer’s selected forum.

4. Consider Bringing in Other Carriers

Often, when there is a cybersecurity, privacy or data protection-related issue, more than one insurance policy may be triggered. For example, a data breach like Target’s may implicate an organization’s cyber insurance, commercial general liability (CGL) insurance and directors’ and officers’ liability insurance. To the extent that insurers on different lines of coverage have denied coverage, it may be beneficial for the organization to have those insurance carriers pointing the finger at each other throughout the insurance coverage proceedings.

A judge, arbitrator or jury may find it offensive if an organization’s CGL insurer is arguing, on the one hand, that a data breach is not covered because of a new exclusion in the CGL policy and the organization’s cyber insurer also is arguing that the breach is not covered under the cyber policy that was purchased to fill the “gap” in coverage created by the CGL policy exclusion. It is also important to carefully consider the best strategy to maximize the potentially available coverage across the insured’s entire insurance portfolio and each triggered policy.

5. Retain Counsel With Cyber Insurance Expertise

Cyber insurance is unlike any other line of coverage. There is no standardization. Each of the hundreds of products in the marketplace has its own insurer-drafted terms and conditions that vary dramatically from insurer to insurer—and even between policies underwritten by the same insurer. Obtaining coverage litigation counsel with substantial cyber insurance expertise will assist an organization on a number of fronts.

Importantly, it will give the organization unique access to compelling arguments based upon the context, history, evolution and intent of this line of insurance product. Likewise, during the discovery phase, coverage counsel with unique knowledge and experience is positioned to ask for and obtain the particular information and evidence that can make or break the case—and will be able to do so in a relatively efficient manner. In addition to creating solid ammunition for trial, effective discovery often leads to successful summary judgment rulings, which, at a minimum, streamline the case in a cost-effective manner and limit the issues that ultimately go to a jury.

Likewise, counsel familiar with all of the many different insurer-drafted forms as they have evolved over time will give the organization key access to arguments based upon both obvious and subtle differences among the many different policy wordings, including the particular language in the organization’s policy. Often in coverage disputes, the multimillion-dollar result comes down to a few words, the sequence of a few words, or even the position of a comma or other punctuation.

Following these five strategies and refusing to take “no” for an answer will increase the odds of securing valuable coverage.