Tag Archives: eric gewirtzman

How to Augment Agent Channels

At the beginning of this year, Deloitte released its predictions for the insurance industry. Topping the list of priorities was the need to “expand digital distribution and virtual service to cut costs and gain competitive advantages.”

For insurers who have relied exclusively on independent or captive agent workforces, the way forward is unclear. How do they establish a digitally based, direct-to-consumer presence when many haven’t yet stepped onto the digital stage?

The Current State of Digital Readiness in Insurance

According to Aite Group, only 20% of auto insurers and 7% of homeowners carriers are currently selling products online, despite the growing number of consumers that are choosing to use these channels.

“Many insurers are tied to core policy admin systems that originated in the last century,” said Rick Huckstep, industry influencer and thought leader at The Digital Insurer. “They remain constrained by the legacy of a pre-internet, analogue way of working.”

These systems, built with a 20-year life expectancy, were entering their twilight years before the current digital revolution, so it’s no surprise that they account for up to 80% of insurer costs. Even more troubling, according to Huckstep, they represent a significant impediment to establishing a digitally-based direct-to-consumer strategy.

For insurers who have focused exclusively on external agent channels for distribution, the situation is more severe. While they usually have a basic one-dimensional web presence, many of these insurers haven’t begun to think about how they are going to establish an attractive online storefront, let alone how they will tie legacy systems into the web frontend.

See also: Why More Don’t Go Direct-to-Consumer  

Implementing a Direct-to-Consumer Strategy

In our recent research, 73% of insurers reported consumer demand for D2C channels of engagement, but only 23% were satisfied with the results of their digital efforts. To be effective, a comprehensive digital strategy needs to tie together all of the key elements related to the customer experience.

For insurers relying exclusively on independent or captive agent forces to sell their products, the three principles below provide a starting point to add D2C channels of engagement into the mix.

Focus on Customer-Centricity

When Amazon came on the scene in 1994 selling books and records, it already had a vision of becoming an international seller of almost everything. Since then, the retailer has evolved into the premier online merchant, setting the standard for customer engagement in the digital world.

Looking closely at Amazon’s example, insurers can learn a lot about developing a D2C strategy. First, even if it seems beyond imagination in the beginning, plan for the end result.

Setting up an online storefront may seem like your biggest challenge today, but where are the technology trends going? Robotics and artificial intelligence are already improving workflows, and blockchain is waiting on the horizon.

Incorporating the digital basics that are available into your distribution strategy provides a base to integrate future advancements as the market changes.

Next, make it interactive. Amazon does more than sell everything under the sun. It interacts with shoppers, offering product recommendations that make it easy for consumers to find what they want at a price they are willing to pay.

Insurers can do the same, gearing their web-storefront to provide product recommendations, alert consumers to gaps in coverage and advise on deductibles and policy limits.

The message here is simple: Think of everything a target customer needs and then create the most efficient and customer-friendly way to deliver it.

Plan for Better Data Handling and Access

When it comes to data, insures have a lot of it, but, according to Aite Group, they aren’t making good use of it.

Currently, insurers use a complicated mix of lead generation techniques, including purchasing leads from outside vendors. As leads come in, data is filed in its own repository according to coverage type, causing product siloes and often resulting in data inaccuracies across systems.

As a result, insurers lack a single view of the consumer where every employee and system has the information necessary to engage in informed interactions with the customer in real time. Mark Breading of Strategy Meets Action calls this the ultimate view, and it’s essential to an effective D2C strategy because customers expect to interact with lightning-fast efficiency.

Imagine you sign into your online banking site, but, instead of being provided a single account overview, you’re required to login separately to see each account. This is the type of engagement insurance systems are set up to provide today, and the experience that many customers receive when purchasing coverage online.

They enter the site, input their personal information and are provided a quote for a single type of coverage. To inquire about other policies they may need, the customer is required to go through the application process again. If they need to make an inquiry with an agent, they have to provide the same information once again.

Direct-to-consumer distribution requires the web frontend to be connected to backend systems in a way that unites product siloes and delivers a 360-degree view of the customer and related products.

Establishing a Customer-Facing Call Center

In the non-digital world, consumers and business owners look to agents and brokers for guidance on obtaining the appropriate coverage. In the digital realm, the best D2C platforms use consumer-entered data, as well as information from third-party sources, to speed the application process, minimize errors, identify coverage gaps and recommend options.

So, what happens when a consumer needs to speak to someone? Even with direct-to-consumer engagement, insurers will need a customer-facing call center to answer questions and help with routine policy inquiries.

Accenture recently surveyed over 32,000 consumers to get their thoughts on the insurance industry. When it comes to getting advice and answers to questions, as many as 86% of these respondents are open to receiving automated support but up to 62% still prefer to receive guidance from an actual person when they have a question or need advice.

Insurers who rely exclusively on independents or captives will need to establish a separate customer-facing call center to support D2C channels of engagement. That call center will also need a cross-channel view to pick up the customer transaction right where they left off during their online interaction.

Planning ahead could net big advantages; Bain reports an increase in customer loyalty when insurers provide multiple channels of engagement. Consumers also report higher levels of trust with omni-channel insurers because consumers feel that the company will work to resolve any issues, an important aspect of a happy customer-insurer relationship.

The Importance of Partnerships

Huckstep, Breading and other industry influencers agree: When adding D2C channels of engagement, insurtech partnerships are the way to go.

Breading feels that the industry will be greatly transformed in 10 years — making it barely recognizable from what it is today _ and a large part of the change will come from insurtech innovation, particularly where distribution is concerned.

See also: The Agent of the (Digital) Future  

Distribution is a hot area for insurtechs in personal lines and is already having an important impact,” Breading said. “Insurtech has been a major trigger for new insurer strategies and will be an important part of the transformation of insurance over the next five to 10 years.”

According to Huckstep, insurtech platforms that build on the significant investment already made in legacy IT put insurers in the “fast lane” toward D2C distribution and outperform attempts at overhauling or moving to new policy admin systems.

“The insurtech digital implementation can be measured in months and thousands of dollars (instead of years and millions),” Huckstep said. “Speed-to-market is the defining characteristic for these tech-enabled platforms.”

At the end of the day, speed-to-market is what it’s all about. Accenture’s study revealed that as many as 51% of consumers are purchasing coverage online, but, according to Aite Group, less than one-quarter of insurers are selling direct to consumer through digital channels. That means a small number of insurers are reaping all of the rewards of digital distribution, while others, particularly carriers that sell exclusively through independent or captive agent forces, lose revenue and market share.

I’d like to hear from carriers with independent or captive agent forces. Are you feeling the push from consumers to offer D2C channels of engagement, and what approaches are you taking to ensure that you have a presence in the new digital insurance economy?

What P&C Insurers Are Missing

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?

3 Ways to Maximize an Insurtech Partnership

In reading recent reports on insurtech, it was heartening to see the number of insurers that have chosen to gain the market-leading capabilities and tools they need to succeed by partnering with innovators. Many of the major insurers on the list are seeking differentiation, focused on augmenting their product lineup with a new offering, such as State Farm’s and Allstate’s partnerships with Openbay to provide non-collision auto repair services. Others are expanding distribution through a new channel such as an app.

In our experience, insurers that start a partnership with an insurtech that focused on a narrow goal, such as gaining homeowners coverage to enhance their existing auto, inevitably expand the relationship, because the right insurtech partnership rapidly positions insurers for greater growth and prosperity.

Banking on the Power of an Insurtech Partnership

Banking on the digital savvy of an insurtech innovator can deliver powerful results, but in our experience focusing on the following three areas produce the greatest overall outcomes:

  • Empower agents: In the initial talk about digital distribution, many assumed that agents would be ousted from their traditional roles and forced into a position of obscurity. We don’t see this happening, and neither do leading insurers, as 50% of consumers still want to speak with an agent when they have questions or concerns.

The problem is, when you put an agent up against the Amazon experience, the agent comes out as woefully inefficient, taking too much of the consumer’s time to manually plug reams of information into multiple back-office systems to generate a quote.

See also: What’s Your Game Plan for Insurtech?  

Agents are still a powerful force in the industry, but to keep their competitive edge they need the ability to speed the quote-to-issue lifecycle. One leading insurer stands to improve premiums by $100 million to $150 million by the end of this year because it streamlined the agent’s tasks to offer seamless product bundling in a single transaction.

Overhauling legacy systems won’t get other insurers there fast enough, but partnering with the right insurtech will.

  • Add product and channel choice: I mentioned the Amazon experience above, because it has shaped so much of consumers’ shopping preferences and expectations. As we see by following insurtech funding and partnerships, traditional insurers are realizing the direction that consumers are pushing the industry and, in an attempt to get ahead of the game, are differentiating themselves and the service they provide by partnering with insurtechs to add channel and product choice.

We see tremendous benefits for insurers that focus on meeting more of the customer’s needs. Consider a leading insurer that introduced coverage options by selling other carriers’ products to augment the insurer’s auto lineup and added 72,000 policies in less than 10 months. Another gave agents access to additional home products and grew policies sold from less than 8,000 a month to 57,000 a month.

Of course, product choice isn’t complete without giving consumers the ability to engage with insurers through their channel of choice. One top-five insurer, well known for digital prowess, has been reported to own quote conversion rates of 35% through agent channels and as much as 53% through direct purchasing.

The problem for most insurers comes in attaining digital capabilities and the extensive range of products they need to acquire and retain customers. Developing products can take a year or more, and overhauling legacy technology to add digital channels of engagement and efficiently distribute new offerings is an arduous task. Neither course of action will make traditional insurers competitive before leading digital rivals pass them by. Partnering with insurtech innovators to bundle products from other carriers with their own and distribute them with top-tier digital capabilities, can.

  • Streamline the quote-to-issue lifecycle: During a recent advertising campaign, one client generated 3,000-4,000 quotes a day, but not by simply cranking up advertising power or frequency. Instead, the client supported the extended marketing campaign by digitizing the quote-to-issue lifecycle for 80% of desktop traffic and 100% of mobile users. Smart app capabilities and automation allowed consumers to enter minimal information and automatically generate rapid quotes. The experience is similar to Amazon’s product purchasing environment, where customers search for a product, are immediately presented with options and click to buy the items they want. This is the future of insurance, and, by partnering with a leading insurtech provider offering a SaaS-based digital distribution platform, this insurer is providing the future today.

Coming Back for More

Insurers that focused on a simple goal, say of improving product selection or extending delivery channels, often expand the relationship to include more offerings and new distribution capabilities. One top-five insurer partnered with a leading innovator to enhance product selection for in-house agents by bundling products with those from other carriers through a digital distribution platform, and three years into a five-year contract signed up to offer additional product options, added 367 agents and extended the relationship to also offer the insurer’s products and carrier appointments direct-to-consumer via digital channels.

See also: 3 Misconceptions on Insurtech  

Why? Because within the first two years, the company found itself presenting 70% of customers with an offer, converting 35% of those quotes and doubling sales year-over-year. With outcomes like these, who wouldn’t expand the relationship?

To learn more about selecting the right insurtech innovator to power your growth, download our infographic: InsurTech Innovators Arm Incumbents to Meet the Customer-centric Imperative.

5 Things to Know on Insurtech Partners

At Bolt, we have been working with insurers since 2000, and I am often asked about the new startups entering the market and how traditional insurers can compete. The first thing I usually want people to understand is that not all insurtech is intent on disrupting the market. Bolt, for instance, is what we like to call an insurtech innovator. Our goal is to partner with existing insurers and help them find answers to the contemporary challenges they face. This explanation naturally leads to the next question I’m frequently asked: What should insurers look for when seeking an insurtech partner?

Finding an Insurtech Partner That Brings Value

The insurance industry is unique. Guarded by strong regulations and financial requirements, it has been relatively closed to new entrants, developing a culture and method of doing business that’s different from other industries. That makes finding a good partner from the growing list of insurtech innovators a challenge.

See also: Insurance Coverage Porn  

Below are the top five factors I think an insurer needs to consider when partnering with an insurtech innovator:

  • Don’t fear change: While insurtech innovators need to understand the complex regulatory environment and the culture of the insurance industry, I also think that traditional insurers could learn a little from the newcomers. Silicon Valley startups, for instance, are at the forefront of cutting-edge technology. Consider the tremendous consumer backing that a company like Apple has, and you realize that these techy new entrants have tremendous insight into what makes the customer tick. Adopting a little of this can take insurers a long way in the customer-centric era, so don’t be afraid of a little give and take when it comes to merging your culture with an innovator’s.
  • Have a plan: Some insurtech innovators are eager to enter the industry and will promise you the moon and stars, but do you really need the whole universe of what they are offering? For instance, most insurers have a strong agent channel, and their customers like working through agents. One insurtech may promise superior results by eliminating agents in favor of a straight D2C play. As we’re seeing with many new insurtech disruptors, consumers want to interact through a variety of channels, so you would be better served by digital capabilities that can support both D2C and agent channels.
  • Avoid the culture clash: I’ve worked in both the technology industry and the insurance industry, so I understand the culture shock that can occur between the two types of organizations. Earlier this year, we attended the Auto Insurance Report National Conference (AIRNC) 2017, where Patrick Sullivan spoke about the wave of insurtech entrants. Based on his experience speaking with many of them, he concluded that the movement won’t change the world, but niches abound. What this means is that disruptors won’t be able to unseat existing insurers, but innovators with a strong insurance background can merge their technological skills with this knowledge to help insurers navigate the changing environment. The key is to find partners with strong industry experience.
  • Support innovation: The insurance industry is well-known for being resistant to change, so it’s important that a spirit of innovation comes from the top down and that leaders support the progressive steps you’ll be taking with an innovator. For instance, at Bolt, we’re always asked by companies that sell products on our platform why they should want to bundle in products from others in our network. We’ve seen companies greatly increase their results by doing so, because they show the customer they are committed to all of his or her needs. But making the commitment to bundle with competitors wouldn’t have been possible without an organization-wide commitment to change.
  • Dedicated resources: Regardless of the change initiative underway, partners can only take you so far. Internal change management is the responsibility of the insurer, and you need to make certain you have a plan, and the dedicated resources, in place to support the new initiative. Over the last few years, we’ve worked with a major insurer on expanding product selection and giving agents access to top digital tools that streamlined the buying process. The company instituted internal ambassadors that led the change and supported agents throughout the transition, ensuring the success of the launch and beyond. The result was a $26 million increase in premiums over two years.

See also: Why AI Will Transform Insurance  

Adapting to the industry evolution underway isn’t going to be easy, but insurers can pave the road to success by partnering with insurtech innovators that have solid insurance experience. By merging their native digital expertise with the ability to support and navigate the industry complexities, innovators can help traditional insurers become top-tier digital enterprises, capable of delivering the customer-centric environment consumers are demanding.

To learn more about partnering with InsurTech Innovators, read our thought leadership piece, How InsurTech Will Revolutionize the PC Insurance Industry: Partnering Into the Future.