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Digital Survival Tools for Agents

Whether the majority of your business is online or in-office, it is crucial for you to have the right tools to help you capitalize on the insurance market and get ahead of the competition in a changing landscape.

It does not matter what type of insurance you are selling, whether it’s employee benefits, life insurance, group insurance, voluntary benefits or property and casualty. While your role may not be directly affected by things like legacy system transformation, robotics and big data, there will be ripple effects. Besides obtaining new clients, presenting renewals and marketing, changes in regulation and advances in technology are all things that agents will have to contend with.

Here are three elements that savvy agents and brokers will want to consider.

Multi-generational marketing

Global populations are now categorized (albeit loosely) into four categories: Baby Boomers, Generation X, Millennials and Generation Z. Although Baby Boomers are still the largest population, the U.S. Census Bureau predicts Millennials will outnumber Boomers by 2019.

These differentiated markets make targeting sales much more difficult. Fortunately, there are online tools that can support you. The trick here is diversifying your presence. Ensure that you have a presence on multiple channels so that you are able to meet your customers where they are.

See also: 10 Essential Actions for Digital Success  

Update your agency website with a live chat feature, and ensure it is easy to contact you online. Examine whether it makes sense to use Twitter, Facebook or Instagram. If you do, you’ll need a strong content strategy that provides real value to pull in visiting prospects.

Don’t just surf the web, observe the web. Set up Google alerts and analytics and Hootsuite streams to follow partners and competitors. Watching for trends will keep you ahead of the game.

Administration tools

A strong agency management system can provide you with everything you need to support your customer lifecycle. When looking for the right one for you, think about CRM and marketing automation. Determine what will make it easier for you to track leads, nurture prospects, close deals and obtain commissions.

Once you’ve sold a policy, a high-quality microphone and webcam will enhance consistent communication with customers remotely on Skype, WebEx, GooglePlus Hangouts or even Facebook.

Get comfortable with automation

As you get comfortable with a new and diversified way of connecting with your customers, you’ll want to consider that insurance carriers are doing the same thing. Accenture’s Technology Vision 2018 report revealed 82% of insurance carriers agreed that their organizations must innovate faster just to stay competitive.

In a world where customers are shopping around for options and prices all the time, retention itself becomes a valuable commodity. Help carriers help you by learning what tools their new systems have to offer so you tap into all the resources available.

Do your insurance companies offer broker portals? Do they offer online quoting capability for immediate results? Can you generate a proposal or immediately sell a policy? Can you offer that functionality on your own website? The carriers that invest in your success by improving sales, underwriting and admin functions for quicker turnarounds and smooth renewals are doing themselves a favor, too.

See also: Agents Must Become ‘Discussion Partners’  

Think strategy

As you determine the best way to move forward, sit down with others on your team, start a Google doc and plan your strategy for the year ahead. As Yogi Berra wisely said, “If you don’t know where you’re going, you might not get there.”

What free tools will you use? Which ones will you invest money in? How will you track progress to determine ROI? What tools are working for you?

The best agents and brokers will be nimble enough to exploit the tools available to them and prepare for new ones as they arrive. The sooner you start, the more likely you’ll find yourself ahead of the digital curve.

Lemonade Really Does Have a Big Heart

Twelve months ago, Lemonade opened for business. For me, it marked the start of a new chapter in the history of the insurance industry. To coincide with their launch, I posted this article after speaking with CEO and co-founder Daniel Schreiber. The headline was “insurance will never be the same again!”

Of course, it was easy for me to make such a grand pronouncement 12 months ago, on the day that Lemonade hit the street. At that time, they had no customers, had not written any insurance and had certainly never paid a claim.

One year on, and Lemonade is up and running. Was I right to say insurance would never be the same again? I caught up with Daniel again to find out!

Disruptive Innovation

First things first, let me set some context. A question I get asked a lot by insurers and industry folk is, “why should we be interested in what Lemonade are doing?” It’s a great question and exactly what they should be asking. (I also point out that they need to be really interested in what ZhongAn is doing, as well).

To massively over-simplify and paraphrase Clayton Christensen, Lemonade has brought simplicity, convenience and affordability to a marketplace where the existing offering is complicated, expensive and inaccessible.

This is why the incumbent insurers need to take note when Lemonade pays a claim in three seconds. Otherwise, they could end up like DEC. Once the market leaders in minicomputers, DEC dismissed the rise of PCs, only to watch helplessly as IBM and Apple ate their lunch with personal computers.

Or Kodak, the inventor of digital photography. The company was too wedded to an outdated business model that relied on people printing their photos. That was until it was too late, and Kodak went from being the world’s fourth largest brand to bankrupt in less than two decades!

Now, it might have taken about 15 years for the demise of Kodak and about 10 for DEC to wake up and smell the coffee. The point being that disruptive innovations don’t take hold overnight; they need time to gain traction and build momentum.

But in this digital age, this speed of change is increasing. This is the key characteristic in the World Economic Forum’s definition of the 4th Industrial Revolution. It took Google just five years to hit a $1 billion in revenues. And Amazon only four!

Just think about this for a second. A decade ago, we didn’t have the iPhone, the iPad, Kindle, Uber, AirBnB, Android, Spotify, Instagram, WhatsApp, 4G. Could you imagine life without these now? Could you conceive that insurance is going to change and for the better?

You trust me, and I will trust you

There is another reason why incumbent insurers should be watching Lemonade very closely. It has addressed the fundamental issue with insurance and customer perception, which is trust, behavior and the conflict of interest.

There’s a ton of research and data that shows customers don’t trust insurers. And for good reason.

Insurers make the product complicated by using fancy jargon that Joe and Josephine Bloggs can’t understand. Insurers get paid up front and then create hurdles and barriers when the customer rightfully asks the insurer to do what they’ve already paid them to do.

And worse, the customer has to prove they are not a liar to the insurer’s satisfaction before a penny is paid out.

“Insurance fraud has become a self-fulfilling prophecy for incumbent insurers,” Daniel said. “They don’t trust customers to be fair and honest. This drives their behavior toward customers. And guess what, customers respond accordingly. Which justifies the insurer’s behavior in the first place. It’s a vicious circle that neither side can break.”

See also: Lemonade’s New Push: Zero Everything  

Lemonade’s virtuous circle

This conflict of interest doesn’t exist in the Lemonade business model. By operating as a tech platform that is also an insurance carrier, Lemonade has separated cost of operations from the pool of risk capital. It has also raised the bar when it comes to total cost of operations at 20% GWP.

Lemonade don’t profit from non-payment of a claim (in the way an incumbent insurer does). The company starts by trusting customers to make honest claims. Which is why Lemonade pays out straight away, with around a third of claim payouts fully automated. No human intervention at all.

Lemonade accepts that there are a few bad apples but works on the premise that most of us are fundamentally decent people.

It is usually at this point that the diehards and old laggards of the insurance industry start throwing fraud and loss data at me. Citing decades of data that proves Lemonade will eventually crash and burn under the weight of inflated and illegal claims.

My response is always the same “hands up everyone who is a bad person.” Of course, no hands go up because the vast majority of us are decent, respectful, honest people.

Which is why Lemonade has now had six, yes ,SIX, customers who have handed claims payouts back.

Just think about this for a moment.

A customer makes a claim (in seconds), gets paid (immediately), finds the situation has changed (later), realizes he got paid too much (oops!), then gives the payment back (you kidding me?).

Could the customer’s behavior be directly related to Lemonade’s behavior?

Yes, certainly! You only have to look at customer behavior at Grameen Bank in Bangladesh to see that trust can be relied  upon. Here, unsecured personal loans are repaid on time without the need for credit scores and debt collection agencies.

You don’t have to take my word for it, either. Hot out of the oven is this video of Lemonade customers in New York.

So, what’s the story, one year on?

Lemonade has been true to its word on the subject of transparency.

Throughout the year, the company has published its numbers, warts and all, for everyone to see. Building and maintaining trust is fundamental to Lemonade’s business model, and this starts with being open and honest.

Daniel has shared with me the latest numbers, and they are very impressive. I won’t repeat them here, because I know the team will be posting them all shortly in the latest Transparency Chronicles. They’re proud of the numbers, and rightly so.

See also: Lemonade: World’s First Live Policy  

All I will say is that Daniel and the team have steered a considered and thoughtful course in their first year. They could have chased the numbers, as many first year startups would do, only to regret the quality of business they end up with.

But Lemonade’s team has stuck to their knitting, have impressive growth numbers, a quality customer base completely aligned to the brand and are now licensed in 18 states (with more to follow).

Our job has only just started,” Daniel said. “Over the next year, we will continue to make insurance easier and better for our customers. One area we’ve started to look at now is the underlying insurance language and the products that form the heart of all insurance.”

Are you surprised?

You shouldn’t be! Lemonade is a highly professional startup and will no doubt become the definitive case study for exactly how “it” should be done.

But has this surprised Daniel?

“There are two things that have surprised us this year,” Daniel told me. “First, the extent of the warm reception we’ve received across the industry and from customers. We hoped customers would like us, but we never took for it granted.

“After all, you can’t beta test a new insurance company. The MVP (minimally viable product) approach simply doesn’t apply to insurance. It’s regulated and has to be the real deal from the get-go, right first time. So, for us, having customers put their faith in Lemonade from Day One has been very satisfying.

“The second is that our faith in humanity and behavioral economics has been affirmed. There will always be people who want to game the system, but on the whole, all our expectations about customer behavior have been exceeded.

“Who would have thought we would have six customers who gave their claim payouts back. That is very gratifying and also humbling for us. And gives us encouragement to continue doing what we are doing.”

Lemonade is live; insurance will never be the same again!

For me, I’m convinced. Historians will look back to Sept. 21, 2016, the day that Lemonade opened for business, as a watershed for the insurance industry.

Which means, of course, that the key question now is, who among the incumbent insurers will provide the Kodak moment? The one who simply missed that the world had changed until it was too late.

Hate Buying? Chatbots Can Help

If you wanted to buy health insurance, how would you do it? I’d probably Google “health insurance,” click on the first link (maybe skip the ads out of an irrational disdain) and reach a website that looks something like this:

Once I am here, I find that I am woefully unprepared to carry on. What is basic sum insured? Pre-hospitalization? Post-hospitalization? Convalescence benefit? Ideally, I would have known what all these terms meant before I started searching for insurance, but I didn’t.

Insurance providers such as HDFC Ergo know that many people don’t understand these terms and provide more information. In the picture above, clicking on the little circled “i’s” next to each plan feature reveals further information. This is helpful — but only to a point. If I expand too many boxes, the screen starts to look like a jumble of words.

At this point, I would do what all people do best: procrastinate. I would return to Facebook, YouTube, Snapchat or Instagram and indulge myself in the endless stream of instant gratification I can get by simply picking up my phone or opening a new tab.

Suffice it to say that websites can only take you so far. Too much text clutters the user interface (UI) and makes the experience unpleasant. Too little text, and the user is too uninformed to make a decision.

See also: How Chatbots Change Open Enrollment  

Consequently, insurance providers add the option for real human interaction in the form of instant call-backs and live chats.

Through these media, an insurance broker could answer all the questions a potential customer has and tell him exactly what he should or shouldn’t buy. The customer doesn’t need to do any digging or reading on his own.

However, this, too, is not a perfect solution.

Hiring real people is not scalable.

They need to be clothed, fed and given days off.

If you are a multinational insurance company, you can throw money at these problems and minimize the inconvenience. If you are a smaller company, though, this is not an option. You might as well say goodbye to on-the-fence customers and focus on the informed ones.

But what if there was a solution?

What if you could have human interaction without the cost? Or could inform users without human interaction?

This is the promise of chatbots.

Chatbots make conveying information easier than in traditional media. They take a daunting and impersonal process like reading up on insurance plans and turn it into a simple conversation.

Imagine if all those uninformed leads could be funneled into a familiar WhatsApp-like interface, where a piece of software living on Amazon’s servers personally answered all queries as if it were a human. Chatbots interact with potential clients as a real human would to collect basic information about a person’s level of knowledge and stage in the buying process. Thus, when a human does eventually get in touch with each potential client, that human doesn’t need to waste time figuring out what the client knows and can begin helping immediately.

See also: 4 Hot Spots for Innovation in Insurance  

Here is an example of how Securenow, an insurance brokerage company, uses chatbots to help customers.

And this is how you can even showcase the best-suited insurance plans over a chatbot.

Chatbots are still in their early stages, but it is hard not to see their game-changing potential in the insurance space. In an industry where information is important — if not necessary — in making purchasing decisions, chatbots have the potential to make the buying process easier for all parties involved.

How Basis for Buying Decisions Is Changing

Building a business around speed and convenience is nothing new. Fast food drive-thrus, cell phones and FedEx overnight delivery services were just some of the predecessors to today’s Ubers, apps and same-day Amazon orders. But in most of these cases, purchase decisions were based upon simple factors — “I’m hungry,” or “We need delivery of a legal document,” or “Of course it would be nice to be able to make a call from my car.”

There were other services for which people understood that immediacy wasn’t an option. Many financial decisions took time. If you wanted to earn a little extra interest by using a certificate of deposit instead of savings, you would have to wait months or years for maturity. Securing life insurance was a multi-week (sometimes multi-month) underwriting process. Applying for a home loan with multiple credit and background checks took time. For the most part, people accepted these elongated processes and delays with resigned and good-natured patience. This was life. Important decisions required time, not only in the preparation, but also in the education and execution. Two hours with a life insurance agent would allow you to learn about all of the products available and understand their complexity, and it would help the agent to fit products to your needs. You valued the time spent learning, understanding and choosing based on the trusted relationship with your agent.

The convergence of generational shifts and technological advancement created a new mindset that rewrote expectations and priorities for many. Patience is no longer always considered a virtue. Insurance relationships are no longer always valued. Time-crunched people seek time-saving services. Value is seen in immediacy, uniqueness and ease.

See also: Innovation: a Need for ‘Patient Urgency’  

Enter the new generation of insurance companies redefining the insurance engagement. Lemonade, TROV, Slice, Haven Life and others who are redefining speed and value to a new generation of buyers … are placing traditional, existing insurers on notice.  From purchasing a policy in less than 10 minutes to paying a claim in less than three seconds … speed and simplicity are the new competitive levers.

Out of necessity, this has changed an insurer’s view of competition. Insurers used to know their competitors. They understood their distinctive value propositions. They debated on what were the real product differentiators. Insurers understood the reach of their agents, their geographic limitations and the customer and agent loyalty they could count on because of their excellent service.

While all of these factors still guide insurance operations, the competitive landscape has shifted to different factors critical to acquiring and retaining customers. Insurers are feebly groping for just a tiny bit of space in consumer minds —enough to plant the seed of need and just a little more to water the plant into engagement and completing a transaction — because today’s consumer isn’t going to listen well enough to grasp distinctive details. He or she is looking for an easy and quick fit.

A 2015 study of Canadian consumers estimated that the average attention span had dropped to 8 seconds from 12 seconds in 2000, driven at least in part by consumers’ constant connections through digital devices.

Need. Purchase. Done. Happy.

A 2012 Pew survey of technology experts predicted what is now coming true, “the impact of networked living on today’s young will drive them to thirst for instant gratification, settle for quick choices and lack patience….trends are leading to a future in which most people are shallow consumers of information.”

Only five years later, insurers are feeling the impact.

A key reason many of the new, innovative companies are appealing to consumers and small and medium-sized businesses (SMBs) is because they simplify and remove some of the cognitive effort required to make decisions about insurance. In his book, Thinking, Fast and Slow, the Nobel Prize-winning behavioral economist Daniel Kahneman described human decision making and thinking as a two-part system. Greatly simplified, System 1 thinking produces quick (i.e. instantaneous and sub-conscious) reflexive, automatic decisions based on instinct and past experiences. These are “gut” reactions. System 2 thinking is slow, deliberate, reason-based and requires cognitive effort.

In general, most of the decisions we make each day are through System 1, which can be both good and bad; good because it increases the speed and efficiency of decision making, and because in most instances the outcomes are acceptable. However, not all outcomes are good, and many could have been improved had System 2 thinking been engaged. The problem with System 2 is that it takes effort, and humans naturally try to minimize effort.

See also: Insurtech: Unstoppable Momentum  

So, a traditionally complex industry is intersecting with a cognitive culture that is mentally trying to simplify, reduce effort and be more intuitive. This has consequences for decisions throughout the customer’s journey with an insurance company. Good decisions about complex issues like insurance should be based on System 2 thinking. However, during the research and buying processes, the cognitive effort to do so can lead many people to choose other paths like seeking shortcuts to in-depth research and analysis or delaying a decision altogether.

In a recent report, Future Trends 2017: The Shift Gains Momentum, Majesco examined how impatience is driving a shift in behavior that is causing insurers to look at the anatomy of decisions. What behaviors are relevant to purchase? To renewals? To service? How can insurers still provide risk protection to individuals who won’t take the time to learn about complex products? We’ve drawn some of these insights out of the report for consideration here.

For one thing, insurers clearly recognize that the trends affecting them are far broader and bigger than the insurance industry. Businesses and startups across all industries are capitalizing on the lucrative opportunity afforded by meeting the ever-increasing demands for speed and simplicity made possible by technology and re-imagined business processes. Amazon Prime, Netflix, Spotify, Uber/Lyft, ApplePay/Samsung Pay, Rocket Mortgage (Quicken Loans), Twitter, Instagram and other technology-based businesses represent contemporary offerings that have simplified the customer journey.

Retailers such as Walmart, Best Buy, Staples, Amazon and even eBay are testing same-day delivery for items ordered online. Simplifying a customer’s entire journey with a company by making it “easy to do business with” is more critical than ever for insurers.

What is the good news in the world of impatience? Insurers are quickly finding ways to counter the disparity between the need for speed and the need for good decisions. They are also using a bit of psychology to positively influence decisions, and they are buying back some brain space with techniques that both inform and engage.

In Part 2 of this series, we will look at these techniques as well as product adaptation, framework preparation and planning for transformation that will meet the demand for quick decisions. For more in-depth information on behavioral insurance impact, download the Future Trends 2017 report today.

Are You Still Selling Newspapers?

“Who is that guy, and what’s he doing?”

Shaun called me, laughing. He explained that he had just heard about a teenager who was at his friend’s house. As they walked through the den – he saw an older man reading a newspaper in a recliner and asked the question above.

The man’s son said, “That’s my dad, and he’s reading a newspaper.”

The next question was, “What’s a newspaper?” followed by, “Where does he get it?” The son apologized for his dad’s eccentric behavior by explaining that there are stories about news, politics and sports in the paper.

It’s like what we can read on Google, Facebook, Twitter, Snapchat, Instagram or WhatsApp, or view on YouTube. Every morning a man drives by the house and throws a paper (usually in a plastic bag) out of his window and into our yard. Rain or snow, sleet or shine, dad walks outside to get it. Then he comes in and reads it like he’s doing now.

“Why doesn’t he have a smart phone? What’s wrong with him?” the friend asked.

These questions may shock those of us who walk to the curb at 5:00 every morning, anxiously awaiting our daily delivery. The newspaper is important to me. It is more than news or journalism. It is a ritual in my life, a daily ritual I’ve enjoyed for more than 50 years.

To the teen above, my ritual probably is crazy. To me, he seems stupid. In yesterday’s world, I’m right. In tomorrow’s world, he is.

Consider the profits made by the publishers of newspapers in yesterday’s world. Consider the Big 3 broadcast channels, CBS, NBC and ABC, and their dominance in the media world.

Now recognize that they are dinosaurs – smoking around the tar pits while awaiting their demise.

Is your agency or carrier or brokerage selling yesterday’s products to a population that is the past, or is your agency a living system that is growing with the marketplace as it will be and adapting what you sell and how you sell it to the buyers of the future, or are you focused on your reminiscences?

What populations/niches will you serve in tomorrow’s world? What will they be buying? How will you deliver it to them profitably?

I can promise they will be different than I am, and you must be different than you are – if you don’t want to go extinct! Will your model be paper or virtual?

Think new! Act now!