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Smart Things and the Customer Experience

The inanimate world around us is coming alive, powered by smart things and AI. It is difficult to name an object for which there is not a smart version.

Garage doors, thermostats, doorbells, appliances? Check.

Shoes, belts, hats, shirts? Check.

Cars, trucks, boats, drones? Check.

Just about anything you can imagine, and some bizarre things that would probably never cross your mind, have smart versions that connect to the internet and can be controlled by mobile apps or even take action on their own. The potential is great, and the implications for insurance are many. But one thing about smart things that has a mixed record so far is how humans communicate with them. In some cases, the customer experience is well-thought-out and will contribute to adoption. In other cases, the experience is downright awful.

Without naming specific companies, here are a few examples of good and bad experiences with smart things.

  • Smart TVs:
    I am starting here because some of these are terribly frustrating. Many require interaction via remote control devices, pop-up keyboards on the TV screen and the down-down-over-over-over maneuvering on the keyboard for EACH LETTER. It reminds me of the early texting days with triple taps.
  • Smart tags:
    Small devices that attach to keys, slide into wallets or get packed into suitcases are widely available. I’ve tried many of these devices and have discovered that some are simple, fast and easy to install and use, while others are a nightmare. One device I ordered was extremely hard just to get out of the package! Another one required you to slide it open to install a battery, but I almost gave up trying to pry it open. Alternatively, I have some that I use that took me less than a minute to set up, and they just work.
  • Telematics devices:
    There seems to be a migration away from dongles, which is a good thing. In some cars, you have to be a contortionist to get your body into position to plug the dongle into the OBD port. Mobile-app-based telematics are easier to set up, and the user interfaces are usually modern.
  • Wearables:
    I’ve had three different fitness wearables. Generally, the experience is good, although sometimes the data entry to set up a profile and do regular logging gets tedious.
  • Vehicle information/entertainment systems:
    The ability to initiate a phone call or change the radio station with a voice command is great – when it works. There are some commands that are just never interpreted correctly, or never interpreted at all.

See also: How to Make Smart Devices More Secure  

I could continue with examples of smart home devices, virtual reality/augmented reality headsets and glasses and other smart objects. Many of you can relate from your own experiences: some are slick, easy and fun – and others tedious and frustrating. There are several lessons here that insurers should keep in mind in any venture where they are providing or leveraging smart devices to policyholders.

  • Recognize that customer experience goes beyond the mobile app.
    The ordering, shipping, opening the box and reading the initial instruction booklet are all part of the experience. Some insurers discovered how important this can be after sending out dongles for telematics devices.
  • Make sure it works!
    I have returned more than one smart item, including a bathroom scale that was supposed to synch with a fitness wearable that never worked, even after several calls to tech support. It is the ultimate poor customer experience when something does not work as advertised.
  • Resist the urge to collect too much information.
    Especially during set-up, just collect what is minimally required to get it going, not extra information that you desire for marketing and other purposes. When an individual buys a smart device, he is anxious to get it up and running.
  • Ensure that tech support is accessible.
    “Fill out this form, and we will contact you within the next 48 hours” is not a good way to go. Most people are excited about their new device and don’t want to wait this long for a response. At the very least, provide a live chat session.

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

The connected world of smart things is exciting and offers many possible ways to enrich our daily lives, improve business operations and make the world safer. The functionality of a smart device is very important. But don’t forget that the customer experience will play a large role in the adoption of smart things.

What to Do When Catastrophes Go Viral

The power of social media is undeniable. Whether it’s political movements, disasters, or breaking news, social media delivers unfiltered information instantaneously to people around the world. When a catastrophe occurs today, comments, pictures and video are likely to appear on the Internet as it happens. For instance, a deadly explosion at a Texas fertilizer plant was caught live on video and posted to social media, as was an enormous explosion that rocked the Chinese port of Tianjin. But when social media posts about a catastrophe go viral, the company involved can be in for a struggle.

To avoid getting left behind, companies need to prepare for how they will communicate using social media when a catastrophe strikes. A company that plans ahead and is able to mount a robust response may not only salvage its reputation, but may actually enhance its public image if it is seen as managing a difficult situation well. Because many companies lack this kind of communications expertise, they may want to work with consultants that can help them prepare for a disaster and respond appropriately. In addition, they should consider insurance that provides coverage for experienced public relations catastrophe management services to protect their corporate reputation.

Social Media Plays a Crucial Role in a Crisis

When it comes to disasters, mobile apps and social media are seen by the public as crucial ways to get information, according to a Red Cross survey. During Superstorm Sandy in 2012, social media played a significant role in providing official information and combating rumors. When Cyclone Tasha struck Australia in 2010, the Queensland Police Service made extensive use of Twitter to provide information to people spread over a vast area.

Social media, however, is widespread and public information, which means that if there is an explosion, fire, or other disaster, chances are someone may be streaming it live to the Internet, tweeting about it, posting it to Facebook or uploading pictures to Instagram even before the affected company is aware of it. In essence, that means public opinion about the incident, as well as the company involved, is already being shaped, possibly without any direction from corporate communications.

Because information travels so quickly through social media, the public no longer has to wait for the evening news to receive the most up-to-date information. Therefore, companies are not afforded the luxury of time to gather all available facts before addressing the public. Traditional media and news organizations are also feeling an increased amount of pressure. Since social media has enabled news to travel quicker, stories may not receive the same level of scrutiny as they once did. That leaves plenty of opportunity for the spread of misinformation, which can be very difficult to counteract. On the Internet, inaccurate information may persist long after it has been thoroughly discredited elsewhere.

Embrace Social Media in Crisis Communications

To handle the social media aspect of a crisis, companies need to be able to act immediately or risk allowing reporters and “citizen journalists” to tell the story they want to tell, which may not provide a complete and accurate picture. Being unprepared can lead to inconsistent messaging, or even misstatements that may create confusion and ultimately damage a corporation’s reputation. A company that is seen as clumsy in its media response to a crisis risks losing credibility.

See Also: Should Social Media Have a Place?

When a disaster is handled well – by providing the public with timely and accurate information as well as proper reassurances about its products and services – an organization can actually bolster its reputation. While social media accelerates the media cycle, it can also enable a company to take control of its image by acting as a primary and reliable source of information when a catastrophe occurs. This requires planning and preparation.

An initial step is to review the corporate crisis communication plan to understand its limits in social media. A traditional crisis plan provides for one-way, controlled communication through prepared statements, press conferences, marketing tools, and commercials.

Such an approach is likely to be viewed as unresponsive by the public seeking immediate information. Incorporating social media into the traditional plan provides for two-way communication that allows for debate, insight, and opposing viewpoints that can guide the company’s responses.

The social media plan, however, should remain consistent with the company’s traditional media efforts. The company should provide consistent messaging in both traditional and social media about its culture and philosophy, the actions it is taking and the expected results, and its concern for those who have been affected.

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Develop a Detailed Social Media Plan

The plan should delineate the policies and procedures to be followed in the event of a catastrophe, and – most importantly – assign roles and responsibilities to specific staff. This ensures that someone who understands the company’s message will maintain control, which can help lessen potential mistakes. Both external and internal policies should be covered so that the information communicated to and among employees and the public is timely, accurate and consistent.

The written policy should detail the information to be provided – for instance – pre-vetted information about the company and its corporate philosophy. It should establish guidelines pertaining to the types of social media posts that necessitate a response. Not every
post merits a reply. Anyone who uses a computer or smartphone can post information to the Internet. Identifying legitimate posts and inquiries and providing necessary information can help preserve a company’s reputation.

Because the social media landscape is dynamic, companies shouldn’t limit themselves to just one outlet, but rather those that are most appropriate for the business, the audience and the geographic region. If an incident occurs abroad, companies should use the
social media outlet most appropriate for that region. With their massive user base, Facebook, Twitter and YouTube are obvious choices for domestic and international audiences. Others such as Instagram, Snapchat and Tumblr, should be considered. Companies active in Europe and Russia should consider the social networking site VK.

Prepare the Response

While it may not be possible to prepare material for every potential catastrophe, companies can still organize information ahead of time that can be released as soon as something happens. Information can be prepared for a “dark page” for the corporate website that can be published in the event of an emergency; however, companies should be careful not to publish a “dark page” until a crisis actually occurs.

The site can include background information about the company and its specific businesses as well as the corporate philosophy during times of crisis. Other information might be media contacts and toll-free phone numbers for claims intake. Preparing the information ahead of time makes it possible to have it reviewed by a company’s legal department, public relations, and senior management. Once the page is live, it should be monitored and updated so that it always provides the most current information.

Whether information is prepared ahead of time or developed in response to a particular incident, it should be presented in a way that is accessible for the audience. Written material should be understandable by a wide range of people. Companies should avoid industry jargon and acronyms, which may be unclear or even misunderstood by the general public.

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Monitor and Test

When not in crisis mode, it is helpful for companies to monitor social media. Viewing the social media environment in the normal course of business can help companies ascertain how their brand, products and services are viewed by the public. Companies can purchase monitoring services or build these capabilities in-house.

While monitoring social media is an important part of regular business, it becomes essential after a catastrophe to identify issues that need immediate attention. This helps to ensure that the traditional and social media messages the company is sending are having the desired impact. If the same questions continue to be asked on social media, it’s a clear sign that the message is not getting across.

As part of their overall catastrophe preparation, companies should test their communication response plan to assess their procedures as well as their staff. Testing can help ensure that everyone understands their roles and responsibilities and is able to react quickly. Drills assist in identifying blockages and help address uncertainties in the process. After the test or following an actual event, the company should conduct a thorough reevaluation and debriefing to identify the areas that worked well and those that need improvement.

Preserve the Corporate Reputation

Today, a story about a disaster can be trending on social media even before the company involved is aware of the loss. Organizations that wait too long to respond can cause lasting damage to their reputation. A company that is perceived as avoiding or failing to address a story may soon realize that its lack of response becomes the subject of that story. Undoing the damage caused by a tardy or ill-conceived response can be very difficult.

Many people realize that companies may make mistakes, but how these companies react and the decisions they make when faced with a disaster can potentially lessen confidence among customers and the wider public. Knowing how and when to respond helps project an image of competence and concern. Social media is the fastest way to reach people, project the company’s message and protect its reputation.

To become better prepared, companies have to identify their most likely risks and develop plans to mitigate those exposures, whether they are health, safety or environmental. Companies need to know how best to respond on social media if a disaster were to affect their business. To do so, companies may want to work with consultants that can provide risk analysis and mitigation services and help to prepare a crisis response. In addition, to help plan how they will respond to a crisis on social and traditional media, companies should also consider insurance that can defray the costs of hiring expert help when a disaster strikes. No one knows when a catastrophe may occur, but being prepared can help lessen the damage. Customers will look to these companies for information– companies that can provide that information are more likely to weather a crisis with their reputation unscathed.

How to Redesign Customer Experience

Humans have amazing capabilities and, even more, they can be amplified by the power of technology. When both are working in harmony, what was once impossible becomes possible. Technology is now the “X” factor that can help you become more efficient while more effectively serving your base. When it is intentionally aligned with human effort, technology acts a weapon you can wield to strengthen your organization, increase the ability of your team and delight your customers or members. Discovering this human/technology balance is a process we often walk our clients through; many of these clients are in the financial services space, which is an industry being transformed by technology as much as any. There will be winners and losers in the financial space and the defining variable will be how well you can learn to integrate humans and technology to deliver your business model. We call this integration Humalogy.

What is Humalogy?

Humalogy is the integration of technology and human effort to improve processes and offer a positive and meaningful impact on an organization. That’s only when Humalogy is properly balanced. Understanding the Humalogy balance is critical because if left unbalanced it can be expensive to an organization, highly infuriating to customers or both. The balance you find will enable you to do some magical things. Here are just a few examples:

See Also: Tips on Improving Customer Experience

  • Increase your individual, team and organizational effectiveness and capacity through lean processes and efficiency
  • Increase the quantity of potential and current customers that you are able to effectively reach with your messaging
  • Create an environment of profit amplification by both reducing costs through automation while shaping a better customer experience through the use of digital tools
  • Implement customer service enhancements through technology-enabled convenience such as self-service
  • Enable people in your organization to be more productive and satisfied in their role, because technology has freed their time to accomplish tasks that humans do well while avoiding mundane, automated assignments. Simply, they’re able to focus on the satisfying, cerebral aspects of their careers.

The Humalogy Scale

We have developed the Humalogy scale to measure the balance of human and technology effort. We use this scale with our clients, many in the risk insurance space. Some processes lean heavily on humans (H5 on the Humalogy scale), and others primarily rely on technology (T5). Zero is an equal balance of effort from both humans and technology. What is important to recognize is that there is no “universally correct” balance. The proper balance for any space is the balance that yields you the highest level of efficiency combined with the best possible customer or member experience.


For example, H5 would be an insurance agent traveling to an accident and manually filling out a claim. Moving across the scale, we find a claimant snapping a picture of the accident using a smartphone and then filing a claim using a mobile app and receiving payment through direct deposit. This requires much less human effort and so is high on the T-side of the scale.

By defining where these processes are on the Humalogy Scale, it becomes easier to determine where to apply technology to drive efficiency, scalability or repetition. At the same time, in our technology-augmented world, we need to be conscious that some processes can be improved by adding the human elements that supply empathy, innovation and build trust.

Tasks more suited for human work involve rational processing of information, deep thinking, social and emotional intelligence and those tasks that require creativity, intuition and improvisation. Meanwhile, tasks more suited for computers are those that execute rules or processes, involve repetition or mechanization, require big data analysis or are too dangerous or too large or small for a human to accomplish.

Finding Humalogy Balance

Humalogy is important because when you apply this process to your business, it becomes a lens that can help you improve customer service while creating a lean organization that lowers costs.

Have you taken inventory of the technology expectations of your members? No industry is exempt from the evolving expectations of constituents who want access to services easily and instantly. Self-service is how industries are meeting the customer where they are — customers are now equipped to complete tasks that once required a service representative, often from their personal tablet or smartphone. Defining which processes you can automate and provide self-service using technology will help satisfy your customers and endear them to you.

On the other hand, the wrong Humalogy balance can result in poor customer service and a loss of loyalty. If your approach to Humalogy is not planned, often what may have been calculated for good can result in catastrophe. How many times have you felt alienated as a customer because a service provider tipped its Humalogy scale and traded personal touch for an automated call center? If someone wants to speak to a human representative, it is important to offer the opportunity.

Humalogy is a tool that can be considered in a number of functional areas. The two primary ways we apply Humalogy in the risk insurance space is through lean and relationship journey mapping.

Humalogy-Based Lean to Strengthen Process Efficiency

Humalogy-based lean is designed to help organizations improve their back office processes so that they’re more efficient. Some companies follow Lean Six Sigma practices that have emerged from years of optimizing physical and manufacturing processes. These methods are powerful and effective but can be very narrowly focused on the process. At other times, this approach may improve the human parts of the process but fall short when it comes to implementing technology. On the other end of the spectrum, aggressive automation efforts driven by technologists may miss important nuances that may be better handled by humans. In the worst case, a technology-centric approach can result in automating broken processes.

How do you get, and stay, on the right path so that you both improve your processes and automate appropriately? We recommend applying a Humalogy lens that lets you examine a process from some distinct angles:

  • It lets us decide if a process involves a greater emphasis on human effort or technology effort. This helps us understand which processes are too heavily human and in need of automation.
  • It helps determine which processes we should immediately devote attention to improving. We are able to prioritize more effectively.
  • It acts as a reminder that a solution isn’t always a technology solution. Often with processes, a greater human involvement is necessary to help a process run more effectively.
  • When we analyze processes, we are forced to diagram those processes to understand what is happening at each step. This gives deeper insight into how technology may be used to transform a process.

While Humalogy-based lean can help you improve back-office processes, studying Humalogy from the perspective of your customers will help improve their experience. This is accomplished by mapping the relationship journey.

Humalogy to Improve Customer Experience

Relationship journey mapping involves walking alongside your customers as they engage with your organization. We develop a subset of very targeted groups based on individual personas. In this process, we analyze together each critical stage of your customer or member journey and evaluate the touch points where you have the opportunity to engage directly with these personas. The goal of journey mapping is to maximize each opportunity and design the best possible experience for each customer.

See Also: Keen Insights on Customer Experience

The consideration of Humalogy is an important component of our journey mapping process. As you consider each of the personas who interact with your organization, you will also consider their proclivity to use technology at each stage. Would he want you to deliver all correspondence electronically? Would she be more willing to read a print newsletter you’ve sent her in the mail, or would an email with the information that you wish to present her suffice. Is he more likely to use a desktop computer or a smartphone? Would she be interested in a mobile application or online portal? Journey mapping allows you to consider the needs of each individual and then discover ways to satisfy those needs.

Developing and using proper journey maps allow you to create a one-to-one experience for each of your customers. You will understand how to provide positive engagements that they will likely choose to discuss with their networks. In short, you can increase your value to your customers, and that’s really what it’s all about.

Technology is already transforming your life and your industry. Technology can also, in an incredible way, transform your organization, everything from your day-to-day operations to the way you engage your customers.

It’s Time to Embrace Telemedicine

At hospitals and clinics across New Jersey, thousands of new doctors could soon be on call — literally.

In Trenton, lawmakers are considering two bills that would enable doctors and patients to skip the office visit and conduct appointments using video-conferencing tools like Skype.

They’re right to embrace this kind of technology. The increasing use of “telemedicine” promises to improve patients’ access to doctors and slash healthcare costs.

Virtual medicine makes it a lot easier — and cheaper — to see the doctor. By first consulting with a patient by video, doctors and nurses can determine whether a costly in-person trip to the emergency room or to the doctor’s office is necessary — or whether two aspirin and plenty of rest will do.

See Also: 5 Questions on Telemedicine Coverage

For patients who end up in the hospital, telemedicine can facilitate faster and cheaper convalescence.

Consider a patient recovering from heart surgery. His doctor may want to continuously monitor his blood pressure and pulse. Telemedicine can accomplish that remotely and automatically. That saves the patient the trip and the doctor the time measuring those vital signs.

Telemedicine can also save money. Take a program called Health Buddy, which asks patients daily, tailored questions about their health through a handheld device at home. After reviewing the answers, doctors know when and how to offer care. A study published in Health Affairs found that Health Buddy reduced Medicare spending by as much as 13% per patient.

Other programs offer patients hospital-level care inside their own homes. Doctors and nurses visit one to two times a day while other providers monitor vital signs remotely. Participating patients often require fewer tests and less time under observation, so these “hospital at home” programs can cut costs by 19% compared with conventional inpatient care.

Telemedicine can also alleviate the mental stress of being sick. Someone diagnosed with heart disease, for instance, may understandably worry about his prognosis. That can take a toll on his physical health and jeopardize his chances of recovery.

Healthcare providers can ease these concerns with remote counseling. One such telecounseling program helped cardiovascular disease patients deal with anxiety and depression through video sessions. Over six months, the program reduced hospital admissions by 38% compared with a control group, according to a report published by the American Journal of Managed Care.

Telemedicine can improve healthcare providers’ ability to communicate with one another, too. By connecting doctors with health workers in emergency rooms, for example, telemedicine can prevent 850,000 unnecessary transfers between ERs each year. The savings? More than $530 million.

There’s even evidence that telemedicine can offer care that’s superior to inpatient care. Take Teladoc, a videoconferencing technology that allows patients to consult with a doctor around the clock. According to one study, those who used Teladoc were less likely to need to see the doctor again for the same illness than patients who actually went to the doctor’s office.

Finally, telemedicine may also decrease wait times. American Well, for example, offers a mobile app that allows patients to send out a request for a doctor — much like one does for an Uber — and the first to respond does the consultation via videoconferencing. Over the last three years, the average wait time has been three minutes.

See Also: Questions to Ask on Telemedicine Risk

New Jersey’s lawmakers seem to be paying attention to all this research, particularly Sens. Joe Vitale, D-Middlesex, and Shirley Turner, D-Mercer, and Assembly representatives Pamela Lampitt, D-Burlington-Camden, and Daniel Benson, D-Mercer-Middlesex. One of Lampitt’s bills (A-2668) would establish parity for insurance coverage of telemedicine with conventional in-patient care. A bill sponsored by Vitale (S-291) would allow patients to seek telemedicine services from out-of-state doctors. This latter measure would also permit New Jersey’s Medicaid program to reimburse for telemedicine.

Thus far, the Garden State has been slow to adopt telemedicine. Insurers in many other states already cover it. The American Telemedicine Association recently gave New Jersey six Fs on crucial telemedicine issues, including allowing for the reimbursement of remote patient monitoring and videoconferencing.

State leaders now have the chance to raise those grades. Telemedicine controls costs and improves patients’ health. It’s time for New Jersey to take advantage.


Insurance 2.0: How Distribution Evolves

At American Family Ventures, we believe changes to insurance will happen in three ways: incrementally, discontinuously over the near term and discontinuously over the long term. We refer to each of these changes in the context of a “version’ of insurance,” respectively, “Insurance 1.1,” “Insurance 2.0” and “Insurance 3.0.”

The incremental changes of “Insurance 1.1” will improve the effectiveness or efficiency of existing workflows or will create workflows that are substantially similar to existing ones. In contrast, the long-term discontinuous changes of “Insurance 3.0” will happen in response to changes one sees coming when peering far into the future, i.e. risk management in the age of commercial space travel, human genetic modification and general artificial intelligence (AI). Between those two is “Insurance 2.0,” which represents near-term, step-function advances and significant departures from existing insurance processes and workflows. These changes are a re-imagination or reinvention of some aspect of insurance as we know it.

We believe there are three broad categories of innovation driving the movement toward “Insurance 2.0”: distribution, structure and product. While each category leverages unique tactics to deliver value to the insurance customer, they are best understood in a Venn diagram, because many tactics within the categories overlap or are used in coordination.



In this post, we’ll look into at the first of these categories—distribution—in more detail.


A.M. Best, the insurance rating agency, organizes insurance into two main distribution channels: agency writers and direct writers. Put simply, agency writers distribute products through third parties, and direct writers distribute through their own sales capabilities. For agency writers, these third-party channels include independent agencies/brokerages (terms we will use interchangeably for the purposes of this article) and a variety of hybrid structures. In contrast, direct writer sales capabilities include company websites, in-house sales teams and exclusive agents. This distinction is based on corporate strategy rather than customer preference.

We believe a segment of customers will continue to prefer traditional channels, such as local agents valued for their accessibility, personal attention and expertise. However, we also believe there is an opportunity to redefine distribution strategies to better align with the needs of two developing states of the insurance customer:those who are intent-driven and those who are opportunity-driven. Intent-driven customers seek insurance because they know or have become aware they need it or want it. In contrast, opportunity-driven customers consider purchasing insurance because, in the course of other activities, they have completed some action or provided some information that allows a timely and unique offer of insurance to be presented to them.

There are two specific distribution trends we predict will have a large impact over the coming years, one for each state of the customer described above. These are: 1) the continuing development of online agencies, including “mobile-first” channels and 2) incidental sales platforms.

Online Agencies and Mobile-First Products

Intent-driven customers will continue to be served by a number of response-focused channels, including online/digital agencies. Online insurance agencies operate much like traditional agencies, except they primarily leverage the Internet (instead of brick-and-mortar locations) for operations and customer engagement. Some, like our portfolio company CoverHound, integrate directly with carrier partners to acquire customers and bind policies entirely online.

In addition to moving more of the purchasing process online, we’ve observed a push toward “mobile-first” agencies. By using a mobile device/OS as the primary mode of engagement, the distributor and carrier are able to meet potential customers where they are increasingly likely to be found. Further, mobile-first agencies leverage the smartphone as a platform to enable novel and valuable user experiences. These experiences could be in the application process, notice of loss, servicing of claims, payment and renewal or a variety of other interactions. There are a number of start-up companies, some of which we are partnered with, working on this mobile-first approach to agency.

To illustrate the power of a mobile-first platform, imagine a personal auto insurance mobile app that uses the smartphone camera for policy issuance; authorizes payments via a payment API; processes driving behavior via the phone’s GPS, accelerometer and a connection to the insured vehicle to influence or create an incentive for safe driving behavior; notifies the carrier of a driving signature indicative of an accident; and integrates third-party software into their own app that allows for emergency response and rapid payment of claims.

Incidental Channels

In the latter of the two customer states, we believe “incidental channels” will increasingly serve opportunity-driven customers. In this approach, the customer acquisition engine (often a brokerage or agency) creates a product or service that delivers value independently of insurance/risk management but that uses the resulting relationship with the customer and data about the customer’s needs to make a timely and relevant offer of insurance.

We spend quite a bit of our time thinking about incidental sales channels and find three things about them particularly interesting:

  1. Reduced transactional friction—In many cases, customers using these third-party products/services are providing (or granting API access to) much of the information required to digitally quote or bind insurance. Even if these services were to monetize via lead generation referral fees rather than directly brokering policies, they could still remove purchase friction by plugging directly into other aggregators or online agencies.
  2. Dramatically lower customer acquisition costs—Insurance customers are expensive to acquire. Average per-customer acquisition costs for the industry are estimated to be between $500 and $800, and insurance keywords are among the top keywords by paid search ad spend, often priced between $30 and $50 per click. Customer acquisition costs for carriers or brokers using an incidental model can be much lower, given naturally lower costs to acquire a customer with free/low cost SaaS and consumer apps. Network effects and virality, both difficult to create in the direct insurance business but often present in “consumerized” apps, enhance this delta in acquisition costs. Moreover, a commercial SaaS-focused incidental channel can acquire many insurance customers through one sale to an organization.
  3. Improved customer engagement—Insurance can be a low-touch and poorly rated business. However, because most customers choose to use third-party products and services of their own volition (given the independent value they provide), incidental channels create opportunities to support risk management without making the customer actively think about insurance—for example, an eye care checkup that happens while shopping for a new pair of glasses. In addition, the use of third-party apps creates more frequent opportunities to engage with customers, which improves customer retention.

Additional Considerations and Questions

The digital-customer-acquisition diagram below shows how customers move through intent-driven and opportunity-driven states. Notice that the boundary between customer states is permeable. Opportunity-driven customers often turn into intent-driven customers once they are exposed to an offer to purchase. However, as these channels continue developing, strategists must recognize where the customer begins the purchase process—with intent or opportunistically. Recognizing this starting point creates clarity around the whole product and for the user experience required for success on each path.


Despite our confidence in the growth of mobile-first and incidental strategies, we are curious to see how numerous uncertainties around these approaches evolve. For example, how does a mobile-first brokerage create defensibility? How will carriers and their systems/APIs need to grow to work with mobile-first customers? With regard to incidental channels, which factors most influence success—the frequency of user engagement with the third-party app, the ability of data collected through the service to influence pricing, the extensibility of the incidental platform/service to multiple insurance products, some combination of these or something else entirely?

Innovation in how insurance is distributed is an area of significant opportunity. We’re optimistic that both insurers and start-ups will employ the strategies above with great success and will also find other, equally interesting, approaches to deliver insurance products to customers.