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Digital Distribution in Life Insurance

It’s not news that today’s consumer has high expectations when it comes to the buying experience and customer support – and this certainly includes the purchase of insurance. As the industry landscape grows more competitive and new players enter the field, insurers need to set themselves apart now more than ever.

A better experience for the customer throughout the process can help insurers grow business volume and lead to increased customer satisfaction and loyalty. While digital innovation within insurance distribution offers the opportunity for insurers to meet the rising bar of customer expectations, as an industry insurance is late to the game when it comes to digital marketing.

To gain an understanding of the level of education and capabilities in digital marketing within the insurance space, RGAX fielded a survey among small-to-medium-sized U.S. insurers. A summary report, “Digital Distribution: 2018 Pulse of the Industry,” features key findings that provide a snapshot of both the current digital marketing environment and future investments planned among insurers.

See also: Digital Innovation in Life Insurance  

How far have we progressed?

If you’re facing challenges when it comes to implementing a digital marketing program, you are not alone:

  • 43% of respondents stated that their level of education on digital marketing capabilities was “some/little”; 11% reported having no education.
  • 64% of survey respondents reported that they have “some/little” overall capabilities for digital marketing; 11% said capabilities were “non-existent.”

What’s standing in the way?

According to respondents, top challenges to incorporate digital marketing to improve customer experience include: lack of resources, lack of expertise, organizational challenges and lack of strategy.

  • 29% of respondents think it is too expensive to introduce or expand digital marketing efforts.

Where do we go from here?

The majority of respondents are currently testing direct-to-consumer digital strategies to determine the best path forward:

  • 64% reported they are currently testing digital advertising.
  • 50% are testing an online e-application journey.
  • 43% plan to begin testing digital lead generation soon (one to two years), but 32% have no such plans.

How do we get to where we want to be?

Lacking sufficient expertise or resources to build a digital marketing program alone, insurers are looking outside to bridge the gap:

  • 21% of respondents have partnerships in place with startups or external vendors to enable digital selling strategies, and an additional 43% are planning to do so.
  • 52% of companies reported partnering or using vendors to advise them on their digital marketing strategy (partners or vendors include advertising agencies, marketing firms, consultants, reinsurers, lead generation partners and tech vendors).
  • Survey results indicate that using data to enhance insurance sales strategies is an area for growth. Currently, up-selling and cross-selling was the most-used application of customer data, with 39% reporting use of this strategy; customer segmentation overall and by product was next at 36% utilization.

Find a need and fill it

No matter where your company fits within these survey results, the opportunity to catch up to or even lead the industry remains open to all. Untapped digital possibilities in insurance abound, creating space for innovators to grow.

See also: In Age of Disruption, What Is Insurance?  

Strategies to leverage data represent a clear area for improvement, with less than half of respondents using customer data for up-selling and cross-selling, models for accelerated underwriting or customer segmentation. Another area in need of development is administration capabilities, including policy e-delivery, do-it-yourself service processing and online policy transactions completed by a policyholder. And although some insurers have already adopted or are planning to adopt life and legacy planning, identity protection or wellness programs, such engagement and loyalty programs represent yet another growth opportunity.

A streamlined, tailored experience based on a true understanding of the customer journey is no longer a nice-to-have – it is a must. With help from companies like RGAX to provide guidance and support around digital marketing, insurers can define and implement their own digital marketing strategies to better reach their target customers.

Best of Both Worlds: Humans and Tech

There’s a lot of talk about how artificial intelligence (AI) will lead to the displacement of vast numbers of agents and brokers in the insurance industry. The truth is, while AI will automate certain processes, it will ultimately enhance — rather than replace — humans in the marketing and distribution of insurance.

“Human advisers are going to continue playing an absolutely critical role,” said Farron Blanc, VP, Innovation Studio for RGAx, at Denim Summit 2017. “When you go fully digital, the conversion rates are probably about 1% from seeing an ad all the way through paying the first premium. As soon as we put in a call center, we’re seeing — depending on the segment — a 30% conversion rate.”

There’s no question both humans and technology will play a critical role in the future of insurance. But what are the benefits only a human can bring, and what are things humans can’t do without technology? Let’s take a look.

The Human Value

Below are a few things humans bring to the table that technology can’t do alone:

  • Trust. As Chip Bacciocco, CEO of TrustedChoice.com, pointed out during Denim Summit 2017, insurance is, at the end of the day, a social contract and requires trust. “The real point of buying insurance is that you can go to sleep at night feeling like you did the right thing, you’re taking care of your family,” he said. “If you aren’t 100% certain you clicked the right button on that screen, and that real people are really going to pay your claim someday, you never really get to sleep.”
  • Accountability. Along with trust, any type of business or social contract needs someone to hold accountable. “You need to know who to talk to when something goes wrong. You need to know who your advocate is,” Bacciocco said.
  • Expertise. Let’s be honest: Insurance is confusing. Often, customers and potential customers need to talk to another human being who can empathize with their concerns and truly get at the heart of their questions. Agents and advisers bring years of expertise to the table that can help customers make the right decisions and give them peace of mind.

See also: Cyber: How to Fix the Human Factor  

The Technology Value

Here are the types of benefits made possible only when technology is added to the equation:

  • New markets. Technology makes it possible to reach new market segments. For example, RGAx looked at the needs of Hispanic remitters and found that a $7 per month insurance policy would solve a pain point for them: protecting their loved ones with remittances for two years if something were to happen to them. “How do you get humans to sell $7 insurance to people who really need it?” Blanc asked. “Technology is this great democratic leveler that allows us to reach new forces.That’s why it’s disruptive. It allows us to reimagine the value chain and serve people in whatever way they want.”
  • Personalization. There is an unbelievable amount of data available on consumers, especially when it comes to their digital behaviors. Recently, Denim announced we have collected more than 1 billion data points on consumer engagement with mobile and social media ads powered for insurance and financial services companies. Technology allows us to activate data to deliver highly relevant offers and personalized experiences to consumers.
  • Multiple channels. Not all consumers want to engage with their insurance and financial services providers the same way. Some would prefer to do everything face-to-face or over the phone, while others would prefer to do everything online. Still others will start the process online but then need to talk to a person to complete the request. Technology makes it possible for consumers to engage with providers in the channel they prefer, any time of the day or night.

See also: How Technology Breaks Down Silos  

Key to the future will be combining the best elements of human interaction with the best elements of technology to provide a superior experience to every consumer, every time.