The connection between technology and consumers in the insurance industry has never been more relevant. Although the insurance industry was already facing rising competition and customer expectations, the global pandemic forced our industry to take legacy processes and technologies, and transition to “digital” seemingly overnight.
With the rise in vaccination rates and a hopeful return to a “new normal,” it won’t be possible to put the genie back in the bottle and return to legacy operations. Consumers and distribution partners alike have experienced the impact digital interactions bring. The entire insurance value chain will need to continue its digital evolution to drive operations, increase personalization, and improve experiences where expectations are set by marketplace leaders, not just industry category leaders.
Let’s look at four important areas that are actively shaping the insurance industry and the commerce experience – data, processes, technology, and our people.
Leveraging Data Responsibly
As digital natives begin to make up the majority of the U.S. population (just over half the U.S. population is considered millennial or younger as of July 2019), the demand for personalization in the commerce experience grows. Data fuels personalization and process improvement in a modern commerce experience. Applying data to consumer interactions and leveraging it for predictive and prescriptive relationship strategies creates the information required to invoke real-time interactions such as suggestions for the next best actions based on knowledge of a customer and their goals.
Data sharing relies on trust between a brand and the consumer willing to share it. A broad study indicates that 60% of global customers are willing to share data in return for perceived value from their insurance carrier. Unfortunately, insurance also ranks in the global top 10 not trusted industries. In addition to adherence to increasing privacy regulations, it will be important for insurance carriers to demonstrate responsible data custodianship and judiciously use data sets in the commerce process.
Don’t Automate a Bad Process
Without a clear and efficient process, your commerce initiatives will fail. Automation of bad processes won’t magically deliver improved results. Good process design is the foundation for effective execution and is further enabled by technology investment, not vice versa.
Processes must evolve with the consumer as well. Looking to the future, broader societal trends will influence commerce processes used for product development and distribution. Some considerations for future commerce processes include:
- New product opportunities are being driven by innovation and market conditions. Autonomous vehicles and the Internet of Things (IoT) reflect broader innovation while an aging population and climate change require new risk products to be developed.
- Product distribution through new channels such as social selling, OEM partnerships, and Insuretech.
- Tried and true process principles hold for the future as well. Whether for new services or existing products, the supporting commerce process must offer simplicity and ease of use throughout the experience.
Leveraging the Best Technology
With sound data and good process design, technology offers the infinite potential to drive competitive advantages in the commerce experience. Digital tools can improve the way consumers learn about, shop for, and purchase products in the insurance industry. A recent industry survey revealed that younger consumers (under 55) are three times more likely to switch carriers based on digital tool availability.
Key areas where the insurance industry can improve digital tools for commerce include:
- Data-driven lead generation tools – At least 44% of agents identified digital tools as the best thing carriers can invest in right now.
- Personalization drivers – Personalization efforts through digital tools improve the ability to create meaningful connections across every touchpoint that help acquire, engage, and retain customers.
- Transparency and control – Enhanced digital tools can help improve the commerce experience with improved research and comparison tools.
Understanding Our People
New skill sets are required to operate in a digital environment. In The State of Digital Insurance, 2021, a Forrester report shows that security, customer experience (CX) design and data issues are the biggest inhibitors to digital transformation. With organizations transitioning from product-centric operating models to customer-focused and digitally-enabled, carriers will be required to reskill, upskill, and seek new skillsets from the marketplace. This is one of the largest operational challenges carriers face, requiring novel approaches to attracting and retaining the right talent.
Carriers should recruit skills that will help modernize the infrastructure for helping customers engage in a digital direct environment. This requires hiring and reskilling employees for new approaches to marketing, data science, artificial intelligence (AI), and machine learning (ML) that will support a digital foundation within the carrier.
At the agency level, digital commerce will require agents to increase their understanding and use of digital tools for prospecting and interacting with potential clients. Interactions will evolve from in-office, face-to-face interactions to video conferencing and other digital presentation skills. Agents will be called for expertise on complex products as simpler products, such as auto, become commoditized onto direct platforms. Their ability to navigate complex underwriting in areas such as property and commercial will differentiate their value proposition in a digital commerce environment.
My Closing Thoughts on This Evolving Industry
Digital is no longer an incremental thought or activity. It must be embedded as a core operating strategy, including commerce experiences, for any insurance organization to remain relevant and innovative. We must all support the evolution of data, process, technology, and the distribution workforce, to further the world of insurance down a road to a more digital, advanced world.