What Does Investing in Digital Imply for the Insurance coverage Business?
This post is part of a series sponsored by AgentSync.
The insurance industry is notoriously lagging behind in terms of digital distribution.
However, research has shown that after the COVID-19 pandemic, nearly nine in ten insurance managers (87 percent) plan to invest in digital improvements. Nine out of ten. That’s the almost unanimous approval of an industry known for contrarianism – keep in mind that every single state (and territory) has its own set of regulatory rules and requirements.
This refreshing move towards agreement should come as no surprise after 2020. The home-stay regulations forced people to reconcile with the reality of working from home and allowed companies to get creative to avoid business interruptions. The only constant for almost every person and business has been reliance on digital technology to maintain the appearance of normalcy.
Digital improvements mean more than online shopping
The digital enhancements urgently needed by the insurance industry differ slightly from those in other industries.
An important example of this is the direct-to-consumer sales channel. Many industries rely on online shopping. No surprise there. In 2021, over 2.14 billion people are expected to buy goods and services online.
It therefore seems logical for companies to invest in a digital framework to encourage consumers to purchase insurance policies directly through their websites. And some are.
Amazon announced its digital insurance network, Amazon Insurance Accelerator, which helps small businesses selling products on Amazon get product liability insurance coverage. By leveraging digital sales channels, Amazon Insurance Accelerator aims to make it easier for small businesses to compare policies and offers between insurers to find the most suitable policy for their needs.
While some companies are paving the way for a future for insurance directly to the consumer, many believe that the simplicity of buying at the touch of a button doesn’t quite translate to most insurance products.
Although 87 percent of insurance managers say they invest in digital technology, only 32 percent consider investing in digital sales channels to be an effective sales strategy. Because consumers enjoy working with people when making insurance decisions.
Producers are No. 1
Manufacturers are critical to the insurance distribution network, in large part because of the sheer volume of policies available to consumers and the complexity of those policies. That makes it difficult to navigate the insurance industry as an insurance professional, let alone as a consumer.
Many insurance consumers turn to manufacturers when buying or researching insurance products – 73 percent of consumers want to work with people to make a purchase decision – especially for complicated products like annuity and commercial insurance products. So the role of the manufacturer in the insurance distribution network is really going nowhere.
However, that does not mean that there is no room for digital advancements in the insurance industry. In fact, consumers tend to look for multiple touchpoints when working with insurers throughout the customer lifecycle. Whether through chatbots, websites or call centers, consumers want 24/7 access to their insurer and the flexibility to choose their preferred communication method.
Reinterpretation of the customer experience
Consumers need insurance – and to communicate with their insurers – in the face of accidents, natural disasters and emerging risks. For example, the coronavirus pandemic resulted in a 30 percent increase in consumer insurance-related demand. Yet almost 40 percent of insurers say COVID-19 has had an impact on customer loyalty.
How is that?
Until the pandemic literally made this impossible, the insurance industry relied heavily on face-to-face meetings and communication. Many in the insurance world have been slow to embrace the profound digital changes that are revolutionizing other industries, but they just moved on. But when the shutdowns caused people to need remote access to their insurers, those who have invested in digital skills – including technology and tech-savvy employees – are the ones consumers have turned to.
A June 2020 survey found that 41 percent of policyholders who want to switch providers cite poor digital skills as the reason for the change. Digital technology is no longer optional in customer loyalty, and insurers are growing stronger and paying attention to it.
With innovations like automation, artificial intelligence, and virtually document signing, insurers are now taking a leap to renew the customer experience. While previous digital improvements focused heavily on digitizing manual processes – which is important in itself – new technologies are opening up opportunities to rethink the consumer experience and create a customer-centric approach to customer loyalty.
Increasing the efficiency in the industry
Digital improvements also offer the opportunity to increase efficiency and streamline processes and workflows. Currently, the insurance industry is full of manual processes that consume producers’ time, which becomes expensive for insurers.
The acquisition costs for investments in digital extensions are not comparable with the long-term costs that arise if no investments are made in these extensions. An analysis of auto insurance companies found that those who do not invest in digital improvements to increase efficiency can expect an annual profit decline of between 0.5 and 1 percent.
Imagine a company that invests in technology to save manufacturers time and allow them to focus on consumers. Not only can producers sell more products, but they can also focus on cultivating relationships with existing customers, thereby reducing customer churn. The consequence of increasing internal efficiency is an improved customer experience.
A look into the future
It is very clear that the status quo is no longer good enough for insurance customers. As more companies invest in technology that enables them to do even more for their customers, the bar has finally been raised.
That’s good for the insurance industry. We now have the tools to go further, think deeper, and revolutionize the insurance industry for a technology-driven future.
Watch a demo to learn more about how AgentSync is revolutionizing the manufacturer licensing process for insurance companies.
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