Insurers need to adjust their distribution to new customer needs
In the current times, the insurance business is trying to move towards the generation of experiences similar to those that its customers already enjoy at other times in their life and in other consumer products. For the insurance business, this is a complex transition, when traditionally the service provided by them has few points of contact overtime on the customer journey (payment notice, renewal notice, accident notification or some loyalty campaign). They are unattractive, let’s not fool ourselves.
To this is added the complexity of a product normally misunderstood by the customer (regardless of the branch), despite the help and the existence of a professionalized distribution network that tries to be that element of union and understanding. This network must also advance towards a new way of marketing the insurance products, earning in applying soft skills and letting technology make your life easier. Improving the technological capacity of the distribution will greatly speed up these aspects, since it is the digital environment where new generations feel more comfortable, and where this professional mediation should be if you want to access the client.
The evolution of the insurance distribution should be supported, as soon as possible, in aspects such as customer behavior (measured in real-time thanks to elements such as telematics, IoT and data), the generation of integrated environments between multiple actors and partners outside the insurance sector, where each one contributes with points of value and enrichment, to finally lead the client himself to be an advisor and even a producer (consumer-producer) of the company’s products (as is the case with such recognized brands as the GAFA or big four).
It is also key to offer real personalized products, where at best, the elimination of bonuses and surcharges will give future faith that the calculation of the premium has not started from a general basis to reach an adjustment from a niche of clients. That means that it has been built 100% from the experience and individual needs of the customer and then there is no need to bonus or penalize because that is your right and fair price. For this, technology is key and nowadays there are already capacities through the use of AI, IoT and “APIfied” cloud systems that are advancing into being able to offer companies technological platforms that expedite and facilitate achieving these objectives.
The insurance of the future must fix the client’s lifestyle as the starting point of its design. Customers must be able to find it anywhere – transparent or parametric insurance has the ability of being and acting when it is needed. Insurers must give the client autonomy in their choice, where the model of only being able to choose what the insurer offers in a general way must change, and it is the client that must define through the data that generates at all times what is the product he wants. This will guarantee 100% satisfaction and therefore, will lead you to have an experience that builds trust with the company and therefore a real loyalty.
Surely we will improve fraud rates, reduce risk and optimize pricing, benefiting both clients and insurance companies. If there is no win-win, there is always the risk of breaking a relationship. Once this is achieved, the mediation may devote more time to reinforce that relationship with the client to make it unique and hyperlinked or integral (we will eliminate the traditional branches and talk about cross-guaranteed experiences for objects, people or situations).
The concept of a product workshop must evolve towards becoming a designer of personalized experiences, due to its versatility, the ability to incorporate external data from the company, its agility, integration capacity and ease of parameterization, not only the one defined by business units or actuarial units of companies but also for the agility of generating almost every second a different product with some coverages and premiums adapted to the client that can be distributed alternately in multiple channels (even knowing that the smartphone is the king in our lives). Even that capacity must reach the integration of these platforms with social networks for the immediate publication of the personalized offer to the specific client in its preferred channel and thus remain continuously next to the client.
Even these concepts must be redefined because the client does not speak at home of his insurance policy. Why not change the way you call the policy, insurance, product, coverage, accident. It is a language that when you leave the insurance sector, the common person does not understand and does not use it, because he is not too familiar with it. For that, the technological platforms that are the backoffice of the company must also serve us, but it must also be the engine of the user’s relationship with their insurer because it will generate autonomy that will lead them to think “This is the company that I was looking for. It makes it easier for me and it lets me decide when, how and where. It adapts to my way of life and makes it easier for me to protect what I really want to protect.”
We have all heard of microinsurance that are activated when you need them – P2P products where the concept of community is the basis; insurance on demand; insurance based on use, not to pay when they are not used; or companies that contribute with part of the premium to social projects. Metromile, Root, Oscar, Bihu, Lemonade, Nextinsurance or Trov are some examples and these companies are trying to advance in these model changes. Some will fail along the way, others will succeed, but from all of them, good lessons will be learned that, in a few years, will become the standard procedures in the sector and thus redefining what the insurance products must be in the future and their way of distribution. And for all this, what better ally than the technology that makes it easier and improves every day. Now, we must begin to incorporate them and use them massively in the sector.