Founder and CEO of SmartFinancial.com: on a mission to make the insurance buying process more efficient.
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By now it's old news that the insurance industry lags behind many others in the area of technology. However, insurers are quickly getting up to speed by changing to new technologies and partnering with insurtech companies.
Retention of customers could still be a challenge in the coming months and years, but I believe that growth and retention will rest heavily on service-based strategies that improve the customer experience.
Also, adding value to existing relationships by offering innovative noninsurance products and services could help insurers retain business in the long run. In order to do this, mergers and partnerships will prove to be very important to insurers.
The following are the trends and strategies I believe will change the landscape of the insurance industry in the future.
Streamlined Application And Claims Process
Insurers should transition to digital processes if they want to compete. This could be a challenge due to the fact that the insurance industry is often the slowest to adapt to new technologies. Insurance is also a very low-engagement product, and insurers may not interact much with customers — except at renewal. Each touch point in this relationship should be optimized.
Also, insurance shoppers are generally internet-savvy, but that doesn't mean shoppers don't need some guidance as they journey through the sales funnel. You should enhance the consumer experience through digital touch points every step of the way. You should also answer important questions at each juncture. Along the sales funnel, the user should glean just enough information to keep proceeding to the next step. If you give them too much information, or give them pricing too soon, you may undermine the entire process.
The complete user experience, from getting quotes and servicing policies to filing claims, should be simple yet effective. That's why it's important to test the process thoroughly before you launch any applications.
Creating FAQs at each juncture of the process will enable you to give the consumer the right information at the right time.
Mergers And Acquisitions: Consolidating With Peers
According to a recent Deloitte survey, 94% of insurers continue to look to mergers and acquisitions as a growth strategy. M&As are an effective way to offer more products and services without overwhelming your company's capabilities. A partnership with another company is another way to extend your business's products and services.
For example, if you own a large agency that sells personal lines of property insurance, you may want to merge with or form a partnership with an agency that only handles health insurance policies. You'd automatically see an expansion of your client base, and you'd expand your product offerings. This form of consolidation can be beneficial to both partners if you leverage each other's strengths. Or perhaps a merger will expand business in new territories for both companies.
Sometimes, a partnership or joint venture makes more sense to an insurance business that's looking to add value to their membership. Geico, for example, has alliances with roadside service vendors and also partners with lenders who specialize in car loans, car leases and other services.
Allying With Insurtech
The fast adoption of technologies will help determine the growth and success of insurers over the next few years. Over the next three years, for example, Deloitte found that insurers plan to invest largely in cloud technology, which is just one step to overcoming the digital deficit in the insurance industry. Some of these companies may also merge or partner with insurtech companies as a shortcut to fixing technological shortcomings.
Insurtech companies are only now becoming businesses of scale. However, they are ahead of many insurers in data analytics, AI, machine learning and other new technologies, which are important in the new economy.
Rewarding Customers Who Stay
Unfortunately, the lack of personalization in technology can result in a higher risk of losing customers to enticing offers at the touch of a keyboard. Insurers should create ways to reward customers at a time when customer loyalty seems to be a thing of the past in the insurance industry. Despite its challenges, giving incentives to stay can help you keep clients with you for a lifetime.
One way to reward loyal customers is to offer forgiveness benefits for minor claims by not raising rates. Another is to increase rewards with tenure as an earned benefit by partnering with gas stations and repair shops for speedy and affordable service for your most valuable customers.
Offering Services That Provide Added Value To Customers
Another trend I've seen in the insurance industry is adding value through prevention services and noninsurance products. Already, many health insurance policies offer free preventive care, like free annual checkups without copays. But health insurance isn't the only product that can benefit from prevention services. Traveler's Insurance, for example, offers pre-breach services by partnering with Symantec™ to help mitigate risk and prevent losses for commercial insurance customers.
For insurers focused on commercial policies or those looking to expand into commercial lines, it's important to consider prevention as an added value.
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