Why the insurance industry needs digital marketing – Part II

Welcome back folks! Last week we were discussing about the importance of digital marketing in the insurance industry. This week we will discuss about few more facts and figures.

Data Sharing

When consumers share their information repeatedly to make an insurance claim, it clearly indicates that insurers are not sharing appropriate information that could make the process easier. Sixty-two percent of consumers who made an insurance claim, reported to have to share the same information at least twice if not more, and 11 percent who had to share the same information more than four times.

Consumers prefer that the insurers should make use of all the available modes of communication, except for email, about which there is a lot of difference. While a stark 71% of people said emails should be used, only 53% of insurers use email as a mode of communication.

Greater Transparency and Guidance

In addition to tailored and targeted communications, consumers are of the opinion that insurers should have a greater level of transparency, especially in case of already available data in order to improve customer service.

Eighty-five percent of consumers of various services of insurance industry prefer to have their insurer guide them in matters of how they can lower their premium, for example, by suggesting some behavioral changes. Consumers are even willing to pay for this. 64% are even willing to accept premiums that are currently higher in lieu of information that is more accurate, which would in-turn help them reduce their premiums. There are 46% of consumers who are willing to pay more for the promise of fast and more efficient claim settlements.

According to Mike Davies, “As we can see, consumers aren’t averse to paying a little more for a better service that benefits both insurer and consumer,” he continues, “By matching their customers’ expectations and making the most of technology, insurers aren’t only helping consumers, they’re also helping themselves. For instance, using connected devices to provide more accurate premiums means insurers can offer cover at a lower cost and at less risk to themselves. Society’s attitude to technology and communications has changed: the industry needs to change with it.”

In one of the cases, when a site rolled out, consumers fumed. Not only were they not able to get online, but the information was intangible once they did get online. For internet savvy consumers who are used to a smoother experience on shopping sites like Amazon or eBay, it turned out to be a frustrating exercise choosing a health insurance plan online. Insurers can take a cue from this frustration, about how very important it is for insurers, not only health but also for other insurers like vehicles, property and casualty, to master the internet.

While retailers have already moved their businesses online long time back, insurers are still struggling with it. Improved performances can be seen across the following three areas if they shift to digital:

• The opportunity to cultivate the digital data left behind by the consumers on the internet, social media, and even wearables from health monitors, prices and underwrite policies more precisely, and a more effective management of claims.
• Insurers can yield a massive improvement to operating profit margins by simply adopting digitalization of their existing insurance processes (for example, allowing quotes to directly go through processing and configuring products more rapidly)
• An increase in digital marketing that allows insurers to better up-sell, cross-sell and to retain valuable customers with improved opportunity to connect with existing customers.

It has been observed that 65% reduction in cost can be delivered by a planned digitalization, a reduction of 90% in turnaround time on the process of key insurance, and an improvement of more than 20% in the conversion rates. Despite knowing the fact that digital is having a major impact on their businesses, very few insurers actually understand how massively the business is changing.

In a recent survey of the digital practices of more than 30 leading American and European insurers, conducted by McKinsey, the customer decision making journey did not see any articulation of a digital strategy at all by 39% of insurers. While majority of insurers focus on their digital efforts on marketing and sales, carries have found to have focused on the initial stages of the decision making journey of consumers and has lagged in their ability to serve existing customers post-purchase.

The total digital expenditure of some insurers cannot even be tallied because of being so highly fragmented. And then there are those who have so many organization silos, that getting any alignment of a scale and digital direction becomes impossible. The fact thus remains that only 50% of insurers actually have a budget for their long term digital goals, and a mere 30% have a multi-year investment plan for supporting digital.

So what exactly does a digital excellence in insurance look like? Based on a survey conducted on a few top consistent performers, it was found that they constantly do the following:

• They have a well-defined digital strategy along the line of marketing, sales and service. They are also well informed about the customer’s insights. As a matter of fact, they know their customers so well that most of their communications are highly personalized.
• Bets have been placed by them on specific digital capabilities for the future. They have also invested on them to ensure rapid building of those capabilities.
• Their operating model is in sync with the organization’s digital maturity. Digital functions are decentralized and are integrated into business unit activities that are broader, when the maturity of the organization’s digital function increases.
• They are well talented. 80% for their talent online is based on digital experience, like from leading institutions and digital organizations, and over 60% of them have rigorous training programs in place.
• They diligently practice a test and learn culture. Top digital performers, as part of their learning processes encourage risk-taking. With 85% of their digital expenditure measurable in terms of investment and returns, they have quite a robust analytics in place.

To become a great insurer, it is imperative that there is a deep understanding of their consumers and their purchase journeys. Today this decision journey of a consumer is extremely repetitive and highly fluidic process, where consumers, with the help of digital tools easily check out different brands, compare prices and offers, and get recommendations.

Insurers can then benefit from these insights to figure out a strategy that will be critical for their success. They can track which processes needs to be digitalized for a better experience of consumers and to better utilize digital data to inform business decisions like whom to target and how to price their products more accurately.

There is tremendous potential to leverage the vast amounts of digital data left behind by people when they visit websites, the words they search for and the posts they make on social media platforms. Many insurers, to ensure their agents have updated real-time information, have already started harvesting these digital data about their consumers’ life events for sales and also to keep a track on their consumers to curb fraudulent claims.

Analyzing digital data can help insurers to find out a driving score, which is the section of customers they need to attract, and how the payouts can be decreased for fraudulent claims. Keeping in mind the privacy issues that they need to adhere to, digital marketing can be a significant boon for both the consumer and the insurer.

Conclusion

According to Darwin’s survival of the fittest theory, it is  more about adaptability than about the strength and intelligence of species. Similarly, successful businesses too need to adapt constantly with the changing technology or risk being left behind in the evolution of the industry.