How has the insurance industry embraced digitalisation and social media? While some areas of technology have been embraced, can others be improved?
Some things are hot right now – and Facebook, Twitter and other social media avenues are so warm that you can fry an egg on your smartphone. Even the staid old insurance industry wants you to ‘friend’ them, ‘tweet’ them, or let them into your ‘circle’. Post, in association with Accenture, recently brought together some of the leading lights from the insurance sector’s digital and marketing departments to discuss the future of the industry, and ask how firms can handle market disruption from new entrants and non-traditional competitors in the social media space.
In seeking to assess how the market has embraced digitalisation and the proliferation of information on social media sites like Facebook and Twitter, Post first asked those assembled to establish the current state of affairs.
Paul Wishman, group ecommerce director for LV, was keen to stress that while the industry can self-flagellate over its progress with technology, much has been achieved. He cited the My Licence initiative, a data sharing programme which enables insurers to obtain DVLA data on motoring convictions and penalty points when getting insurance quotes as one such example of improvement – but admitted more rapid development remains desirable.
“What we are seeing, definitely, is a growing demand for more self-service. That’s fairly ubiquitous in everyday life, isn’t it?” he asked.
“If you go to Tesco or Amazon, everyone expects that type of service. So that’s one thing perhaps we haven’t all achieved – and certainly LV is included in that.”
However, he added: “It would be easy to say we’re in a terrible position, and everything’s gone to hell in a handcart, but we are making inroads.”
All those in attendance testified that progress has been witnessed, with Aviva’s broker marketing manager, digital strategy, Melanie Pert noting digital focus was previously viewed as “being a bit fluffy”. However, she added despite the common knowledge that digital is simply another channel to communicate with customers, it is still viewed differently.
“I find it strange that we always talk about ‘digital thinking’, but isn’t it all just about the customer? You wouldn’t have called it the ‘direct marketing’ world 10 years ago, so why are we talking about digital like it’s some big area to focus on? It’s just
Robin Pegg, senior marketing manager at Covéa, suggested this is reflective of the scale of the difference between marketing worlds old and new.
The former, he noted, was a one-way street, but this is no longer the case. “Now there’s so much transparency and because of the internet, everything is out there. Whether people choose to use it or not is another matter, but actually we use the term ‘digital’ because it has made us completely rethink how we interact with customers,” Pegg said.
Wishman added one consequence has been too many firms started out by internally segmenting customer-facing parts of their business into as many as half a dozen “personas” as they seek to decide what falls under old-fashioned department headings of “client support” and “online”.
“I might need to pick up the telephone, or I might want to chat to you by live chat, but are you going to have three different people looking at me in three different ways? Because it would be bizarre.”
But projects of internal unification are possible, said Pert, citing the example of the recently launched My Aviva app, which combines information across a single customer’s insurance products such as home, life and car protection. “The vision for that to get to reality has taken some time, and just to get us to move is a challenge. But it can be done,” Pert said.
Accenture’s managing director of digital and innovation, Roy Jubraj, said the challenge is heightened because the industry has not historically approached customers with a view to centring everything around them.
“The industry is waking up to the fact they need that central customer view of how they want to be engaged, and having that be quite consistent, regardless of how the engagement is coming in. But there’s still work to do – there’s the challenge of legacy.”
Jubraj noted launching such an offering is not a one-off endeavour, and instead requires continual renewal, causing Insure the Box’s marketing actuary Charlotte Halkett to remark that her firm had benefitted from starting afresh, without the legacies of systems and structures: “It’s very hard. We did it by starting a new insurance company.”
She admitted, with a laugh, that some might consider such an approach cheating, adding “but it didn’t feel like cheating at the time”.
The social media aspects are the most high profile part of a digital strategy, but it is clear that challenges remain for many in the industry. Wishman said LV began responding to the growth in social media usage as far back as 2009, but said that many firms are still unsure how to classify its social media teams, or best enable them.
“People are saying, should it be sitting here, or should it be sitting there, because it is communications, it is content, it is videos, and it is reaching out to a new audience. The analytics has tended to be a distinct service as well,” he said.
As a result, governance can be challenging, with the stakes raised because millions may be observing a sector of the business that is not necessarily well controlled or even understood.
“There’s massive operational risk around social media,” Halkett said.
“It’s interesting, because first of all, it is probably the least understood channel you have among your senior management. Most of your board won’t know anything about social media at all. So they’re not in control of it, because naturally they won’t understand it unless you have really made the effort to make sure they do. A bit of a generalisation, but I’m sure it probably fits with most,” she added.
Shorter response times
What’s more, the expected response time for a tweet is dramatically narrower than a letter of complaint that an insurer may have faced 10 years ago, which would require only an acknowledgement of receipt in three days. As Halkett said: ”It’s got to be an hour now.”
“It has got to be run by a really senior post – because you need someone to make a really fast decision – but at the same time if it is somebody in a senior position, it is so easy for it to sound like your dad. I’m quite proud of what we do on social media, but it’s hard,” she added.
Hiscox’s group digital manager Ronnie Brown noted the opportunities of a successful social media relationship can be substantial – even beyond the obvious benefits of customer engagement.
“There is a massive opportunity with social data from people, and them trading that data for a lower premium in the same way as telematics. You could quite easily log in with Facebook, log in with Twitter, log in whatever you need to, and while you’re going through your quote process, it goes away, looks at those things, and comes back.
“For example, if someone was a member of the local Rotary Club, they might be a lower risk. That is not fantasy – you could do that now,” he concluded.
Such suggestions will always raise the spectre of privacy concerns, but Brown said customers – in particular younger buyers – would be willing to make the trade-off in exchange for a lower premium.
Wishman cited the example of Amazon’s own efforts to recommend products to shoppers as one such success, and agreed insurance companies of all stripes will be able to benefit if they can find a value for which customers will exchange such information.
For Halkett, concerns of big brother are rarely shared by customers. “Young people also have a much better understanding of the data being out there, so if you talk to them about that, they’ll say ‘Yes, but I’ve got a smartphone’, whereas their parents will also all have smartphones, but for some reason don’t understand that their mobile phone company knows so much about them,” she said.
Not all aspects of digital insurance are limited to social media or personal lines products, however, and Wishman noted that in many ways this is a trail that has already been blazed by commercial lines businesses.
“They tend to have a lot of self-service capabilities, at least I know LV has, but not a lot has changed in personal lines, having come from that 20 or so years ago, it has to be said.”
Example of progress
Jubraj cited telematics as one such example of progress, with technology now being applied to consumer vehicles after more than 10 years on large fleets and shipping containers.
“It’s only the last two or three years that telematics has – from a retail perspective – picked up speed around adoption and acceptance. Lots of insurers in the retail space are dabbling in what they want to do, at least in motor.”
“They have been using connectivity and having device data coming in. Some of the things some of the large commercial players been trying to do around risks – where they’re utilising data from the manufacturing engines from commercial airlines, and actually bringing that risk assessment is impressive, actually,” Jubraj said.
“They can wrap that into a more cohesive engagement between the broker, the insured, and the commercial insurer. There is a recipe there that actually really gets some value out of it.”
One thing is certain – insurers, brokers and other companies in the industry cannot afford to grow rigid in their approaches.
Just as people move from sending Facebook message to more anonymous Snapchat messages, so other trends will see both the quality and quantity of online customer interaction change too.
All agree it is almost impossible to predict how customers – both corporate and individual – will approach their insurers in five or even two years’ time. And the large amounts of money invested in going digital means that insurance businesses will not want to be wrong.
As Pegg concluded: “It comes down to proactivity, and actually are we sitting down once a quarter or whatever and trying to break our model? Actually, what are we doing to try and see what’s coming in?”
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