Can a niche insurance user experience be scaled to drive revenue growth? Post, in association with EXL, gathered together a number of insurance industry experts to explain how
As digital tools become more available, the insurance industry wants to use these to offer a compelling customer experience. Personalisation has transcended into ‘hyper-personalisation’. Swollen with fresh investments, insurtechs have targeted niche markets, using digital propositions to woo customers.
With personalisation reportedly “witnessing an upgrade”, industry figures gathered at a Post roundtable, in association with EXL, to discuss how this can translate into the wider market.
“It’s about providing solutions rather than providing products,” said Justine Dignam, marketing and business development head at Markel. “It’s much more about listening to the needs of the customer and finding out what problems they’ve got and what hurdles they have to overcome on a daily basis and then developing products and services around those.”
Axa chief customer and innovation officer Darrell Sansom agreed it must be about responding to customer needs and not pushing a product.
“What niche solutions do well is start from a customer-led thought process,” he said. “It understands what the customer wants and is more readily able to provide solutions that are relevant. Why wouldn’t anybody want that? Why wouldn’t I want something that’s tailored for me, that understands me in a way that I want to engage and interact? Where we need to be careful is providing things that are product-led and pretending they are customer-led.
“There are a lot of things out there where we suggest it’s in the interest of the customer, but it’s actually in the interest of more product sales.”
In motor, personalisation can come through communications rather than a tailored product.
“If a customer wants to be able to transact with a mobile, then you do more of your communications with that customer by mobile or web or whatever it is the customer wants,” said First Central Group chief commercial officer Andy James. “The underlying product may be exactly the same for everybody. It’s the way that you present that to the customer, which is in line with their needs.”
With a large proportion of customers buying motor insurance through aggregators, this poses challenges for insurers looking to differentiate on more than price.
First Central Group chief information officer John Davison said: “Conceptually, it’s harder, because we’re in motor and we’ve got the issue that you have to be the same as everybody else for it to be comparable. But it’s also easier, because you have more data. You have more information, because the market is bigger, you’re getting more quotes. Finding relevance in that becomes a data-mining exercise.”
“Over 90% of our sales come through aggregators,” James added. “There’s a level of commonality that you have to provide right up front in order for you to be able to be considered in the first place when price becomes that key driver.
“It’s once you’ve got that customer, you then need to make sure, from a persistency and retention perspective, that you use the big data as a way of being able to tailor the interactions that you then have with that customer over the course of the year to make sure they stay with you.
“You need to give them a reason not to go [back to the aggregator]. That’s where the personalisation has got the chance of being able to work for you. You’ve got the aggregator to give you that initial purchase. What you then need to do is make sure you deliver a good enough experience over the course of the year, so that when it comes back, price is less important when it comes to renewal.”
Commercial brokers are already delivering a kind of niche service, according to Tom Gill, IT director at Willis Towers Watson Networks.
Gill said: “In the commercial space, in many ways, a good broker has always delivered a niche, because they will understand the client’s industry and, maybe, they’re specialised, so they can work as a risk advisor. They know which markets to approach to fit the client’s needs.
“What they need to do is to engage digitally as some of the new entrepreneurs expect to communicate in that way. But the niche piece has, to an extent, always been there with a good broker.”
“To solve the conundrum, we need to move away from product and focus on service,” Zurich UK marketing director Richard Pash agreed.
“You can personalise through different forms of communication. And it’s not binary. It’s not: ‘I want digital’ or ‘I don’t want digital’. People will engage and they’ll start on digital and then they’ll text you and then they’ll ring you and then they’ll comment on social media.
“That’s the way we interact with everyday life. The ability to join that up, to see that and to engage with customers in a way that they want to be engaged, that’s personalisation, that’s differentiation. It doesn’t have to be product differentiation.”
To keep customers coming back, insurers and brokers can add extra services, suggested Robin Stagg, head of customer propositions at Das. “In small and medium enterprise insurance, with the right communication, the insured phones our legal advice specialists five, 10 times in a year, around interactions with employees.”
“Then they never have a problem when they go through an employment tribunal. There’s a much stronger hook into legal than into pure insurance. Tell an SME owner: ‘You’ve got a free lawyer you can phone any time you like.’ Who wouldn’t use that?”
However, companies need to make sure they aren’t straying too far from their original purpose, according to Sansom.
“It’s a natural extension to say we’re going to help you avoid this situation in the first place, but we’ll be there if you can’t. That’s where the focus is. All I would say is, you also can’t mess up the basics. Some of this services debate is lovely, but if you aren’t doing what it says on the tin, you’re not really going to get that far either.”
Pash suggested that showing empathy can make customers feel like they are receiving a more personalised service.
“Having people on the phone who are really there and empathise with somebody who is in tears and has had something awful happen to them is so important. Getting that right, doing a super job of it rather than just an average job of it, is pretty important.
“There is lots of talk of offshoring and getting that balance right but how you deal with your customers when they really have a really nasty problem goes such a long way to building not just their trust in you, but also all their friends’ trust in you as well.”
Zurich recently advertised that it paid 99% of claims the previous year. This paid dividends in building customer trust, according to Pash. “When we did this claims campaign, we saw trust move up by 20 points. And that was just through saying: ‘If you’ve got a problem, we’re going to pay it’.”
Sansom added the insurance industry still has a long way to go. “In the middle of the financial banking crisis, we were less trusted than banks. That can’t be great, can it?”
That trust can be damaged when anti-fraud checks delay the settlement of a claim. But failing to detect fraudulent claims can be expensive as well.
Davison explained: “As insurers we’re hit very heavily with fraud. It’s very difficult not to let on to your customers that you’re performing all these additional checks, because secretly you fear they’re all going to make claims for and against you.
“You have this problem where you’ve got this conflict between protecting and managing your own business, by looking at fraud and ghost broking. One trick we’re missing is the transparency piece.” In other words, data sharing.
That data could be used to encourage customers to stick with a brand, suggested Jonathan Mansley, head of digital strategy at LV General Insurance.
“When buying a washing machine 10 years ago, I wanted the one with the most buttons,” Mansley said. “I now look at some weird sticker on the front that tells me how much money it saves, because it’s super-efficient. At what stage do we say: ‘If you buy this washing machine over this washing machine, your premium goes down’?
“That whole personalisation piece, that’s what the next generation is looking for. That’s where the niches are coming in, but they’re not coming in at scale, because at the moment, the predication of those devices in a data exchange community hasn’t really existed.”
Does digital help or confuse?
Digital is helping customers with the process of buying insurance, rather than adding confusion, said Mohit Manchanda, head of consulting for EXL Europe. “It helps, because today if you look at shoppers, they’re touching digital at least once in the value chain. It definitely helps the process.”
Mansley said digital processes would change underwriting. “The very static set of questions that we determine risk on will change because consumption of data will allow people to offer a different experience and underwrite in a more effective way.”
He warned incumbents could become obsolete if they fail to adapt to the expectations of digital natives, like on-demand cover for instance.
“We probably all have lots of people who have been with us for a long time, but we’ve conditioned them into annual policies for stuff that they don’t need cover for. There’s this whole group of customers who want a different relationship with all companies, not just insurance companies. ‘I don’t have a car, but I need to borrow my parents’ car once a year’. That’s the niche that insurtechs come into. It’s very easy to discount them as niches, but they’re just going to grow. We’re at the verge of a Kodak moment.”
The younger generation of buyers will look to personal assistants such as Alexa to provide them with recommendations. These devices could also be used for claims prevention, it was suggested.
Markerstudy head of affinity Ross Halifax said: “When I talk to Gen Z people, the information is there, but they just don’t accept it as knowledge anymore. They want someone to recommend to them.
“Alexa and others, the personal assistant world, I see that as being a model. If you’re allowing it to have your data, it will make a recommendation, because it knows what you want, what you do, where you are and how you consume.”
Stagg added: “Maybe we need to connect that back with our claims data. Amazon does ‘People like you bought this’. Why don’t we do ‘People like you had claims like this, so you might want to do this to stop it happening’?”
Risk and regulation
However, if more data is shared and the industry moves towards managing risk, this poses challenges for incumbents.
“One of the big changes is the shrinking of the entire industry,” Stagg warned. “If you do move to that prevention model. There are, inherently, less claims, which means, ultimately, there is a smaller premium pot for everybody. This means we need to own a chunk of the prevention model if we want a chunk of the revenue.”
“It’s as simple as supply and demand. From a customer point of view, what digital has given them is access and knowledge, perceived or otherwise. It’s like people going in to doctors and telling them what’s wrong with them,” said Sansom.
“But what you have from an insurer’s point of view or a tech point of view is the capability to respond to that through data, through analytics, through customer relationship management, through unified comms. You can have a data-led, segmented model that then allows you to build propositions that are relevant to execute them in a way that’s effective and to engage with your customers on an ongoing basis.
“I worry if the Financial Conduct Authority and things like General Data Protection Regulation start leading as a catalyst for this, because we’ve failed if we’ve had to wait for the legislator to tell us the right thing to do.”