In 2010 consumers began to see the emergence of Insurtech’s who promised a seamless service wherever and whenever they need it. More than a decade on, we can see the traditional insurance industry being fiercely disrupted by these early stage businesses. Across Europe, we are watching new unicorns making a lot of noise in this space, with some wondering if it’s just that; noise?
To what extent are Insurtech’s becoming a threat to legacy businesses? What makes them different to traditional insurance, and so gaining the trust of consumers?
Insurance is a purchase most of us will make at some point of our lives, either as a legal duty or through willingness to prepare for our children’s future. It has historically been, and remains, one of the most important transactions we can make. For decades this service has been handled by banks or legacy specialised companies, providing it the traditional way; through lengthy processes incurring many pain points and requiring extensive documentation which can be difficult for certain groups to acquire.
Not much consideration is given to efficiency throughout the process, from sign up to making a claim, especially when the contractual terms and ways to contact your insurer can remain blurry.
Interactions customers have with their insurer are typically when something unfortunate has happened and responses from the insurer can often be complex. Those few points of contact offered can result in insured customers not feeling a sense of attachment towards their insurer. Building a strong, customer centric, CX strategy requires a deep understanding of the customer, their motivations, fears, goals. Traditional insurers, who do not take their existing customer interactions seriously by using data and analytics, will fall behind their industry disrupting competitors.
Increasing efficiency, and empathising with customers to enhance their satisfaction and experience, is a hallmark of Insurtech businesses. Consumers are all too familiar with how easily they can sign up for subscription model services. They are also benefiting from T&C’s becoming clearer and easy accessibility to services thanks to the increased use of mobile apps. Start-ups, challenging traditional business models like the insurance industry, have unpicked the existing customer journeys, observed the greatest pain points and are focused on delivering enhancements that allow for easier forms of contact by customers, more personal touchpoints and overall reduced friction. As these reimagined ways of working with legacy insurance companies falls into our hands, it is easy to see how much room for improvement the original insurance process had, and it is hard to doubt why we would not embrace the new application.
Insurtechs are rapidly improving customer journeys, and customer experience as a whole. The most simplistic but revealing example is the digitally native aspect of their business model: everything is done through their website or App, whilst not even needing to call someone, making it easier for them to offer a quote and move towards the next step. Meanwhile, some traditional insurers will still ask you to come in-person, to some of their offices.
In fact, the very birth of these companies is by listening to consumers: hyper personalisation, more transparency and in some cases, a price reduction. This is enabled by embracing new technologies, beyond simple digitalisation of documents, it’s about using AI to check and regulate set up requirements, allowing customers to get their quotes quicker. This goes towards simplifying that lengthy process, whilst integrating empathy towards customers, rather than handling them as simple equations. This, coupled with strong integrity and an effort to simply manage customers’ expectations better, is allowing insurtechs to build trusted brands.
Insurers needs to follow that trend, as our expectations for rapidity and doing it easily through our mobile phone, have increased through time and will carry on doing so. For now, Insurtechs still need to gain the trust of consumers: despite all the above arguments, a vast majority of individuals would trust a traditional insurer due to the importance and historical lack of transparency in the insurance processes, but this part is diminishing.
Consumers are trusting online processes more and more, which is a real threat to traditional insurers, who need to embrace insurtech’s way of dealing with customer experience: shorter customer journeys, less pain points and more regular and tailored points of contact through their smartphones. If we continue to see insurtechs improving their customer experience through thorough data insights and analytics, there is no doubt that trust will be gained.
Author: Nora Beqaj, Business Director, The Nest UK by Webhelp