“I can’t wait to pick out my insurance plan!” …said no one, ever.
Even though insurance is one of the most important purchases a person or company can make, it’s a product most customers don’t like or understand. Insurance companies haven’t done much to improve the experience, either, even though they have at their disposal the same digital tools that enhance the customer purchase journey in many other industries.
Traditional insurance purchasing models are still riddled with ambiguity. Customers, who have acclimated to tailored, on-demand service from virtually every service provider in other industries, remain more averse to purchasing insurance than ever.
Why not simply build a website?
The problem for most insurance companies is that delivering a great customer experience online is not just about standing up a nice website. That’s only half of the job. A truly great experience requires a foundation of modern core systems that can talk with your front end via APIs. That’s a long way off for many insurance companies that continue to struggle with multiple legacy systems, some of whom are looking at spending hundreds of millions of dollars to replace them over multiple years.
A great customer experience also requires that insurers rethink their digital operations. Most insurance companies still have operations that were designed to process manual work with turnaround time measured in days or weeks. The online customer wants their endorsement processed in seconds. Your claims operations also have to be aligned to the needs and opportunities of the online customers.
Importantly, delivering a great user experience actually requires you to rethink the very products you are selling. Traditional insurance products are highly complex and difficult to understand. Taking your existing products off the shelf and trying to sell them on an online platform will only frustrate customers who demand simplicity and transparency.
What about InsurTechs?
Ironically, many InsurTech companies are facing similar challenges even though they are not saddled with the legacy issues of traditional insurance companies. Some InsurTechs have successfully created a user-friendly interface, but similar to a digital travel agency like Priceline, the plans offered on these sites are ultimately serviced by traditional providers, because the InsurTech isn’t equipped to go beyond the sales process. If a customer buys a policy from an InsurTech who presents themselves as a new insurance company but is actually an online broker, their customers will soon realize they aren’t getting the experience they expected.
That’s probably why InsurTechs haven’t disrupted the industry in the way some predicted. Even the most successful technologists haven’t been able to shake up the industry, because any tech solution ultimately needs to be backed up by a robust and integrated insurance solution.
Whether a tech company attempting insurance, or an insurance company attempting technology, previous efforts to digitize the process of insurance company haven’t seen much success. The insurance industry simply wasn’t built in a way that allows customers to select from a menu of options and simply “add to cart.”
Learning to ‘play nice’
Delivering on today’s customer expectations requires a fully integrated insurance company with brokerage capabilities, deep technological competency, and customer focus. That is to say, any provider attempting to create a customer-centric insurance experience needs to be both a great insurance company and also a great tech company.
This is why we created ProSight, a specialty property and casualty insurance technology company that marries the technology and traditional insurance aspects.
The insurance industry may have a long way to go before it catches up to the digital age, but it can’t live in the past forever. The customer has taken the throne, and it’s up to us to service their changing needs. Whether you’re approaching InsurTech from a traditional insurance POV or as a technologist, moving the customer to the forefront of your business model will be critical. I don’t expect that customers will ever learn to love insurance, but I’m confident that a customer-centric business model will be a competitive necessity for success in the future.
Joe Beneducci is founder and CEO of ProSight Specialty Insurance. He can be reached by sending email to JBeneducci@prosightspecialty.com.
The opinions expressed here are the author’s own.
See also:
5 high-tech challenges (and solutions) for today’s independent agents