Insurance's next chapter will be customer experience & payment solutions
Of all the areas where insurance can improve the customer experience, are payment solutions the holy grail?
There’s never been a more exciting time to be in insurance.
Billions are flowing into our industry. Capital deployed in the first half of 2021 already exceeds the full year of 2020 funding — with the majority going to megarounds and distribution. Investors view insurtech with an eye on the astronomical upsides of disrupted behemoth industries like e-commerce and fintech — and another eye on the current wave of risk-originating insurtechs that are maturing and moving towards going public earlier in the funding cycle. This infusion of attention and capital translates to a vibrant, growing insurtech ecosystem that pushes boundaries and makes leaps in innovation. We are moving at unprecedented speed.
We are also, as an industry, at a historic inflection point in terms of operationalization. As COVID-19 vaccinations roll out and markets reawaken, there is the larger question of what we as a society and industry will cull and leave behind from last year’s unprecedented forced digitization. Overnight, the pandemic pressured legacy industries to embrace technology in order to stay connected to customers and keep businesses afloat. Now that some semblance of “normal” is returning, albeit unevenly, we must decide which lessons and strategies will carry on the way we do business.
Within this context, what does the future of insurance look like?
Without a doubt, the next chapter for insurance will have a renewed focus on customers. Customer experience is one of the major drivers across all industries in 2021 — and insurance is no exception. Insurance customers, like everyone else, expect a modern customer experience now more than ever.
On the product side, as companies like Thimble have demonstrated, being customer-centric means developing offerings that reflect consumer interest in more flexible, on-demand insurance — a whopping 88% of consumers want more personalized insurance products. We’ve graduated from the ax to the scalpel, as customers want insurance products that meet their specific contexts and protect the things they care about most.
Great customer experience also means delivering these products in modern, seamless ways. As millennial and Gen Z consumers increasingly saturate the consumer base, expectations for instantaneous digital consumer experience grow. This trend is only furthered by the past year, as people have come to realize the full potential of technology in their everyday lives, especially when it comes to efficiency.
With this new prioritization of convenience, insurance companies are racing to take the lead in digital services. This is complicated by the long history of face-to-face human interaction in insurance and the particular challenge of retaining what’s critical about human touch while leveraging technologies to improve and scale. Likely for that reason, insurance distributors have been slower to adopt new technologies compared to other sectors.
But we are catching up. Good examples of using technology to improve customer experience in insurance include document automation, artificial intelligence, embedded insurance, and advanced telematics.
Of all the areas where customer experience can improve in our industry, payments solutions are the holy grail. While payments are arguably the most critical moment in the customer journey, in insurance, this fundamental process is fragmented, tedious, and complex for everyone involved, from the insured to the carrier to the distributor.
Fortunately, modern solutions have the potential of impacting both sides of the transaction, improving end-customer journeys while cutting down operational costs, which have reduced far less than other industries over the last two decades, according to McKinsey & Co. Ultimately, the sellers and backers of insurance can use technology to kill two birds with one stone by increasing efficacy and, at the same time, pleasing the customer.
Though the world felt paused for much of the last year, in many ways, the insurance industry was moving at a staggering velocity, working hard to match services with customer expectations. Across both personal and commercial spheres, consumer demand for experience powered by technology and digital strategy has only increased–and our industry has begun to adapt.
Most importantly, we’re not going back. COVID-19 ushered in a new chapter of our industry’s history marked by technological and social evolution. The winners, whether startups or incumbents, will be those insurance companies that figure out how to graduate from patchwork operational and infrastructure solutions to the seamless, technology-enabled modern experience that today’s customers expect.
The opinions here are the author’s own.
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