Why Lemonade & Metromile should keep you up at night
Review the three key areas to consider when making technology investments.
The term “insurtech challengers” has been bandied about repeatedly amongst traditional insurers the past few years — but the strides that many of these newer and more technologically advanced entrants to the game have been making in recent years could soon put the challenger label to rest: Insurtechs are not here to take part, they’re making innovative leaps and taking bold risks with an eye to take over.
Case in point: Lemonade’s acquisition of pay-per-mile car insurance company Metromile. In six short years, Lemonade has deftly combined a focus on customer-centric technology, partnerships and now M&A to effectively shake up the insurance landscape. Metromile’s license to sell car insurance in 49 states immediately catapults Lemonade as a relevant player in the U.S. auto insurance market, while adding their precision sensors and real time, first-party data capabilities give them a competitive edge by being able to better assess pricing.
This is just one of several potential industry game-changers, and follows Amazon’s partnership with Next Insurance and brokerage giant Marsh this past fall.
What can traditional incumbents learn from these developments? Idle hands can and will lose market share for those who don’t adopt a quicker and more agile approach to both their digital and business investments. Taking a page out the insurtech playbook and adopting a “move quickly and break things” attitude can help fuel the continuous improvement they’ll need to compete and succeed long-term.
Insurers should consider these three key technology elements prioritizing their investments:
1. Identify where tech investments can make most impact quickest.
Targeted investments are vital for insurers if they are to reap a meaningful return in the short or mid-term. It’s wise to first understand which aspects of your business and metrics can most directly improve business objectives and growth. Then audit your current operations and analyze the gaps that delay return on investment (ROI). Which processes are holding back your ability to capture data and make it agile to the departments that need it — and more importantly can use it to grow your customer base through new policy sales or add-ons? Which processes are counterproductive, time or resource intensive, or require heavy coding or development until you can see any fruits from all of that labor?
Identifying these factors or teaming up with an innovative partner that can take this holistic approach can help you target investments, and ensure that new technology you introduce to your existing environment can be based on its ability to grow revenue, lower costs and expeditiously deliver an attributable return.
2. Focus on customer-centric capabilities that speed up customer acquisition & bolster retention.
The days of blind or assumed customer loyalty are well in the rearview mirror. Today’s digital-first customers have a myriad of resources at their fingertips to compare insurance rates, customer service reviews and other factors, and switch if they’re not convinced they’re receiving the best value for their dollar. This is especially true of millennials, 60% of which are open to buying insurance from new insurance entrants.
Grasping and quickly catching up to the needs and expectations of today’s customers is imperative, and to do that insurers must focus on capabilities that eliminate high-effort customer processes, minimize touchpoints for processes that can easily be completed digitally via self-service channels and on mobile, and enable them to onboard customers faster. Eliminating outdated manual processes and prioritizing technology that enables customers to independently onboard themselves can directly speed up “time to sale” for insurers, and also eliminate much of the friction plaguing claims experiences, improving customer satisfaction and loyalty.
3. Prioritize SaaS offerings that can be quickly integrated into your existing systems
The need for insurance operations to perform independently has never been more critical than it is today with the prolonged uncertainty of the pandemic.
Software-as-a-service (SaaS) technology enables businesses to implement solutions for all employees at all locations at the same time, ensuring the software is up to date. This means that agents can handle any aspect of policy sales or claims processing from anywhere in a secure fashion, without any risk to data loss, privacy or security issues.
A SaaS platform allows insurers to cut resources and costs needed to integrate functionalities. By replacing multiple siloed systems with one platform, they can avoid problems involved with integrating numerous features and capabilities. All capabilities are integrated and available for use.
This enables insurers to glean the benefits of their digital investments and accelerate Time to ROI.
Zviki Ben Ishay is the co-founder and CEO of Lightico, a SaaS platform for customer interactions that digitally transforms millions of connections between businesses and their customers. With over 20 years of experience in customer experience, call center technology and service, Ishay has developed a keen understanding of what businesses can and need to do in order to provide better service through digital and remote means to the benefit of both businesses and their customers.
The opinions expressed here are the author’s own.
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