A lack of digitisation of consulting processes leads to a serious competitive disadvantage
The digital customer of today expects processes tailored to his needs from an insurer that meets the communication behaviour and expectations of the customer. If the insurer fails to meet these expectations, a customer will quickly change to a different insurer, or InsurTech given their digital flexibility.
The customer in the digital world
A glance at today’s digital customers shows that they are surrounded by digital processes, which they use accordingly. Language assistants such as Siri or Alexa are used, for example, to control the various smart home systems. The user can use voice commands to dim the light in a certain room, regulate the thermostat or set the time when the suction robot is to perform the cleaning. But applications such as running apps and similar applications also play an important role in the everyday life of a digital customer. Many of these digital standardised processes are now an integral part of everyday life.
The digital customer in the insurance world
If a customer needs dental insurance or home contents insurance, he/she can quickly find the website of different insurers via an internet search and comparison portals. Looking for answers, the customer often does not find the technical solutions demanded and used by other service providers. A chat for quick answers or a personal video consultation are also not available. Even the possibility of an online transaction is often not possible. Customers, who interact in a digital world, usually do not desire home visits from an agent, nor do they want to fill in and sign paper forms page by page.
The role of InsurTechs
With the aid of the Q_PERIOR-Tech Radar we monitor the growth of the InsurTechs business. Some of these providers now digitally reproduce the entire consulting process and offer fully digitised insurance policies. Acquisition, appointments and the conclusion of contracts are carried out consistently in one process without any media disruptions. Chatbots support and intensify customer service by answering simple, repetitive questions and even are used for the sale of policies requiring little explanation, such as travel health insurance or car insurance. InsurTechs are agile and respond quickly to customer needs. Through cooperation with banks or insurers, they sometimes grow at a rapid pace.
The challenge for insurers
In the meantime, individual insurers are trying to enter the digital business segment, but so far they have not yet been able to do so completely and without media disruptions. For example, the customer has to follow a link and re-enter all the data in order to take out a car insurance policy.
Overall it seems that the right strategies are in place, but for various reasons, such as the prolonged low-interest phase, rising costs and resulting low profitability, insurers seem to shy away from further investments. Nevertheless, the ongoing technological developments, changing customer behaviour and increasing competitive pressure are, at least, just as as challenging.
The consulting process and the digitisation possibilities
Looking at the high-level consulting process, it quickly becomes clear that the consulting process can be partially or even completely digitised. Many InsurTechs support, cooperate or disrupt the insurance industry. Q_PERIOR believes that it is worthwhile to analyse the market and identify opportunities for cooperation. For example, the start-up Nect has developed the digital insurance ID. Similar to banks using a digital ID procedure for opening an account, Nect allows to create a unique ID and use it for signing an insurance contract. Another example is the insurance broker Clark, which recently has entered into a cooperation with DKB and thus has enormous advertising potential. However, this market entrant should be regarded as disruptive for the insurance market, in particular because of the cooperation with DKB. With a digitally signed power of attorney for the broker, Clark manages the transfer of the contract to Clark in an entirely unbureaucratic manner. The policies and conditions are stored in the app. In addition, expiration dates are stored and the customer is automatically notified of a change option. These examples show that it is very important for insurers to have a coherent digitisation strategy tailored to the customer’s needs in order to remain competitive.
Areas of action
Therefore, it is recommended to develop company-specific and, above all, customer-centred solutions for the following areas.
1) Focus on the customer
The business model must be very closely aligned with the needs of current and future customers, so that the insurer does not lose any connection with Generation Y. The communication and interaction of this target group, for example, increasingly takes place by using smartphones. The spread of smartphones has now surpassed that of computers by far. Insurance contracts should therefore also be easy to conclude via the smartphone. Likewise, chatbots will be used more and more often. Not only because they are used by insurers, but also because acceptance among users is increasing accordingly. The question is therefore not whether chatbots will become well-established on the market, but when.
2) Digitisation of the multi-channel
There is a lot of catching up to do, especially at the interfaces between the different sales channels. For example, if a customer obtains information about rates on the website and then calls the call centre or an agent, the renewed entry of all relevant data is usually necessary. This procedure is tedious for the client and cost-intensive for the insurer. An automatic transmission of the data from the website to the insurer’s other systems or, better still, to a central communication interface would be useful. For example, existing data could be accessed when a customer calls on the basis of an interested party ID. This could save time and increase customer satisfaction.
3) Digitising the insurance agency and sales processes
A major challenge lies in the digitisation of sales processes. More and more solutions for digitisation can be observed in sales agencies, be it through the intermediary’s own resources or those provided by the insurer. A professional Internet presence in the form of a individual homepages with the possibility to conclude an online transaction is meanwhile just as much part of the standard as an appointment via WhatsApp. However, this is more likely a matter of chance than of a consistent digitisation strategy of the insurance company. Some agents make digital appointments or even offer video advice, but this is usually done individually by the agent in order to adapt to the needs of the market. Other features include a paperless application and digital signature to facilitate the conclusion of the contract. In general, however, the list shows that these digitisation approaches are neither universal nor free of media disruptions.
The Q_PERIOR Insurance Model is ideal as a project accelerator and for identifying the business areas and processes affected by digitisation projects. This model has grown over the years and is constantly being updated. It maps almost all standard processes for insurers and thus enables a fast project progress. From experience digitisation projects are very individually designed and therefore we offer here a rough outline of the procedure to be adapted individually to the customer’s needs. First of all, Q_PERIOR proposes an analysis of the current state of digitisation. The focus is on aligning the developed to identify areas of action. With a detailed implementation plan, Q_PERIOR supports the entire implementation project.