Written by Stephen Whitfield on Tuesday 8 September 2015
General Insurance has seen some significant changes over the last 30 years. There was a time when you either bought your insurance via a high street broker or in the case of your home insurance it was bundled in with your mortgage. That all started to change in the mid-80s with the shift to direct sales which brought with it the birth of a new breed of General Insurer spearheaded by Direct Line. Then, just as that model was becoming the new norm, along came the introduction of Price Comparison Websites (PCW’s) which have taken the market by storm over the last decade. Indeed many brokers have started to utilise PCW’s as a new sales channel but what’s next?
Well, these shifts in distribution behaviours for the personal lines market were brought about due to broader changes in customer behaviour driven by advances in technology. Given the explosion in handheld computing power, the next logical step, therefore, must be to allow customers to interact with their GI provider via the internet and mobile/smart phone. A recent survey of 18 European countries identified the UK as having the highest percentage of people who make a monthly purchase on their smartphones, with 32% (compared to just 18% in Germany). There is clearly a growing demand for self service and if we look across most other industries a shift to doing business via mobile devices.
So where are we as an industry?
Here at Altus we have researched digital offerings from the leading General Insurers and the results are disappointing if not altogether unsurprising. Insurers’ primary digital focus is on attracting new business with over 85% of the leading insurance companies enabling their customers (or prospects) to purchase their insurance via a website. Through the use of responsive web design Insurers are able to create mobile friendly websites thus opening up mobile as a sales channel – although we found there were still 3 leading GI providers who haven’t made their sites mobile friendly! However, when it comes to Mid-Term Adjustments (MTAs), renewals, accessing my documents or indeed the moment of truth – making a claim - the picture is completely different.
Acknowledging the fact that not all customers want to interact with their Insurer via a mobile device and that in certain situations a customer will prefer to speak to a “real” person I don’t think it’s a controversial statement to say a truly customer focused General Insurer should allow their customers to interact with them via the channel of their choice rather than the GI providers choice!
Why is it deemed acceptable that I can purchase a policy online but if I want to add some cover to my policy at a later date (either at renewal or mid-term) or indeed make a claim I have to find the right phone number, go through multiple Interactive Voice Response (IVR) options before waiting in a queue to speak to someone to process my request?
The answer is of course comes down to a combination of factors including cost challenges, buy-in from the board, increased regulation but undoubtedly the biggest single issue is legacy systems. I hear a lot of talk of omni-channel (I would argue as an industry we haven’t nailed multi-channel yet) but until companies address the issue of legacy systems we will be a long way off delivering the experience that the modern day consumer demands.
The risk of doing nothing – Well, ask yourself what is to stop a company such as Amazon or Google from using their digital capability coupled with their existing customer relationships to enter the GI market place? Do you think they would force their customers to phone them if they wanted to add bicycle cover to their policy? No, the bike purchase in the internet store would be flagged and then seamlessly associated (via any number of matching customer details) to the insurance product. The customer would be informed of a quote via text and a text response would confirm acceptance of the cover and payment via Google Wallet - Googles’ mobile payment system which allows customers to store details of debit and credit cards and loyalty and gift cards on their phones and make payments by placing their phones on pay-pass enabled payment machines – the times, they are a changing!
This article first appeared in Insurance Age 04/09/2015