Insurance: a consumer product like any other?
18 June 2018
Updated: 10 August 2018
Digital transformation is a subject on the heart of concerns of big insurers.
Evidence is the many events, fairs and conferences devoted to this subject. The sector is therefore working to integrate the digital codes, for internal and process reasons of course, but not only. Social networks, customer relations, multichannel … what if insurance was a consumer product like the others? Are we witnessing a process of “e-marketization” of the sector? Is the entrance of the sector into the digital era making it becomes a regular online business like the other?
Digitalisation: an internal need, an external necessity
Several studies cover the state of play of the digitalisation in the insurance sector. It is clear that it is indeed in progress, despite the long way to go for some players. According to a Lifery study, only 3% of insurers declare to have finalised their digital transformation, while 27% has recently started, and 43% is in an implementation phase for some services.
“ Insurers’ digitalisation is still a very disparate process. While some have started their transformation with significant financial and human resources, others are in the early stages of their project. And this is understandable given the complexity at first sight of this transition: new tools, new habits … Yet many actors can accompany them step by step, ” says Stephanie de Villelongue, Key Account Manager at SlimPay and expert of the Insurance sector in Europe.
In addition to time-saving, processes optimisation, and the renewal for employees, one of the crucial interest of digitalisation is the retention of customers, who, with new expectations in their relationship with insurers, will be very sensitive to their ability to adapt.
Challenge: apply the methods of client relations of the biggest merchants
Indeed, consumers’ power is as important to the insurance industry as it is to retail or transportation. Beyond the ‘obligation’ to be insured (car, home, etc…), insurance products are now offered as real services offers, with a simplified online customer acquisition, flexible offers, competitive prices, and a proper customer service for major e-commerce platforms.
According to an IHS study conducted in 2016, the Usage-based Insurance is expected to grow to 142 million Subscribers globally by 2023. In 2017, a study from CCMBenchmark found that 20% of French Internet users had already subscribed to an online Insurance. In addition, among those looking to change insurance, 41% consider subscribing online via the Internet.
“Either it’s about subscribing to a streaming service, a beauty box or a home insurance, consumers adopt more and more the same selection methods and the same exigence level” explains Stéphanie de Villelongue. “Thereby, to the question: ‘Are products insurance like other consumer products?’, the temptation to reply with an affirmation is strong”.
This requirement imposed on insurers is reinforced by many factors such as the Hamon law in France or the “Codice del consumo” in Italy that allows consumers to free themselves from a contract after one year, new services like Allan that offers a comparison of all players and their offers. But also by the arrival of new formidable actors.
Insurtech, GAFA : The insurance landscape in recomposition
Consumers expectations are changing and the sector itself is undergoing many changes. Insurtech are these innovative startups that are investing in the insurance industry with platforms and offers as accessible (in terms of subscription process but also in terms of simplicity and understanding of offers) as a music streaming service.
The GAFA, on their side, have understood the potential of renewal of the insurance sector and put their financial and technological strength as well as their knowledge of consumer behaviour in the service of exploration of this sector. If Google has tried comparator insurance in the UK and the US, but without meeting the expected success, the California giant does not close the door of this new business so far. Nevertheless, this remains the proof that one cannot improvise as an insurer, but the sector requires a very specific expertise. Amazon on its side has been getting ready for several months. Some of these new players also offer models of insurance consumption on demand, aming to ensure for a specific or recurring need. The pay-how-you-drive model, for example, is a great success:
“54% of Internet users, today, declare themselves ready to share their driving data with their insurer if they can in return obtain a reduction of their insurance premium or more advantageous guarantees. “
So, is Insurance a consumer product as the others? Although its legal framework is very important, as banking or healthcare, the sector is experiencing a switch and trying to respond to the transformation of consumers habits in demand for mobility, simplicity and speed.