Customer Experience

The Evolution of Regulated Services

In the beginning of our series, we explored the evolution of traditional marketplaces toward fully integrated experiences which include complex industries such as regulated services. In the following paragraphs, we'll have a focused lens on the insurance industry and the value that can be created through digitally connected ecosystems.

Let's break this out into the four key stakeholder groups that will benefit from a connected insurance marketplace:

  • Customer
  • Adviser
  • Carrier
  • Reinsurer

It's all about the customer-duh!

Let's face the facts, most people don't really enjoy buying insurance. More often than not, they're making the decision pressurized (they've been hard sold) or appeasing social norms (“everyone says I should buy insurance when I have kids”). The things they really want is to get through the process as easily and quickly as you possibly can.

However, as an industry, we require personal data points to predict and manage risk via a pooling of profiles. For any customer, the only method to obtain insurance is to provide enough private data to allow an insurer to make an educated risk assessment and product offering – and also the process can be very time-consuming.

Data is inherently included in insurance. For that customer to have a great experience, we need to collect the information as quickly and unobtrusively as you possibly can (no more needles and cups-please!).

Convenience and accessibility are key decision-making factors for consumers today, which is why we've seen major industries like banking and retail digitize much of their business processes. A built-in marketplace can remove the hassle and wait here we are at clients by digitizing checkpoints and interactions. The less paperwork and redundancies which are involved in the process, the better the knowledge will be for the client, which translates into more revenue for businesses.

Advisers matter a lot more than ever

For complex items like life and medical health insurance, most consumers decide on buying these items following a series of conversations having a trusted professional. The adviser within this equation is there to teach, support and advice the customer's decision toward the very best means to fix meet their needs.

The real role that advisers play is coach and therapist. For great advisers, most of the time spent with clients is less concerning the products and numbers, and much more about understanding the people and their goals, dreams and fears. Therefore, advisers possess the essential role of understanding various carrier products and making recommendations according to what they know of the client – all while adhering to industry standards and compliance regulations.

This is extremely hard to do at scale with paper-based processes. One benefit of the digital marketplace is supporting advisers with “product discovery.” Searching and comparing insurance products can be done considerably faster by using technology. Marketplaces also increase options for advisers, thereby creating value along with a better experience for clients. Having a larger pool of insurance products to select from, advisers can leverage technology to filter options in line with the client's goals and finances.

Using technology to alleviate manual processes and automate compliance will enable advisers to spend additional time doing the things they're doing best; coaching and supporting their clients.

Advisers care deeply about people. Insurance coverage is about protecting people. Finaeo is all about supporting advisers by using technology.

Carriers are moving toward digitization

About two months ago, I was inside a carrier's office discussing the way forward for insurance distribution and also the role it might participate in the customer experience. We started getting into the subject matter and sharing types of areas where today's experience is broken. All of a sudden, inside a proud moment, an executive almost stood on the chair to talk about a serious insight:

“Six months ago, our organization found an excellent conclusion; we must focus on the customer.”

This “perceived insight” seems so trivial, but, in fact, may be the tipping point of a billion-dollar incumbent being aware of what matters most: the client experience.

By providing a digital-first experience, carriers might help prospective clients with education, analysis and recommendations to meet their individual needs. A seamless experience means policy-holders will love, as best as they are able to, the choice to spend money on the insurance coverage they likely aren't excited to cover. Making the client experience as great as you possibly can will give you carriers with a significant competitive advantage.

An integrated digital marketplace helps insurers in some ways:

  1. Access to data to make better risk decisions
  2. Understanding of methods goods are performing in tangible time
  3. Increased visibility within the moment of purchase

Risk management is about math. Insurers use models to predict when the premium that customers pay will be profitable according to their own health. Insurance providers compare the client's private information for their internal risk guidelines (known as “underwriting rules”) to produce a price as a swap (i.e. marketplace) for a policy.

Carriers that have the right information digitally and automate it against their underwriting models may have the opportunity to make smarter decisions at scale. Additionally, they will have the opportunity to layer on technologies such as machine learning to drive insights on product manufacturing that previously would be unseen. These “hidden secrets” are the answer to unlocking the future type of insurance.

Once carriers can optimize their understanding of customer data and risk management, they can start to create a more competitive product offering based on remarkable ability to know the performance of products in specific markets and customer segments. Carriers which are digitally associated with their clients will have the opportunity to create, deploy, analyze and iterate on products not in multi-year cycles however in real-time.

Lastly, buying insurance coverage is all about a number of choices, but what truly elevates a carrier may be the ability to capture the attention from the “buyer” (that could be the adviser or policyholder, with respect to the distribution model) within the moment of purchase. Today, insurance coverage is a wide open – mainly analog – marketplace where buyers can choose from an array of carriers to obtain the coverage they need. Carriers are competing for business against their competitors every day and are counting on their brand strength to win the company. However, in today's world, people spend many of their time spent online. Therefore, carriers have to adapt their marketing efforts to remain competitive and make content that resonates with modern consumers.

Once connected to a digital marketplace, carriers can begin to build up more targeted “in the moment” marketing and advertising campaigns and quickly leverage modern marketing strategies for example A/B testing, retargeting and segmentation.

Reinsurers can alter the game

In an industry dedicated to risk management, the best risk-bearer, the reinsurer, holds one of the most important and influential roles on the market.

As with many financial markets, the availability of capital is more flush than in the past, and, naturally, value is being eroded. The standard relationship between supply-chain participants has shifted, and the expectations of value creation are stronger than in the past.

In any market where a pyramid distribution model exists, it comes with an inherent risk of channel conflict. It's an accepted and known reality of insurance that co-opetition exists and that, as a result, you will find trade-offs produced in growth strategies that originate from a wish to keep the “perceived” conflict.

Every partner that the reinsurer works together with ultimately sends the reinsurer similar information, and, by helping the industry standardize these data requirements, reinsurers can help produce a more effective, compliant and valuable relationship using the industry.

Helping carriers move toward a digital-first distribution model will make sure that reinsurers are capturing probably the most information easy to generate a better view into how risk management decisions affect their partner's distribution strategies. This symbiotic relationship can now be centered on strategic value rather than capital access. In short, money is fluid and available; partners are difficult to find.

Today, the examines exchanging insurance as a buy/sell model. Even just in the word what we use (“distribution,” “sales,” “supply chain”), we discuss the purchase as a good rather than a service. Financial services is a deeply personal and complex experience for most of us. A built-in marketplace experience allows everyone to pay attention to the most important part: the client relationship.

Each stakeholder within the experience ought to be seen as an partner, not as a buyer/seller inside a service marketplace. Ultimately, to create the best experience, the industry needs fully integrated and digitized marketplaces that provide today's digital customers using the experience they expect and deserve.