World Insurance Report 2021: adopting the Open Insurance model
Capgemini and Efma have released their traditional “World Insurance Report”, deciphering the biggest moves and trends that are transforming the Insurance industry in 2021. The report notably introduces the concept of CARE (Convenience, Advice and REach) and advocates the use of the Open Insurance model.
As first explained by Anirban Bose (Financial Services Strategic Business Unit CEO & Group Executive Board Member, Capgemini) and John Berry (CEO, Efma), “the research suggests insurers to become familiar with the term digi-intermediation. The digi-intermediated future will feature a seamless environment where sophisticated on-demand digital features empower and augment direct channels (agents/brokers/call centers). Simultaneously, advanced data analytics and insights will humanize virtual engagement channels to enable more individualization”.
CARE: a new equation to maximize distribution channel value in a fast-evolving business environment
The pandemic has significantly affected insurance companies: 60% of insurance executives said that Covid-19 has impacted their firm’s customer-acquisition efforts, and around 40% said that retention was affected. Therefore, how can firms reach the distribution north star in a digital environment where customers are turning to channels that offer the most convenience, personalized advice, and reach? They should solve the CARE equation.
Customers request 24/7 multi-channel access: Convenience means quick access to relevant information whenever needed. Moreover, they seek different levels of advice about terms, conditions, and coverage to select the product that suits the most. An emphasis on personalized Advice will help firms foster customer loyalty and eventually boost profits. “REach is as critical as the two other components: while a channel may offer convenience and personalized advice, it demonstrates its actual value when targeted customer segments use it from research to purchase,” as highlighted in the report.
Mastering digital to provide WOW-factor customer experiences
“The time has come for insurers to actively deploy technology solutions that enrich their engagement channels, create WOW-factor impact and deliver stellar CARE”.
Insurance customers surveyed underlined the fact that the ease and speed of access to information clearly impacts the convenience of their experience. 77% of insurance executives say that agents and brokers are their most prominent distribution channel. However, more than 40% of personal line customers said it was challenging to contact agents and brokers outside typical office hours, with lockdowns making it even more complicated. On the other hand, more than 40% of the agents/brokers polled said they could not consistently meet policyholders expectations for convenience and response time.
As Covid-19 forced – and convinced – customers to adopt virtual interaction, agents and brokers need to ramp up their digital engagement capabilities to remain relevant. More than 50% of the agents and brokers surveyed explained they need digital collaboration and engagement tools – notably digital document-signing capabilities – to assist their customers more effectively. Yet, less than two-thirds of insurers said they already provide their agents and brokers with such digital tools. As a result, they cannot enhance CX.
With data defined as the new oil, and knowledge meaning “power” when it comes to converting leads, agents and brokers now need relevant and timely customer data from various internal and external sources. As explained in the report, agents and brokers who know their customers and prospects will be able to drive informed interactions that will eventually lead to better sales results. For instance, more than half of them said that having a digital CRM would be a helpful solution, but only 60% of insurers currently offer them such a tool. Moreover, chatbots and marketing automation tools will also help them expend scale by reaching policyholders via each customer’s preferred mode of engagement and by streamlining their workload to focus on their core strength which is personalized advice.
The experts also highlight that “as competition with BigTechs and players from other industries intensifies, insurers of the future will actively build a competitive edge with technology. Low-touch and no-touch experiences are an up-and-coming differentiator for WOW-factor customer experiences that don’t break the bank”. They add: “open architecture will tie distribution channels together by enabling insurers to connect with ecosystem partners and redefine their operating models seamlessly”.
Digi-intermediation to fill in distribution gaps and maximize delivered value
Capgemini and Efma advocate a digi-intermediated future, that would enable insurers to offer personalized cross-channel CARE. Therefore, a well designed strategy will empower agents and brokers, opening the door for more digital intermediaries. They will also transcend physical barriers and favor a phygital engagement model – mixing physical presence and digital interactions – to win and retain customers.
The report also focuses on how highly innovative new-age distribution platforms are bridging digitization gaps and enable new business models:
- The aggregators compare plans from different insurers, simplify policy purchases, educate customers, etc.
- The exchanges or marketplaces send or receive leads to and from agents and brokers, who also constitute their customer base.
- The digital managing general agents (MGAs) tailor carriers’ digital products through streamlined and automated customer touchpoints.
- The placement platforms (PPLs) process quotes from multiple carriers.
An Open Insurer mindset
The report concludes:
“seamless communication and data flow between distribution channels and ecosystem partners will be critical in the inevitable digi-intermediated world. Enabling an open API ecosystem and embracing an Open Insurer mindset and the first steps”.
Therefore, the frontrunners of the future will adopt the Open Insurance model and will prioritize the shift from product-centric distribution to favor embed insurance services in customers’ everyday life and eventually best serve policyholders.
The report is available HERE.