Insurance is known for its tradition and is a sector built on face to face relationships between customer and broker and broker and underwriter. So how does the allure of digital weave in to this model?
Since the first insurers gathered in Lloyds Coffee House there has been a tacit agreement that insurance cover is a promise and when selling a promise – even if you don’t need to deliver on that pledge – a good relationship with the customer is key, particularly in commercial lines where policies are often tweaked and changed.
Brokers in particular are not keen to abandon that relationship in favour of trading digitally; they need that customer contact whether that be on the High Street or over the phone. It’s all the more important when you realise that insurance is a once-a-year grudge purchase, especially in personal lines.
Brokers lost a huge chunk of the personal lines market when the direct insurers took hold so it’s only natural that they are wary about how further digitisation will impact their position.
But customers want to buy their products in a digitised way. Fujitsu’s Digital Inside Out report shows that financial institutions are digital trailblazers with 63% of survey respondents saying online banking is their most valued digital service.
People want to check their bank balances, get new loans, and manage their money with their bank – regular contact is a given. Insurance doesn’t work in the same way – remember that once-a-year grudge purchase? Insurers and broker can and are developing their apps, managing social media and investing in mobile technology but finding out how to regularly get their customers to engage via these platforms is a harder nut to crack.
This is partly the reason that despite falling under the financial services banner, insurance is very much the poor cousin digitally. Insurance companies (brokers included) are simply not as far ahead as the banking sector when it comes to using technology to drive their businesses and help their customers.
Insurers are also almost drowning in data – they have tonnes of information, transferring that information on to new, swish systems is a legacy issue causing headaches across the board. To sell a policy – particularly in the commercial sector also requires a lot of information and it’s not always something that can be accomplished by a digital question set.
There are also threats from start-ups (who knows when a new model might be developed?) and the sector can also feel the big tech firms, such as Google, snapping at its heels. Many think Google has all the data (and the capital) it needs to start writing policies, if they decide to take that forward where does that leave insurers?
But it isn’t all bad news, insurers and indeed some brokers are taking the lead and making strides in the digital age. Trade publication Insurance Age runs a campaign FinTech Futures, a campaign designed to help brokers and insurers embrace FinTech.
Some insurers and brokers are taking the lead to find digital solutions to drive insurance forward in the digital age. Aviva, as noted in the report, has sponsored FinTech hackathons and is also encouraging innovation by setting up a tech garage, in order to drive a “Digital First” attitude. Brokers also have a firm presence on aggregator sites which they use as an opportunity to compete in niche markets.
Along with that some brokers are also committing to streamlining their systems, thinking of ways to ensure their customers remain engaged throughout the year and developing better platforms for their staff and customers to use.
For brokers it is about using digital but in a way that doesn’t abandon the relationship with the customer, but enhances it. For example, Aviva’s Broker Mentor service, an online marketing resource tool. The company also recently launched its LinkedIn and Twitter accounts dedicated to broker audiences to share news and updates which are important to them.
So, the insurance sector is playing catch-up, as the Fujitsu report highlights it’s likely the insurers and brokers who embrace digital a future now will be the ones who keep pace with the disrupters and last the distance.
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