For several years, the insurance industry faced warnings that it lagged behind other industries in its pace of digital transformation.
Then the pandemic radically changed the world’s approach to digital technologies and their uses. That calendar year has passed, but the changes it implemented remain with us. The pace of that change is likely to pick up as well.
“2021 will be the year that every company — not just the 15% of firms that were already digitally savvy — doubles down on technology-fueled experiences, operations, products, and ecosystems,” predicts Sharyn Leaver, senior vice president of research at Forrester.
Digital transformation is no longer in our future. It’s part of our lives today. Agents must adopt digital platforms to survive, and insurers need to make those tools available in order to maintain their agent relationships.
The insurance industry was one of the early adopters of the first business computing solutions. To incorporate the linear, preprogrammed nature of early computers, insurance professionals had to change the way they did business.
The industry benefited from being among the first to adopt new business computing technologies, says insurance solutions consultant Craig Bedell. “However, the convoluted business processes and forms-based communications that served these early technologies did not change as the technical capabilities evolved,” Bedell notes.
The result is an insurance industry whose technology is now out of sync with surrounding industries, as well as with customer expectations.
Today, platforms lead the business world, with companies like Uber, Airbnb and Facebook at the forefront. “Even five years ago, one could not have imagined that the world’s largest taxi service company will own no vehicles or that the world’s largest accommodation company owns no real estate,” write Karen Vey and fellow researchers in a 2017 article in the International Journal of Advanced Corporate Learning. Similarly, they note, Facebook does not sell content it produces; rather, the company has become a worldwide leader in media by hosting content produced by others.
Customers have come to expect frictionless platform experiences, too. In a 2020 Forrester study, 40 percent of U.S. adults reported an increase in their summer online shopping compared to pre-pandemic levels and 42 percent said they had increased their shopping at online-only stores specifically, writes senior analyst Emily Pfeiffer. Another 42 percent said they did not plan to return to brick-and-mortar shopping even if they could do so safely.
When it comes to customer expectations about digital shopping, insurance is not exempt. Customers expect to purchase insurance from online platforms as easily as they do other items.
“Amid such disruption, insurance companies are being forced to rethink their business models and go 100% digital,” writes Christopher McLaughlin at PropertyCasualty360. Insurance agents are heading into the all-digital world as well.
“Digital transformation is not a business decision, it is a survival strategy,” writes Vinod Saratchandran, business analyst at software development company Fingent. Rather than adopting digital transformation ahead of predicted changes in the insurance industry, insurers and agents embrace digital tools only after these tools have proven themselves necessary to continued success.
Platforms, for example, are becoming more popular with both insurance carriers and agents as they demonstrate their ability to improve distribution, speed underwriting and equip agents with the information necessary to provide the best advice to customers. Agent self-service portals and mobile apps equip agents to answer customers’ questions more quickly and accurately.
During the COVID-19 pandemic, insurance agents found a number of ways to use online platforms and tools to connect with their customers, writes Terry Rowinski, president at Health Payment Systems. These included holding more video calls, sharing weekly updates with information that affected their customers and hosting online events, like webinars and Q&A sessions, to help customers better understand their risks and how to address them.
The pandemic gave insurance customers time to learn more about needed coverage with agents’ assistance. “If insurance agents can find new ways to serve clients during [the pandemic], clients will see why the relationship is so valuable,” writes Rowinski. This value can be built through digital platforms after the pandemic passes, too.
Agent marketing is changing too, as customers’ expectations change. “Brands like Amazon and Zappos have changed the way insurance customers expect [agents] to market and interact with them. Customers want quick, tailored and informative marketing that differentiates brands from one another,” writes Jen Wingate, P&C training supervisor at Copeland Insurance Group.
For example, a Twilio study found that 9 out of 10 consumers want to communicate with brands via text messaging, but “less than half of global businesses have the infrastructure in place to fulfill this consumer demand.” Insurance agents that embrace text messaging as a way to talk to customers thus place themselves at the forefront of digital transformation by embracing a popular technology that most customers have already incorporated into their daily lives.
“Messaging has some distinct advantages that should also make it a boon for customer experience,” says Ian Jacobs, a senior analyst at Forrester. For instance, customers are more likely to respond to text-based messages, and many already have notifications turned on for these apps so they never miss a message.
Similarly, live chat can not only build customer relationships, but also speed the underwriting process. “Instead of having to jump on the phone with an underwriter or send information out and then get a lot of follow-up questions, the chatbot enables that agent to know what the right next question to ask is, based on the answer the consumer gave,” says Dennis Barnes, CEO of insurance industry transformation partner company RGAX.
“Our advice to other independent agencies as they look for their competitive advantage would be to adopt the right technology that will enable them to set their business apart and provide trusted advice to clients while protecting what matters most,” writes Wingate.
One major hurdle for agents and insurers alike is the broad scope of the phrase “digital transformation” and the work it involves.
“The phrase ‘digital transformation’ can mean anything and everything,” writes Seth Earley, CEO at Earley Information Science. While the goal of digital transformation may be focused and well-defined, implementing digital tools to meet that goal often results in upending entire systems, departments or ways of doing business.
For example, writes Earley, a digital strategy intended to improve one aspect of customer service may affect every touchpoint in the customer journey, as well as every team member who works with customer information. The quickly-expanding scope of a digital transformation project can make it seem daunting for insurers to tackle and impossible for agents to do so.
“Since the scope is necessarily broad, getting sustained momentum and long-term support can be a major challenge,” writes Earley. Coordination between agents and insurers toward a common goal is essential.
Getting people on board may be easier than in the past, writes Priya Merchant at PropertyCasualty360. While initial reluctance to change slowed down early digital transformation efforts, today “many more people are willing to overcome their technological reluctance,” writes Merchant. The rise of platform-based shopping, ride hailing, curbside pick up, delivery and other services has helped customers, agents and insurance company staff members become more comfortable with digital technologies, allowing them to more easily see how these tools can improve their own work.
Greater interest in digital transformation by insurance industry participants, including agents, is also driving innovation and ambition in applying digital tools to business problems. “The significant change in CEOs’ priorities over the past six months is a clear indication that businesses have had to pivot at breakneck speed to deal with the challenges of the pandemic,” notes Bill Thomas, global chairman and CEO of KPMG.
As the sudden demand for digital capabilities driven by the pandemic dies down, insurers and agents can pause and evaluate these changes with perspective. They can determine which digital adoptions are working, which need augmentation and which can be expanded to new areas in order to strengthen insurer-agent relationships and build customer loyalty.
The COVID-19 pandemic did more than simply send us all home for several months and rearrange our shopping habits. It forced every industry to embrace digital transformation as a means of survival. Insurance companies that emphasize building agent and customer relationships through digital platforms have the tools to maintain and expand their business into the future.
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