It is widely acknowledged that insurance companies are not maximising the potential of digital channels when it comes to selling policies. While most offer some online services, the truth is that they are not delivering a seamless end-to-end digital journey for customers.
In a recent report, BCG found that insurers are missing out on up-selling, boosting conversions and increasing opportunities to attract new customers because they are failing to digitise and simplify the sales process. This is particularly true for non-life products. The lack of a straightforward, easy to use online or app-based insurance offer is creating a barrier to completing the sale. In addition, insurers are ignoring the most obvious advantage of digitalisation, which is to help them bring ddown costs.
BCG carried out research across European markets and found that only 10% of insurance customers used a digital channel for the entire sales journey. What they evidently preferred was to gather initial information and quotes digitally – often through websites. If anything complex arose, such as reducing the quote they had been given, they would turn to agents or brokers. The UK and Ireland were the only markets where more than 25% of insurance customers had purchased policies online.
One of the problems that BCG identified is that insurers have digitised existing paper forms, but these are too time consuming for customers to complete online, particularly because of the excessive questions at the beginning. Many insurers also fail to start with a low price quote for a basic policy offer before raising the price for added features. Instead they start with a high price quote.
One of the recommendations made by BCG to the insurance community is to improve digital personalisation whereby a website responds to a specific user’s preferences and buying habits.
Singaporean survey concurs with findings
The outcomes of the BCG research in Europe in many ways reflect the findings of our own survey conducted among 500 Singaporeans earlier this year. While our cohort were only questioned about purchasing travel insurance and showed a keen preference (53.4%) for using online websites for purchasing insurance, the need for a personalised approach was clear. The top five most important factors when choosing a channel to buy insurance among our respondents were: personalisation; brand reputation; clearly presented products and services; the provider being available where the customer is; and prompt service. Interestingly, the least important aspect was the removal of human interaction. When asked what their most important priority was when purchasing insurance, they said it was premium affordability.
Learning from the ecommerce experience
We only must look at the stellar growth of ecommerce to see the benefits of selling digitally. According to Shopify, annual global ecommerce sales are projected to increase by nearly $3 billion between 2021 and 2027. That is an overall increase of 59.5% and an average annual growth rate of 8.1%.
Businesses selling digitally can scale quickly and streamline their operations through automation. They can better use AI and data analytics to inform decisions and improve the customer journey. They can personalise every interaction on every channel to build customer confidence and loyalty and they can reduce their own operational costs.
All these advantages are widely known, but insurers are still failing to act. When we launched the KoverNow insurance app, we came into the market to provide customers with an alternative digital option and shake-up the traditional processes that were no longer fit for today’s consumers. However, we have seen almost no corresponding actions on the part of insurance companies. It seems that they are either unwilling or unable to update their business model, and unfortunately, it is their customers who are missing out.
