Today’s customers demand simplicity and want to have problem solutions right away, for every industry being urged to embrace digitalization opportunities. What does it mean for the insurance sector? McKinsey’s research predicts that only those insurance companies that will move swiftly, face and enable digitization, meeting consumer needs, will flourish.
Despite placing digitization as the organization’s priority, there are still uncertainties and challenges that slow the progress down. Read this article and learn more on how to combat the digital transformation challenges and what to keep in mind starting digitalization as an incumbent insurer.
Make insurance accessible and appealing
Insurance products are complicated and complex, and it might take decades till the client benefits from them. In simple words, insurance is necessary but boring through the eyes of the customer. Digitalization can help to make insurance appealing and accessible.
Digitization can improve the organization’s business processes, improving productivity, sales, and increased ROI. However, when it comes to an understanding of what digitalization for the insurance sector means, most executives will probably point to selling insurance products and services via a landing page. That said, it links the very first two flaws. First, having a risky and daunting implementation process from a human, financial resources, and costs perspective and secondly, having a limited overview of the digitization alternatives available out there – for instance, embedded insurance.
Embedded insurance can be defined as a comprehensive digital integration of the insurance coverage, that is integrated into a specific offering at the Point of Sale. As a result, the technology supports digital transformation for the processes or business, at the same time enabling digital transformation and improving revenue journey and user experience.
Why choose embedded insurance over selling via a landing page? The answer is simple. There’s a considerable risk for the customer not to find the landing page with the offering. Even if somebody finds it, it will cost many financial resources to stand out among the competition or resources on aggregators to reach and convert the potential customer.
Using embedded insurance, a potential customer is met at the right time and place, for the conversion rates significantly increasing, and costs, inversely, decrease.
But, to enable digitalization within the organization with embedded insurance solutions, the following has to be kept in mind:
Simple and straightforward product offerings
To allow a flawless user experience and digital interaction with consumers using embedded insurance, simplicity is the key. Unlike the insurance products and services sold by brokers, in this model a straight-forward insurance products, without many variations, must be implemented.
Why is it so? The broker has time and can explain a complicated product to a customer easily. The insurance agent might even generate trust with the consumer being able to reduce the complexity of the product on a client-orientated level. That is not applicable in a digital environment – the client does not have time or patience for a lengthy decision-making process, gathering all necessary information for a purchase. It is a matter of seconds.
It’s a win-win
As also mentioned in Simon Torrance’s article, embedded insurance is a win-win situation for all involved parties, starting from insurers to digital platforms and software companies. As insurance products are sold directly at the Point of Purchase, it saves business time, with more minor explaining product features, terms, conditions, and less variation of products needed.
Readiness for outsourcing
It is a well-known fact that IT resources in insurance companies are scarce. To overcome the technological gap and meet consumer expectations with tailored digital technology, the in-house IT team might not be equipped enough to undertake and implement the environment and infrastructure necessary. However, there are a bunch of digital enablers out there that can assist in developing a technical framework and enabling digitalization within the enterprise.
To conclude, digitization will continue to evolve as 21-st century consumers demand a convenient UX and simplicity in any product and service. And, insurance is not an exemption. Therefore, it is a perfect time for the insurers to jump in and accelerate digitalization in their organization. Of course, opportunities also bring challenges, pushing the organization management to acknowledge the digitalization opportunities out in the market entirely and acquire the organizations’ openness to outsource a digital enabler to enable the digital transformation, thus breaching the knowledge gap and developing a tailored embedded solution.
Insurance providers have a decision to make – to be disrupted or be the disruptor using the embedded insurance as the key towards accessing the digitalization.