Amazon Has Arrived in the Insurance Game: How Can Providers Rise to the Challenge?
By Gaby Young
The need for seamless digital customer experience has already climbed dramatically with the impact of the coronavirus pandemic - but with Amazon now jumping into the insurance space with after its recent partnership with InsureTech player Next Insurance, the competitive landscape and the current standard of customer expectations are about to take a massive leap forward.
The global e-commerce giant known for setting new standards when it comes to fast and friction-free online shopping journeys has in recent years expanded into the music, TV, and finance spaces. Now it’s setting its sights on the lucrative insurance industry.
Is Amazon merely dipping their toes or going all in? Consider the potential: Insurance premiums in the U.S. alone in 2021 racked up to nearly $1.3 trillion. Already facing significant competition from InsureTechs, traditional insurance providers should rightly view Amazon as a formidable adversary.
Why Should Insurers Take The Amazon Threat Seriously Today?
Digitizing customer-facing insurance processes has been one of the top focuses for providers for years now, but the impact of COVID made it abundantly dramatically accelerated the need to provide customers fast and easy options to apply for insurance policies and report claims. In a 2020 survey of insurance CEOs, 85% said that COVID-19 has accelerated the digitization of their operations and the creation of next-generation operating models.
Why then is it even more urgent for insurers to be able to match the seamless customer journeys Amazon made so famous?
“Corona really changed expectations. You can work remotely and do everything remotely. Now it's even more critical. The role of an insurance agent primarily in the U.S. is still there, but they learned over the year and a half, they didn't have to go in person.” explained InsureTech Advisor’s managing partner Kaenan Hertz at our recent webinar on how insurance providers can prepare to compete with challenger insurers. “But you still needed to accomplish the same stuff. Whether it's a P&C (Property & Casual), whether it's light, you still need to get a signature, to capture certain pieces of information, maybe a driver's license or health record. And so technology is that much more critical now because people realized that you actually needed to be able to do business when you couldn't go in person.”
Missed the live session? Catch it on-demand here.
Having seen first-hand a wide variety of technologies that insurance providers have implemented, Kaenan emphasized that small and mid-sized insurers may face the biggest threat, as larger carriers have the brand and capital to invest in digitizing the customer experience.
I honestly believe the biggest threat comes from the incumbent carriers who have the capital base, who have the knowledge and have the brand. And they’re actually figuring out how to offer a new way to deliver the product. They have that scale, and that's probably your biggest threat.
What’s Keeping Insurers From Matching the Amazon Experience?
While insurers have poured investments into back-end technologies such as Robotic Process Automation (RPA) in recent years, the threat posed by Amazon will actually put digital customer-facing journeys to the test to a degree we haven’t seen before in the industry.
“All of us have been able to order from Amazon. It's easy to get what you want and compare products. If you think about it in terms of insurance carrier perspective, you could utilize the billing approach instead of statement-based billing. If you can text customers updates on delivery. So similar concepts to that are the ones consumers are expecting today, and carriers need to deliver.”
But this threat can also be a great opportunity and driver for the type of innovation providers need to deliver digital customer journeys that match Amazon, and set them up for future success.
With many digital transformation projects taking years to bring any verifiable return, what’s the quickest path for insurers to accomplish this? Instead of focusing on what kind of technology to invest in, honing in on the specific problem insurers need to solve can help them get to the solution that much quicker.
Digital silos and legacy processes effectively block customers from completing the journey digitally from start to finish. Siloed systems that only focus on one of the many steps required by insurance customers, such as limited esignature solutions, fall short of guiding them through the entire process. This prevents insurers from obtaining completed forms, digital consent on terms and conditions and supporting documents needed to close sales and process claims.
Just as importantly, they add significant friction to a customer's journey by forcing them to spend time on the phone with contact center agents, print out lengthy PDF-based documents and use outdated means like fax and scanning machines, just to get them back to their insurer.
This outdated make-work experience is a main reason why 45% of insurance prospects never end up converting into policyholders.
Future-proofing the Customer Journey with Digital Completion Technology
For insurance providers looking to Amazonify their customer journey it all starts with taking pain and friction out of the experience for customers - this means ridding themselves of siloed systems and legacy processes standing in the way of Digital Completion.
While incumbents needn’t turn themselves into full-fledged insurtechs, prioritizing around a unified customer-facing journey is more critical than ever to compete successfully.
Digital Completion technology is available today that can give insurers the capabilities needed to digitize and streamline insurance claims and sales processes, and add ease of remote and digital transactions by letting customers complete sign forms, verify their ID, and make secure payments straight from their smartphones.
Insurers taking advantage of this technology are seeing:
85% lower average time to settle a claim
60% Reduced touchpoints per policy
15% increased customer satisfaction
Operating expenses also dip immediately after eliminating dependence on manual and paper heavy processes.
“Creating automated workflows ultimately will help reduce the operating expenses, increase accuracy and ultimately allow for better underwriting,” explains Kaenan.
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