There was a time when tradition and longevity in the market were hallmarks of success in the insurance industry, and carriers had complete control over every step of the purchasing cycle.
But today, agility, innovation and transparency are the characteristics of the market leaders. These traits enable companies to thrive as our business is evolving as the result of rapid advancements in technology and other factors.
Gone are the days of carriers leading the entire purchasing cycle of insurance products and financial services. In an environment of unprecedented change in our industry, today the customer is in control.
People have changed the way they purchase cars. They now have the convenience of shopping online and having groceries, prescriptions and other products delivered to them. They can deposit checks to the bank from their phones. And the Amazon retail effect gives shoppers instant product comparisons, user reviews, recommendations, expedited shipping and other features that they have now come to expect as standard service.
Given this significant shift toward customer control, our industry is moving toward total transparency in coverages and pricing. Customers will know all the details when they purchase property & casualty products, financial services products, life insurance products and more, in much the same way financial services and securities are sold today.
This drastic change is a bit scary because carriers haven’t had to deal with this type of consumer landscape before, although brokers have had comp raters for a long time.
The solution is logical and simple.
To transition smoothly into the customer-driven sales cycle, carriers simply need to differentiate themselves by identifying a strong value proposition — and communicating it consistently across all platforms. Even if you aren’t the lowest-cost option, you shouldn’t be afraid to be compared to competitors. Once you have sufficiently differentiated your unique product and service offerings and have configured your offers for your ideal customers, you will no longer have to focus on, or worry about, competing on price.
Once you define and communicate the unique value proposition of your product and distribution ecosystem, lead with that unique attribute. Communicate it relentlessly through all levels of your organization. New technology, strategic partnerships, improved service and faster claims processing will never help you gain traction if your employees have no idea what their value proposition is to the customer.
Defining your unique value proposition is much easier when you have a 360-degree view of the consumer and when the consumer has a 360-degree view of your offerings.
Open Platform Solution (OPS) is a platform that enables customers, as well as agents and advisors, to get a complete 360-degree view of all available coverages and costs.
We are working with other thought leaders, technology companies, consulting firms, vendors and carriers to create a middleware platform to assist customers with finding the right protection and financial products for them. This platform will simplify the customer experience, enhance customers’ visibility of insurance product offerings and create growth opportunities for advisors and carriers alike.
OPS is an insurance and financial institution’s ability to offer a 360-degree view of available products and services, both proprietary and external. It’s simply an acknowledgment that no one agent, carrier, representative (independent or exclusive) or broker can be all things to all people. Instead, with a 360-degree view of product solutions, we can have a discussion about what is best suited for each client, regardless of the commissions involved — even if they are not our own company’s proprietary products.
I predict, with all the fiber of my being, that property & casualty protection will move rapidly to a complete 360-degree view. This view will allow us to discuss the ideal option for each individual, family and business owner for property & casualty coverage, life insurance, financial services and other related services.
Carriers and their distribution must continue to develop innovative new products and create new markets that are built around what customers desire and have every right to expect. Every product that exists today, and new products that will enter the marketplace, must have a clear and concise value proposition. Every team member within the carrier and its distribution should be in lockstep with that value proposition.
What is your value proposition? What sets your products and services apart from others? Define a value proposition that is compelling enough to attract and retain customers for the long term. Then communicate it to everyone in your organization — in as many different venues as possible and as often as possible. When asked, “What is our unique value proposition?” every single team member should state your value proposition word for word, without hesitation. If someone misses the mark, keep repeating your value proposition, and keep explaining why it’s so important.
Let’s look at two examples of a value proposition that focus on what customers are responding to in today’s business climate.
“We collect and process data in a meaningful way so we can provide you with more accurate and personalized cost models.”
Without a doubt, the insurtech momentum is now gaining at light speed. Our great industry has remained stagnant for some time, with incremental growth at best, in the property and casualty (P&C) marketplace.
Insurtech start-ups are exploring avenues that large insurance firms have less incentive to exploit, such as offering ultra-customized policies and using new streams of data from internet-enabled devices to price premiums according to observed behavior. Using input from all types of devices, including GPS tracking of cars and the activity trackers people wear on their wrists, these companies are building more finely delineated groupings of risk, allowing products to be priced more competitively.
Although the initial response when outside influences begin gaining traction is to dig in your heels and fight them, many traditional insurance companies are discovering unique value in partnering with insurtechs to offer customers the best possible options. When we blend decades of experience in underwriting with innovative mechanisms for gathering data, we can customize policies and develop pricing that’s tailored more to each customer’s individual needs.
According to a 2019 McKinsey & Company report, digital networking via the Internet of Things (IoT) enables insurers to reduce costs and generate additional revenue. By harnessing data from devices that are equipped with sensors and automatic-activation functions, insurers can assess risk regarding issues like health habits and driving behaviors much more accurately.
Partnering with technology experts could enable you to offer more frequent and convenient customer interaction, optimize your resources, extend safety standards and reduce fraud.
“We blend a convenient, state-of-the-art digital platform with expert agent insight.”
The information we provide our customers must be delivered by real professionals, digital strategies, telephonic support and any other media support available. Armed with the proper value proposition, a carrier/company can deliver its products and services through an ecosystem of distribution. This means a total commitment to digital, current technologies, future/unknown technologies, telephony and, most importantly, a local advisor or independent contractor.
Information is currency. And this is the case for millennials (those born between 1980 and 1995) more than any other generation. Research studies are in agreement that millennials prefer to shop online, and they expect instant results. They have little patience with insurance administration. For this reason, websites like Goodfetch let consumers compare prices for policies through various companies quickly and easily.
One study reports that in 2019, millennials make 60 percent of their purchases online, up from 47 percent in 2017. Also, millennials now make 36 percent of their total purchases using mobile devices, up 20 percentage points from 2017.
However, it would be a mistake to assume that millennials never want to interact with a human.
According to the 2018 Insurance Barometer Study survey by the Life and Health Insurance Foundation for Education (LIFE) and LIMRA, more than half of millennials would research life insurance online, but they would purchase life insurance from a financial professional. Gen-Xers are the group most likely (32 percent) to research and complete the purchase entirely online.
Also, millennial business owners are more likely than business owners in other generations to value the expertise an agent provides them. According to Nationwide’s fourth annual Business Owner Survey, 69 percent of Millennial business owners work with an insurance agent, followed by Boomers at 66 percent and Gen X at 59 percent. The most common reason for working with an insurance agent among all generations is the trust that business owners place on the guidance and expertise from an agent.
Carrier/companies can distinguish themselves by blending a highly interactive digital experience and quick response time with the expert advice and insight that only an experienced agent can provide.
Your unique value proposition obviously will be shaped from your location, the demographics of your market, the products you sell and other factors. Whatever your unique offering is, define it, communicate it and showcase it wherever possible.
In the conclusion to its 2019 Insurance Industry Outlook, Deloitte states that the winners in the race to become the insurers of the future will likely be those who understand how to change in the way that best suits their particular company and business to create competitive advantage in this new world. The report states, “A key element will likely be agility, determined by an insurer’s ability to take advantage of new technology and data sets, design services and solutions rather than products and transform its operating platforms through collaborative initiatives and ecosystems in a pragmatic and material way.”
I believe the opportunity for growth in the P&C industry has never been greater. The changes that are forcing our industry to step up and innovate are the same forces that will weed out the no-longer-relevant carrier providers.