There’s one word that sums up what’s going on in the business of insurance right now: disruption. Last week, I had the opportunity to talk with an innovation team at a Tier 1 carrier. When I asked the group if they were feeling that big changes were afoot in the industry, there was lots of head nodding. Consider just these few catalysts of change:
An improving economy driven by freshening winds in the US housing market.
Activist consumers willing to both join forces with their insurers and at the same time regulate them through the power of social media.
Converging physical and digital worlds that engage consumers through smart portable devices.
Two maturing regulatory reforms: one that reorders the molecules of the health insurance industry and the second that’s creating a new industry (and risks), namely access to medical marijuana.
Anybody out there who doesn't have a mobile device, raise your hand...just what I thought.
The explosion of mobile phones and apps in the everyday lives of consumers--and agents--is powering big changes in the business of insurance. Heightened customer expectations are getting formed by the changing mobile landscape; new generations of customers; new competitors, and the ferocious pace of mobile tech-enabled innovation that is radically reshaping how customers become informed, purchase, and get service.
In our new report, the first of Forrester's Mobile Insurance Playbook, we examine how mobile forces are driving customer expectations and how customer demands are going to influence new insurance business models.
Consumers are living La Vida Mobile. Mobile is a pervasive element in the daily lives of insurance customers. With more mobile devices available within easy reach, US consumers are tapping into this ready convenience to research, buy, and service their financial needs, including insurance. And how about those Millennial insurance customers? More than one in four told us that they use mobile as their main personal financial channel.
Agents are becoming proficient mobile tool users. The tablet form factor looks almost purpose-built for the needs of agents. From their hi-def displays to fast boot-up and super portability, agents are ardent tablet-ers, and half the agents in an informal survey at the end of last year cited mobile as one of their leading business initiatives.
This year, North American insurers overall are pretty darn happy. For starters, there clear signs that the economy is finally starting to gain steam, premiums are on the rise, the market’s firming, and the political will may well shift enough to revisit past regulatory reforms, particularly those that impact health insurers. And these factors are coalescing into the new strategies for 2012. In our “Trends 2012: North American Insurance eBusiness And Channel Strategy”, we discuss what factors are driving insurance ebusiness teams to:
Become obsessed about their customers
Get serious about how to collaborate better with their agents
Focus on the infrastructure that supports the digital business
Refine their thinking about what eBusiness means to the insurance ecosystem
The insurance industry is in the midst of some big changes. Those changes introduce very new pressures, priorities, and uncertainties into an industry whose business depends on stability. In these dynamic times, carriers hang their hat on what they do for their customers, even if how it gets done and who does it might be changing. Our report, "Tech Opportunities In The North American Insurance Industry", outlines the top business priorities and supporting technology investment plans of North American insurers. In this year's study (our fourth) it turns out that:
Industry’s business outlook turns strongly positive with select IT spending following along. Even with a record number of disasters that have translated into record economic losses, more US and Canadian insurers have positive outlooks when compared with last year. What’s behind these buoyant outlooks? By all indications, it looks like insurers will be competing on something other than price, as the market condition changes to “firm” and even “hard” for some lines. This year’s top initiative remains growing the business, with ebusiness teams playing a starring role.
Technology’s value shifts to sales, service, and support, not simply cost-savings. Five years ago, the IT’s fundamental value proposition was as a means to take cost out of the insurance equation. While still important, virtually all the insurers we surveyed told us that technology was critical to how they serviced and supported their customers, and 80% told us that technology was essential in the insurance distribution and sales model.
One of the things that people like about the insurance industry is that the business of insurance doesn't change much. Insurance carriers have pretty much done the same thing: rate risk, issue policies, settle claims, sell through agents, and invest our premiums, all the stuff that makes them insurance companies. We’ve talked a lot about this idea of “business capabilities” here are Forrester, essentially the notion of what an industry does. These capabilities change very slowly, if at all. Capability changes are usually the result of some big structural economic change--think of the now-modern and booming Russian insurance industry growing after the collapse of the former Communist state. Of course, the way in which those capabilities get executed in a mature insurance market is influenced by what’s going on outside the four walls of carrier and can change very quickly.
When it comes to the top business strategies for North American insurance carriers (and agents), selling more to the same customer is a top initiative. Because, what's a better way to grow revenue and profit in a tough market than to sell more insurance to your proven customers? And thanks to big media budgets, it’s easy to see lots of these cross-selling campaigns in action, from the practical take of Allstate’s Shop Less, Get More campaign to more humorous approaches with Progressive’s Flo and Nationwide’s World’s Greatest Spokesman (among others), duking it out over insurance bundles and multi-product discounts.
With all this enthusiasm, just how successful are insurance ebusiness at cross-selling? In our report, “Making Online Insurance Cross-Sell Initiatives Work”, that went live on the Forrester website today, it turn out that sales performance varies wildly between the ten US insurance companies evaluated, with the best cross-sellers sharing four key characteristics. And it’s not just the best performing carriers that share traits—consumers likely to purchase multiple insurance coverages from a single carrier have their own set of common characteristics around income, age, and even where they live in the US.
So, what can insurance ebusiness teams do to improve their cross-selling performance? We outline nine tactics such as including leveraging opportunities to promote insurance when using interactive tools to when and how the cross-sale offer is made during the online experience. Along with auditing internal practices against our checklist, a roadmap for the remainder of 2011 is offered that, if followed, will let insurance providers start 2012 with an effective cross selling strategy.
In the interviews we just wrapped up with insurance thought leaders, one thing’s certain: Mobile is going to play a BIG role in the future of insurance. Alongside another topic (about which you’ll hear more later), mobile, and its role in enabling policyholders along with underwriters, agents, commercial underwriters, and the claim supply chain, animated virtually every conversation we had. One area in particular — mobile partnerships — spurred some great discussion on the outlook for new mobile products and collaborations that might be in the offing.
Alongside Tokio Marine’s intriguing mobile one-time insurance for sporting events and travel, we uncovered a unique life insurance purchasing model in South Africa. What was it that caught our attention? Econet Wireless and First Mutual Life in South Africa have teamed up to produce Ecolife, a life insurance product purchased by prepaid subscribers using mobile airtime. The customer only has to purchase US$3 to receive coverage, and the amount of coverage increases with every additional dollar (up to $10,000 coverage). First Mutual Life’s attempt to reach the sizable population of South Africans without a traditional bank account has seen rampant successthus far.
I got jolt this morning, and it wasn’t from my coffee. The headlines in my morning insurance news push were all about last night's announcement that Allstate was acquiring esurance and an agency sibling, Answer Financial for $1 billion (http://www.bloomberg.com/news/2011-05-18/allstate-to-buy-esurance-in-1-b...). Along with the fact that esurance itself has gone to market with what every ebusiness executive has stated as the big strategy over the near-term—giving the customer the choice in how they want to engage with its new “Technology When You Want It, People When You Don’t” tagline—this deal could well be the start of a more interesting trend: a bigger wave of M&A among Tier 1 carriers.
This news was especially tantalizing because we just wrapped up a series of interviews with insurance thought leaders to get a perspective for how the insurance industry was going to look in 2020. We wanted to understand how these changes were going to impact the jobs of ebiz executives in insurance. This is what we heard:
Enabled by “big data”, carriers are going to:
Shed and acquire business lines to be more specialized and obviously more profitable
Make some splashy acquisitions (like this one),
Launch new and innovative business models (like a “lights out” insurer that, in exchange for low premiums, policyholders would have to do more for themselves)
Challenged by new market entrants who “get” data
All of which have big implications for what insurance ebusiness teams will be challenged to do. Look for our thoughts on what 2020 is going to mean later this quarter.
Without a doubt, the hottest inquiry category for insurance ebusiness and channel execs (and insurance IT, for that matter) has been anything to do with claims. And why not, since as one insurance ebiz executive we talked with pointed out, isn’t claim handling the real business of insurance? We also saw the big interest in both customer experience and claims processing when we surveyed 75 or so US and Canadian insurers a little less than a year ago, with both appearing in the top three insurance business priorities into 2011.
The claim is the real moment of truth in the insurer-policyholder relationship, and that experience is a big factor in whether that policyholder decides to stick around when the claim gets settled. Just what’s on the minds of insurance roles when it comes to claims this year? For starters, here’s a sampling of claim-related inquiry topics I’ve fielded:
What’s the business value of claims concierge services? (and check this out—three inquiries about claims concierge services in two days!)
Why do policyholders still want to file claims with their agents?
How is document scanning and imaging being used for claims?
What role is streaming video playing in claims?
What’s the state of mobile claims applications for field adjusters?
And many, many questions on the vendor landscape for claims applications, including an interesting one on integrating legal matter management into the claims system for asbestos-related workers’ comp claims
I’m just wrapping up a report on how carriers can tame the claims beast, but in the meantime, if you’d like to learn our thinking and what else is simmering around the topic of claims, that’s just an inquiry away.
Yee Hah! The worst recession since the Great Depression was declared officially over in June of 2009. We should be feeling great, since all things considered, the insurance industry fared pretty well when it came to how it emerged from that dark tunnel. But except for one notable role voice, insurers, unlike their banking peers, are still holding back from growing the business. How do we know? We took a look at nearly 5,000 inquiries that Forrester answered for insurers, bankers, and securities firms in the wake of failure of Lehman Brothers to just after this May’s Flash Crash.
What was on the minds of insurers during these six quarters? For starters, insurers:
Asked more questions than their financial services peers. Of the three segments we looked at, insurers asked half of the inquiries we fielded—2,500 versus nearly 1,600 and 600 for banks and securities firms, respectively.
Framed more than half of those questions around risk. Insurers didn’t veer away from what got them through the recession intact (indeed, from the very nature of their business)—managing risk. Even questions about application development strategies were framed as a risk question, with most insurers seeking validation that they were following in the well-worn grooves of others in insurance (and other industries) before them.
Posed too few questions about growing the business. Unlike their banking and securities siblings who asked questions about growing the business through new product launches, up-selling and cross-selling, or luring new customers away from competitors, insurers, with one big role-based exception, did notreflect that Q2 2009 economic inflection point.