On-Demand Insurance: Hyper-Personalized Digitalization in the Insurance Industry
Insurance companies make a sharp turn to stay on track
The insurance industry is going through changing times driven by the digital transformation acceleration, the requirements of more demanding clients and the presence of competitors that emerge in new ways.
The goal of a digital transformation is to transfer traditional operations to a technological structure that will enable a more agile, secure and centralized development of the business, which adapts easily to future changes. However, (the sole) digitalization doesn’t add value in itself (or it does, but in the very short term). We should add other layers of value to our digital solutions for the products and services to be emotionally acknowledged and positively valued by their users.
Thus, the need to start offering people-centered services and products comes up. That is to say, building solutions that are relevant to the clients (a significant content in the right moment).
The insurance business sector has changed very little over time, remaining within a traditional model based on offering mass products and distributing them through a network of agents. And, historically, it has been highly reactive: people take out insurance in the face of a specific need (for example, the purchase of a new car), and they expect not to contact the company except for paying the insurance premium (which, we all surely agree, is not something that makes people precisely happy) or when they are dealing with an issue or complaint (an even more painful moment!)
In many insurance companies, clients (at most) build a relationship with the agents, which can also be risky since, if the agents get job offers from other companies, they may take away the client portfolio.
So what I’m trying to say is that as the service delivery goes by, insurance companies are missing the opportunity to connect with their clients and build long term bonds of trust. Perhaps this hasn’t been necessary in order to keep their client portfolio up to now. However, nowadays reality is changing: now people have tools to compare and acquire other products at hand, not only driven by the price, but also by the kind of experiences they guarantee.
“I think xxx is the best one for me, the policy issuing is faster; it is more expensive than mine, but I can take it out in 3 minutes without having to wait for the agent to approve it.”
Interviewee talking about her insurance company and the competitors.
Hyper-Personalized Insurances
Let’s take a look outside the industry for a moment. We are all used to Spotify recommending songs that match our preferences or Netflix suggesting series and movies that we’ll surely enjoy. We can see how Amazon’s shopping experiences keep evolving so that today they can predict when you will run out of your pet’s food and they send the food bag without you even realizing you had to restock it. Even the physical space is experimenting changes based on who inhabits it; for example, through shop windows that show different clothes according to the person that stands in front of them, or advertisements that adapt to the person who is watching them.
We’re talking about one-on-one, brand-to-user experiences. Increasingly, people expect a hyper-personalized treatment and they expect brands to anticipate their needs (even in exchange for their data): unique and individualized experiences, relevant to each one of us, with content adapted through suggestions, recommendations or promotions.
Now let’s go back to the insurance industry, where reality also demands to move towards an agile and customizable model in which clients may have greater control over their products, accessing personalized and customizable content and discounts. Policyholders also seek to enrich their lives with coverage and services that adapt to their needs, lifestyles and behaviors (regular and occasional), through optimized digital channels, and acquisition and claim processes that are simple, secure, flexible and tailored. This helps create more desirable experiences and allows us to enhance the interaction frequency and quality.
The trend of hyper-personalizing experiences can be put into practice in at least two ways:
1. Taking advantage of our knowledge of the users to develop the service offer: for example, to predict risks and calculate customized prices.
Technological developments allow us to move forward, being able to understand and analyze (through the use of IoT and Artificial Intelligence) people’s style and behaviors in order to predict their risk of facing a hazard and, based on that, rewarding the most cautious ones (drivers, for example) or the healthiest (in the case of life insurance). That means using data to customize the service.
2. Allowing the clients to choose between the available services, letting them, for example, switch them on and off at their convenience: turning on the car insurance at the weekend (the rest of the time the car is in the garage) and the household insurance when they go on holiday. For instance, the quarantine due to the Covid-19 pandemic triggered this issue as regards the vehicles that remained parked, in some cases, for months.
This customization trend, which changes the model of the insurance world, is achieved through digital platforms in which users can interact both to operate and to view their own behavior.
It’s key to complement these digital platforms with clear and easy-to-read interfaces and intuitive interactions; with optimized content for a straightforward interpretation (without technicalities), building a more human bond.
Among the trends, we also find companies that start offering 100% digital experiences, including the onboarding and the service contracting from the website or app in a super simple way.
However, when operating on digital channels, we shouldn’t stop considering their coexistence with other company channels (on-site, telephone, bots, among others). When designing, it’s important not to center the experience on the channel but on the users, ensuring that they won’t feel any friction when moving from one channel to another one.
It’s time to transform the business, to center design decisions on the users’ needs and rely on the technological developments that surround us. Thus, we will achieve true value propositions, more intelligent, that pleasantly surprise clients and make them choose and recommend us.
Personalizing experiences will increase the frequency and quality of the clients’ interaction with brands, achieving a deeper bond that is necessary for clients to keep choosing them in the future.
