Next year, children born when Amazon.com sold its first book online — in July 1995 — will turn 18, possibly striking out on their own for the first time to purchase auto, renters, health or life insurance. Those consumers will have grown up in a world defined by e-commerce — their ability to instantly purchase products and services has been limited only by their imaginations (and their wallets). Like a new song? One click on iTunes, and it's yours in 30 seconds. A friend at school has a cool pair of new shoes? Zappos can deliver your own pair in 24 hours.
Feel old yet? If you're selling insurance, you can't afford to. You need to stay current with the times. Within the insurance enterprise, the business, technology, marketing, distribution, human resources and even compliance departments must work together to create and deliver insurance products that meet consumers' evolving needs and real-time expectations.
"That need for speed is in the minds of consumers dealing with insurance carriers," says Forrester Research (Boston) analyst Ellen Carney. "It has to be fast, and the delivery of the product has to be fast. Fifteen minutes is too long now."
Though speed is of the essence, there are a number of other lessons insurance companies can learn from the ways retailers have adapted to the new consumer paradigm, adds Neff Hudson, assistant VP of emerging channels at San Antonio-based USAA (about $19 billion in revenue). "When you think about what's happened to retail because of commoditization and price transparency, they have to get really good about getting people into stores," Hudson says. "They've been very forward-leaning in terms of marketing, use of data, partnerships in unusual places and cost efficiency."
USAA has viewed Amazon as a role model for "three to four years," according to Hudson, who says the integrated financial services provider is especially impressed with Amazon's use of predictive analytics to offer product recommendations. People like easy-to-understand comparisons, and there's a lot of opportunity to do that in financial services, he adds. "For example: 'People like you need life,' 'People like you need this much comprehensive coverage,' 'Have you considered umbrella insurance — because people with your asset class tend to use it.' "
But when it comes to cross-selling other USAA financial products to the company's insurance customers, the regulatory framework is not always so simple. The differences between what information the company is required to disclose and store (and secure) for investment sales, for example, mean USAA has to be very careful about sharing information among business units, Hudson says. "Sometimes we get intimidated by regulations and following process and procedures, and we forget that what people really want is advice," he acknowledges.
There's also the matter of customer loyalty, Hudson says — specifically, not taking it for granted. "We can't assume we have a trusted relationship with every product — you may trust us with auto insurance, but do you trust us as an investment company?" he poses. "We feel, if we can get you as an auto insurance and banking customer, we can keep you for a long time."
Where USAA really sees the benefit in retail-like customer analytics, Hudson adds, is in product development. He points to the banking unit's Deposit@Mobile capability as an example of tying the end consumer's desire for faster processes with a business need to reduce paper flow. "Our best innovations have been the ones where the business need was aligned with the member need," Hudson reports. "In that case, our enemy was paper, and what members needed was a way to get their money deposited quickly. Asking people to use their phones to speed up a process is just natural."
Smoothing the Buying Process
To speed up the insurance application process, Progressive is looking to exploit consumers' penchant for mobile devices by offering mobile imaging. Forrester's Carney says streamlining the application process is an area in which insurers need to up their games in order to meet customers' demands to get out the door with an insurance policy as quickly as they would with an online retail purchase. Big data, she says, can help these efforts by tapping unconventional data sources to build a risk profile faster and with less effort on the prospect's side.
"As soon as customers have to put in things like their Social Security numbers, you're going to get drop-off," Carney contends. "If we can get the algorithm right, where we don't have to ask for sensitive information, people are going to be more apt to complete the application."
Mobile quoting, she explains, doesn't mean just translating the online application experience to an app or mobile website. Insurers should be prepared to take advantage of some of the unique capabilities of a smartphone to build a risk profile in new ways.
"You can certainly figure out some of the characteristics of their location based on GPS data," Carney says. "The information may not be perfect, but can it be good enough? The right kind of predictive analytic might help us figure out enough about this customer that could streamline that process."
San Francisco-based Esurance ($872 million in written premium), a unit of Allstate, also has realized the potential for analytics to smooth the buying process. The company uses data pre-fill based on proprietary analytics. And for customers weary of filling in their bank information on yet another site, Esurance has accepted the third-party service PayPal (San Jose, Calif.) since 2005. According to Lisa Ward, VP of customer experience and communication at the online insurer, Esurance also has initiatives in the pipeline that will take those analytics to another level.
"This helps them make more-informed decisions throughout those processes, and helps us improve customer satisfaction," Ward says. "We will be rolling out new coverage recommendation features very soon."