Over the past several years insurance companies have faced increased product commoditization due to ubiquitous online presence, more sophisticated aggregators and the increased availability of insurance products. They are faced with the challenge of driving growth while managing their risk profiles to be less capital-intensive. In a market with heightened expectations for digital experiences – which the COVID-19 pandemic raised even more – the likes of Oscar, Lemonade and other new DTC market entrants are raising consumer expectations, spurring companies to develop more experience-led strategies to drive engagement and value. Then there’s other players like American Express and Chase making their play.
Where should insurers look to drive growth?
Against this backdrop, Life, Health and P&C insurers are turning to new services to drive growth and engagement. Services create more compelling and differentiated solutions that focus on customer needs, going above and beyond basic insurance coverages. This enables insurers to identify new streams of less capital-intensive revenue and increase demand for existing products – especially in a category that has historically struggled to drive engagement at moments outside of the core product moments (e.g., purchase, premium payment and claim).
Based on our extensive experience and research within the industry, integrating a services strategy also translates into impactful business outcomes for insurers globally – from initial purchase intent to long-term customer retention. The results speak for themselves:
- Customers were twice as interested in an insurance product when sold with relevant services (Source: Prophet Insurer Research)
- The presence of services impacts broker interest with three-quarters of brokers stating that services are critical to their choice of provider when recommending to clients (Source: Prophet Insurer Research)
- Insurers who offer three or more services on top of the core product see NPS increases between 20-40 points.
When it comes to services, who is doing it well?
Insurers are already recognizing the value services can bring both to their customers and their business. However, as many insurers do not have exclusive relationships with services providers, avoiding services replication across the industry is key. Insurers are therefore partnering and acquiring across the services ecosystem to uniquely deliver new customer value.
P&C providers are already seeing strong integration of services into their offers given their ability to utilize customer tracking and connected devices, not only providing product discounts but also additional services on-top. For example, Progressive Insurance has partnered with TrueMotion to launch Snapshot, a service that monitors and measures driver data through either their smartphones or a plug-in device. This enables customers to understand their driving habits and generate personal discounts. Progressive is continuing to explore expansions to the program and invest in partnerships to combat distracted driving.
Health and Life are also now capitalizing upon the opportunity to integrate services into their portfolios by exploring the way they can utilize health tracking to adjust premiums through improved health. From a global standpoint, Vitality is one example of a brand that has developed a personalized customer health and wellness tracking and support platform. In the U.S. specifically, John Hancock has partnered with Vitality to provide discounts and tailored recommendations to their customers based on their health tracking. While in Asia, AIA has made a focused push to expand the solutions they offer to customer across the region.
Health insurers also are exploring the role of partnerships with preventative health start-ups to help customers manage chronic illnesses. For example, Cigna has partnered with Omada Health to offer customers a personalized preventative health solution to mitigate risk against diabetes, heart disease and stroke.
Six actions for insurers to create impact and drive growth through services
We believe there are six actions insurers take to develop a winning services strategy:
- Understand what customers want. What is the foundational understanding of customer wants and needs to guide services development?
- Identify the business opportunity. What role could and should services play for your business and what business objectives should your services strategy inform (i.e., acquisition, incremental revenue, retention, efficiency)?
- Prioritize unique and relevant services. What are the set of unique services most relevant to your customer base that you will prioritize developing?
- Drive engagement. Where and when within the journey do customers become aware of services and how do we improve interest for them?
- Improve the experience of access and use. What is the right experience behind driving easier services access and use to deliver greater customer value?
- Identify the right internal owners. Who within the organization is responsible for funding, building and managing our services strategy?
Insurers are falling short on delivering value to customers. A well-defined services strategy can nurture customer relationships and earn loyalty to fuel growth.
If you’d like to learn more about the role of services and how we have helped leading insurance companies execute experience-led strategies that drive impact and engagement, get in touch.