UBI is the gateway to the insurance of the future and in our article UBI: Like it or not, it’s the future we highlighted some big macro issues for the insurance industry - ones that do not solve themselves overnight: innovate the offer, catch up with other service industries and increase revenue from existing customers.
These big changes need not be as daunting as they first seem. Insurers can take some simple steps to move the needle from transition to change more quickly by creating a key action plan set against the timeline of expected social and industry change.
The key is to think of this as a transition plan and not a total, instant revolution.
1.Lower the cost acquisition of new customers
Insurers spend a phenomenal amount of time and money acquiring new customers but after that, they do little follow-up work. The sale is done, so they move on — they’re scorching the earth rather than farming and nurturing it. After dumping a ton of money on acquisition, insurers will likely only get a handful of new customers, and it can take a long time to recoup the costs of this approach compared to an average waiting period.
Address this by creating a culture that moves away from the “sales-and-nothing-else agents” with a focus on retention (at a much lower cost) to cultivate a better breed of prospects with a much higher conversion ratio.
2. Make technology and service a priority for customer experience & engagement
Large swathes of the population are used to dealing with the minutiae of life via apps on their mobile devices, allowing them to do their banking, shopping, control their heating or even answer the door remotely, as and when it suits them. It has thrust excellence in digital execution to the forefront of business strategy and those that don't have it are falling way behind.
Insurers must create best-in-class customer applications that are tailored to each policyholder covering everything from exclusive rates, deals and offers to premium transparency.
3. Transition customers to your new culture of insurance
These changes mean little if not accurately communicated to customers - and wider market. Similarly, this period of transition must be constant but gradual. Ditching an established method of operations is not going to happen overnight but the move to offering UBI and an evolved customer experience is a constant build.
Set frequent and regular targets when it comes to changing the insurance offering with key metrics set against customer perception and understanding
4. Retain more customers through value, fairness and service quality
The next step is to ensure customers remain with you on this journey. But, by doing the previous steps, insurers are likely to see both retention and referrals increase as the company establishes a reputation for trust, transparency and technological excellence.
Carefully manage and analyse customer retention and referral rates with teams KPI'd against these ahead of new customer acquisition.
5. Build the foundations for the tech stack to meet behavioural changes for driving
Technology partners and/or skilled hires from both inside and outside of the insurance space can bring a wealth of experience, utilising such techniques as machine learning and AI modelling, data lakes, and rapid development iterations. The insurance industry falls remarkably short of other financial service industries, such as banking, when it comes to investment in technology.
Partnerships should be forged early to both maximise the time invested but also to tap into a pool of talent before it dries.
Insurers are not looking to the future and they should be. The industry is still spending too much time and resource on modelling and pricing for ‘the now’, and not ‘the tomorrow’.
The ability to engage now, make a quick decision and learn outweighs the risk associated with the unknown. Procrastination and worse, wilful ignorance, will cause insurers to fail. Driver’s circumstances vary hugely and personalised insurance policies are seen as the answer to addressing those differences. Where once this just wasn’t possible, today’s technology means that greater personalisation is within the grasp of insurers.