One of the most profound impact of e-commerce has been on customer expectations. From long queues and tedious questionnaires we now buy in few minutes and fewer clicks. In this age of decreasing attention spans and increasing options life insurance is still stuck in the ‘90s.
Although quickly digitising, insurance remains the worst performer in abandonment rates (shoppers starting an application but not finishing it) at a whopping 83.7%. Applications in banking and insurance are notoriously long and complicated. In banking, challengers are gaining market share predominantly by accelerating and elevating the customer on-boarding experience. Nobody wants to wait two weeks to use their own money.
Contrastly insurance has hit a plateau in improving that journey. While many of us can get protection disclosing very little information and friendly interface it is never the best price. Worst yet for the majority of the customers who still have to either (i) give personal and sensitive information about their and their family’s history or (ii) go for a medical exam for which the waiting time will be two weeks and a cost of up to £150.
A recent survey by Signicat reveals the top reasons for abandoning an application are:
Bottom line is that customers don’t want to share too much or spend too long.
ReMark Group’s brilliant survey of consumer trends of the life insurance market show that almost 3/4th of the customers want the buying process to be completed the same day it starts:
Against this Munich Re calculated the average on-boarding time for life and health insurance policies is 52 days.
This provides a massive opportunity for challengers. Revolut and Monzo leveraged an easy-to-use and secure app with advanced data services to eliminate the need for long and unpleasant ‘know-your-customer’ journey.
Similarly digital marketing companies have become very good at finding the right people at the right time in their lives but the tedious customer journey and complex terms results in appalling conversion rates of just over 2%. Moving the needle on this number can be an unbeatable edge.
Digitisation of health monitoring and assessment have crossed the tipping point with numerous improvements in prediction and prevention. This information is available to insurers from medical records to health and fitness monitors. There is enough data available on people in real-time to formulate a health assessment which is more accurate, dynamic and fair and helps people improve their health outcomes.
Increasing number of entrants are focused on a simple value proposition and a fast and easy on-boarding process. The challenge remains in leveraging the right data sources to strike the perfect balance between i) speed, ii) accuracy and iii) acceptance rate.
We are working with challenger and incumbent insurers to resolve these challenges.