For many more traditional industries, digital transformation can be a daunting proposition. Large organizations are generally slow to change, as development must happen over time and be an ongoing process, with any disruption to daily business flow deemed too much of a risk for agile transformation. But the digital economy is changing the way consumers think about insurance, and the larger incumbents will have to get to grips with digital quickly to avoid being disrupted by more technologically savvy, smaller companies.
The traditional insurance business model has proven remarkably resilient, but it could be under threat as innovative new startups ride the wave of enthusiasm around FinTech to offer alternative insurance products. Its more important than ever, then, that traditional insurance companies update their marketing efforts. As put by McKinsey: ’Evolving consumer behavior is threatening traditional growth levers such as TV advertising and necessitating a shift to personalized mobile and online channels.’ Investment in digital channels is on the rise; insurance companies are developing mobile apps, hiring game developers, and analyzing customer data. Insurance may be behind, but it won’t be for long.
‘For me a fundamental change in these industries is to shift to a retail consumer mindset,’ says Aviva’s CDO, Andrew Brem. ‘If I think of the nomenclature of financial services, even on digital you are filling out a form. The button says ‘apply’. When do I apply for something from Amazon? This notion of a form, of applying, of a quote or of acceptance is entirely outmoded.’
Insurance companies are working on being more transparent with their data. Premiums are calculated based on a mountain of metrics, but traditionally these have been kept from the consumer. If this information were made transparent, consumers would be able to modify their behavior to lower their premiums, for example, something 85% of consumers would like to do according to a survey by GMC Software. These changes simply put the consumer on a more even footing with the insurance company, and demystifying the process must be woven into any insurance company’s digital strategy.
Another major issue for insurance companies to tackle is siloed customer data. Thanks to many having undergone a series of acquisitions and takeovers, customer data is often disparate, and an effective single customer view is a dream rather than a reality. Hana Graham, Head of Marketing at Pen Underwriting, told Insurance Post: ‘Data centralization is inevitably a challenge when you bring together 12 businesses as we have at Pen, which is why we’ve made a massive investment in Salesforce and our own bespoke systems.’
The solutions to these problems will potentially be found in the startup community, and the insurance industry is beginning to engage more and more with it. Aviva, for example, invests in startups, partners with startups, and founds startups of its own at its digital Garage. The speed at which startups move will be attractive to the larger institutions, so expect to see more and more insurance companies partnering with startups as areas like FinTech develop.
Search marketing is also big for insurance companies. The abundance of competition - from not only other insurance companies but also comparison sites - means that PPC advertising may be a good route for some companies. Aviva, for example, responded to a relatively low organic search ranking in 2015 with a Google PPC campaign which proved successful. One thing to note from Aviva’s campaign is that the landing pages from the PPC ads were tailored depending on the search - a ‘car insurance’ search would land on the corresponding part of the site, with the relevant offers made clear immediately. It’s a relatively simple part of the campaign, but it makes a big difference to how users respond to PPC ads.
The insurance industry isn’t necessarily the most exciting in the eyes of consumers. Brand loyalty is extremely low, price is essentially the deciding factor and as a result the job of a digital marketer is a tough one. Digital development has the potential to not only improve marketing through a single customer view and greater transparency, but to fundamentally improve the types of insurance on offer.