Just before people temporarily stopped taking road trips a couple of years back, two insurance companies commanded 92% of the auto industry’s premium growth. By then, both carriers — Geico and Progressive — had already adopted a direct-to-consumer (D2C) approach to policy acquisitions, anticipating heightened market demand for fast and easy service. Since then, other insurers across the industry have followed suit, some more successfully than others.
And success is the name of the game. Not only do insurers that make a successful switch to D2C enjoy stronger growth,[1] but they also experience lower policy acquisition costs[2] and higher customer satisfaction.
So, what’s preventing some insurers from reaping the full benefits of their D2C strategy? Mindset, more than anything else. But excelling at a D2C approach to policy acquisition isn’t as hard as it might seem. Here are the main D2C challenges and how your company can overcome them:
Technology: You Don’t Have to Rebuild Yours to Deliver Frictionless Omnichannel D2C
Most companies balk at doing a technology rip-and-replace, as well they should. Because it isn’t necessary. Yes, excelling at D2C depends on tapping the right technology. But no, you don’t have to undergo time-consuming, disruptive and costly technology upgrades to keep pace with champion D2C insurers.
That’s good news if you have disparate legacy systems running on multiple platforms, since delivering a frictionless omnichannel experience for your customers is best achieved by keeping your technology up to date and in a single place — ideally, one where features can easily be added and removed as needed.
With everything on one platform, you can obtain a 360-degree view of your customers, which will allow you to engage seamlessly with them across channels, even when they switch midstream. For instance, a customer may browse your insurance products via one device or channel and then jump to another when it’s time to start the prequalification process — which, by the way, needn’t tie up a live agent’s time. By relying on conversational artificial intelligence (AI) and natural language processing (NLP), you can use a chatbot to guide the customer through a no-wait, no-lag experience from first contact to sale, prequalifying the typical prospective policyholder in less than a minute.
That’s what the largest U.S. provider of supplemental insurance did after too many dropped calls resulted when customers on hold got impatient waiting for an agent to prequalify them. After automating the prequalification process across multiple channels, the insurer saw up to 25% improvement in lead quality, $25 million in annual written premiums and $1.5 million in additional premiums. The beauty of this is that the customer didn’t have to build or own the chatbot itself. A digital partner did that, and it charged the insurer only for the product’s outcomes, not the product itself, making D2C ROI less of a leap.
People: Sourcing and Training Your Own Agents
Guiding customers quickly and painlessly to the right products by automating the prequalification process is one thing. Closing the sale is another.
Since policy acquisition requires a highly specialized skill set, insurers who once relied on third parties for sales agents can suddenly find themselves in over their heads when they switch to a D2C model.
This proved the case for an international insurer that offers a range of specialty products. Although an early adopter of an omnichannel D2C approach, the company’s sales function struggled to keep up. It needed well-trained, licensed insurance agents sufficiently skilled in hard selling to convert live calls into binding policies.
Working with a partner that has deep insurance domain expertise, the company built a specialized policy acquisition team staffed with dedicated, licensed consultants. They also added a robust CRM solution that seamlessly integrated the carrier’s policy administration and financial systems. The outcome? The insurer grew from a greenfield opportunity to $330 million in annual gross written premium, saw a 20%increase in policy value per sale and achieved 98+ percent CSAT.
Analytics: Making Direct Customer Exposure an Asset, Not a Liability
The prospect of being on the front line of shoppers’ feedback has made some insurers leery of a D2C model, especially since disgruntled customers often complain in a very public way. But the 98+ percent CSAT just mentioned demonstrates that by directly controlling your sales team, you in turn have much greater control over the quality of people’s experience with your brand, what they’re likely to say about it and whether they’ll choose to buy your insurance products or look elsewhere.
The key is to arm your agents with the right information. This entails continuously analyzing interactions across all customer channels so that your agents understand and respond to policy shoppers’ sentiment and motivation at every touchpoint. Cognitive AI can generate a constant feedback loop that lets your sales team know:
- Where and why various insurance shoppers tend to hesitate in the policy shopping process
- What’s likely to pivot them to a superior customer experience
- How to advance them down the sales funnel and achieve a higher conversion rate
Take, for instance, a large US life insurance provider that wanted to transform into a data-driven culture focused on rapid D2C sales growth. Through a combination of predictive and prescriptive analytics, agents were trained to understand targeted customers, anticipate their needs and concerns (instead of making customers explain their pain points) and then swiftly convert prospective purchasers into policyholders rather than struggle to find an appropriate solution. The outcome was $70M in new annual GWP and a 35% higher close rate.
On Your Way
As you start or accelerate your own D2C strategy, keep the following tips in mind.
Do more with less: Automated prequalification boosts your agents’ productivity so that you achieve higher market penetration without expanding your sales team. The result is a virtuous circle of higher growth and lower costs.
Don’t squander free customer intelligence: Analyzing 100% of customer interactions is highly doable, but most insurers leave huge quantities of free customer data unexamined. Make the most of your own intel to gain a competitive edge.
Reduce complexity: In building/augmenting your D2C infrastructure, be wary of fragmented efforts and unnecessary complexity. Find a partner with a full suite of complementary capabilities that can roll up into one integrated solution for you, spanning an omnichannel platform to a team of highly trained licensed agents.
Want to learn more? Let’s talk. We’d love to hear from you.
[1] https://www.mckinsey.com/industries/financial-services/our-insights/insurance-blog/ten-years-of-change-in-direct-insurance
[2] https://www.mckinsey.com/industries/financial-services/our-insights/the-next-frontier-for-sustainable-growth-capturing-the-cost-advantage-of-direct-insurance
Reduce Risk. Gain Advantage. Improve Retention.
Vijay is an Insurance Change Leader, helping clients navigate complex challenges and rethink competitive advantage.
