By Graeme Dean, Head of Insurance, Cover Genius
There’s a reason loyal customers are regarded as the ‘gold standard’ by many businesses. It costs 500% more to acquire new customers than to keep current ones. Additionally, repeat buyers are likely to spend 33% more than first-time customers.
Our digital age of ecommerce and online marketing means it’s easier than ever for customers to shop around for the best price. However, this has a negative knock-on effect on customer loyalty. Businesses must work harder than ever to keep customers coming back.
The good news is, brands can reap the rewards of customer loyalty by delivering excellent customer experiences. But how do ecommerce businesses keep their customers at their heart while growing and scaling in other directions? Perhaps the strategic use of insurance partnerships is the answer.
Incorporating partnerships with third-parties such as insurance providers allows ecommerce businesses to grow while offering benefits to customers. The ecommerce player additionally develops an alternate revenue stream, without having to do any of the legwork.
Previously, ecommerce businesses were unwilling to associate themselves with the archaic world of insurance. Fortunately, there’s a new generation of insurance providers. Here’s how insurtechs are changing the sector for the better, and how ecommerce companies can use it to their advantage.
The legacy of a sector
Before exploring how strategic partnerships with insurtechs can benefit ecommerce players, it’s worth exploring the historic challenges of the insurance sector that stunted such relationships in the past.
As with many traditional institutions, past generations of insurance providers were beset with clunky, legacy tech that hindered customer service. While we are referring to the historic nature of the insurance industry, this behaviour still continues.
The biggest inefficiency hindering customer experience is the reliance on manual processes. These require insurance staff to manually complete bank details, claims payments, and other administrative functions. When you consider that global insurers operate across timezones, currencies, languages, and legislation, this can delay processes further.
This reliance on sluggish, manual systems often accompanies a delay in claims payments. The typical claims payment time for global insurers is up to twenty days. This is far too long to leave a customer without payment when something’s gone wrong. The fault is not just with insurers: banks can also be too slow in notifying payees if their payments fail, leaving customers without cover.
Clunky systems aside, the actual cover provided is at times unacceptable. Traditional insurers favour one-size-fits-all policies, full of inflexible terms and exclusions. These incumbent insurers aren’t putting their customers first. As such, they typically see low customer satisfaction scores, ranging from minus 10 to positive 15. It’s unsurprising that ecommerce players have been reluctant to expose their valuable customers to partnerships with these archaic insurers.
Insurtechs: the next generation
Luckily, there is a new wave of insurance providers using technology to transform the sector for the better. These insurtechs are putting their customers at the heart of their operations, so they are well-placed to partner with customer-first ecommmerce players.
In our experience, customers are starting to reject one-size-fits-all cover. They want coverage tailored to their lifestyles and risks. Technology-led insurance firms recognise this and are offering cover that is customisable at point of purchase.
Some insurtechs implement AI systems to optimise their insurance product recommendations. This ensures customers end up with the right insurance, at the right price. Because such systems are built on newer tech, it is much easier to make adjustments. Legacy insurers often stay clunky because it is difficult to make improvements to tech that is simply not fit for purpose. This ease of adjustment means insurtechs are able to ensure product fit and pricing is continually optimised.
Typically, insurtechs still rely on traditional insurers to underwrite the cover they provide. As these technology-led insurers begin to attract the market share of customers, incumbent firms will look to them for inspiration. Partnering with insurtechs allows insurers to access new channels they would be otherwise unable to distribute through. As well as providing customers a better service and experience, this provides long-term benefits for the whole insurance industry.
The real test of insurance is how well it performs when a customer makes a claim. As we mentioned earlier, traditional insurers can take up to 20 days to approve claims – and even longer to pay them. This new generation of insurers is putting customers’ needs above bureaucracy and using tech to automate claims payments. Insurtechs are now able to offer instant claims payments, ensuring the customer is not left out of pocket.
Best practices for integrating with insurtech partners
Integrating with the right insurance partners can help online retailers broaden their offering, and provide greater customer service. Of course, the wrong partnership could do more harm than good, damaging your loyal customers’ relationships with your brand. Here’s how online businesses can get it right…
- Always prioritise the customer. Provide a frictionless customer experience, and additional business benefits can follow later.
- When choosing insurtech partners, look for a provider that has the authority to create the right policies for the customer. If they provide “off the shelf” policies, they are no better than traditional insurers. Ask your insurtech partner if they have the ability to build and distribute policies that can be customised for the product you are selling, and not ‘one size fits none’
- Ensure their insurance-buying and quote processes are integrated into the shopping experience through APIs. You want your customers to be able to buy their insurance without ever leaving your website. This should be a seamless, integrated experience — not an add-on.
- Insurers that use a customer-first approach typically have higher NPS scores for customer satisfaction. While traditional insurers often have lower NPS scores (-10 to 15), modern insurtechs focus on NPS as a key metric, and some have scores in the 60s or 70s. Partnering with an insurtech that is customer first and manages the entire process will ensure you deliver a superior customer experience.