Digital innovation within insurance distribution is moving at a rapid pace. Life insurers are aiming to meet the rising bar of higher service standards and growing customer expectations.
Earlier this year, RGAX conducted research through the online survey “Digital Distribution: 2018 Pulse of the Industry,” targeting small-to-medium-sized U.S. insurers. The goal was to provide a current outlook on the level of education and capabilities within the digital marketing space for insurance. This report features telling insights from survey respondents on how they currently engage with digital marketing tools, partners, and vendors. It also overviews potential enhancements to the customer experience and additional opportunities for growth and scalability.
Products and Channel Marketing
For existing product offerings, term products fully underwritten garnered the most responses and are currently marketed by 19 (out of 25) carriers1. Annuities ranked as the second most popular product, marketed by 17 respondents. Next came whole life fully underwritten products (16) and universal life (14). Less than half of respondents indicated marketing any one of the remaining products, which included digital distribution: final expense simplified issue (11); final expense whole life (11); term: simplified issue (9); accidental death and disability insurance (5); variable universal life (3); and long-term care products (1). Nine respondents indicated marketing a product other than the types listed here.
Figure 1: Current Products Marketed by Carriers (25 Respondents)
Use of Digital Marketing by Channels of Distribution
As referenced in Figure 2, career, captive, and affiliated agents represent the channel with the highest reported utilization with 15 respondents using this channel. A range of independent agents followed, including general agents (GAs – 14 responses), independent marketing organizations (IMOs – 13 responses), managing general agents (MGAs – 10 responses), and business general agents (BGAs – 9 responses).
Nine carriers reported offering products through their group, employer group, and worksite marketing channels. Affinity and partnership marketing is used by seven respondents, while banks and financial institutions were reported as viable channels by six respondents. Only five of 25 carriers reported using a full-service broker dealer and just four a direct-to-consumer channel.
The use of digital marketing mirrored the channels utilized but with lower numbers in total. The largest differences between the number of respondents using the channel and the number using digital marketing could be found among GAs (14 vs. 7) and group/employer group/worksite marketing (9 vs. 2).
Figure 2: Distribution Channels Utilized and the Use of Digital Marketing (25 Respondents)
Lead Generation: Current Progress for Testing Direct-to-Consumer Digital Marketing
Of the 28 survey respondents, 64% reported that they are currently testing digital advertising, and 50% are testing an online e-application journey. Refer to the graph displayed in Figure 3.
One quarter (25%) of participants indicated that they are testing immediate online approval processing (other than guarantee issue), and the same percentage are testing issuing policies digitally with a PDF of the policy to a customer e-portal. Additional D2C strategies include fully digital capabilities for online lead generation (21% of respondents testing) digital lead generation for agents (14%), and digital lead generation to a call center (11%). Interestingly, 14% indicated that they have not made any progress for any of the categories listed in the survey.
Figure 3: Progress for Testing D2C Marketing
Future Planning for Lead Generation
For most participants (about two-thirds), future planning for digital lead generation is underway, with 43% of the survey respondents planning to begin testing with the next two years and 25% expecting to pursue lead generation beyond the next two years.
Figure 4: Future Planning for Lead Generation (28 Respondents)
Testing Digital Marketing
Figure 5: Current and Planned Testing Digital Marketing Capabilities (27 Respondents)
Not unexpectedly, the largest group of respondents (13) currently have testing capabilities in place for advertising (e.g., display and social media) as it is the most readily available digital strategy.
Another 10 participants plan to continue to expand or build out these services in 2018. D2C web activities, such as landing pages, blogs, and mobile testing, are currently in place for eight companies with another eight having immediate plans to implement. Current testing for online quoting is in progress for nine participants, and another six have short-term goals to get started. Eight participants reported CRM capabilities with another five having CRM expansion plans in 2018.
It is interesting to note that A/B testing was not a more pervasive capability. Tech leaders like Netflix provide a strong example of how insurers could be adapting technology with the goal of increasing customer engagement and satisfaction. Netflix’s competitive advantage stems from its large-scale investment into understanding how customers engage with its products and innovations. Netflix conducts rigorous A/B testing to determine how consumers respond to product changes, personalized homepages, and UI designs. This strategy has proven effective, and insurers might consider incorporating a similar approach into their digital strategies.
Insurers have typically developed products based on the rules of compliance or actuarial requirements rather than through insightful research into customer preferences. Customers are more likely to be engaged in a sales process that is visually appealing and attractive on an emotional level, or that delivers optimized marketing messages uniquely relevant to them.
There is a correlation at successful companies between high customer satisfaction and high profit margins. The insurance industry has much to learn from innovators like Netflix.
Online Application Processing
For the small-to-medium-sized carriers seeking new strategies for e-application processing, 21% reported partnering with startups or external partners. Another 43% of respondents indicated that they did not currently have any active partners or partnerships for this function, but were exploring or planning to partner in the future. The remaining 36% reported no interest.
Partnerships provided respondents with the following key ways to enable e-application selling strategies:
Improved mobile delivery options
Development of D2C and accelerated underwriting platforms
Ventures with insurtech startups
Greater flexibility with multiple vendors for broker partners
E-application support (e.g., iPipeline)
Signature and Credit Card Processing Capabilities
Increased capabilities such as signature and credit card processing make the customer journey smoother and more convenient for those buying insurance.
Our survey findings reflect that the majority of 23 respondents, 87%, offer digital signature processing, while 65% offer voice signature processing capabilities. Credit card processing lagged slightly behind with only 52% offering digital capabilities and 40% using voice commands. Please see Figure 6 below.
Figure 6: Processing Capabilities for Digital and Voice (23 Respondents)
Data and Risk Selection
Despite the continuous “buzz” around using data to enhance insurance sales strategies, our survey findings did not yield a high number of respondents currently using data with a customer focus, suggesting this may be an area for growth. Respondents to this question indicated a broad range in the number of strategies they are employing. Meanwhile, one carrier reported “this is exactly where we fall short” and another is “just starting to talk about this now.”
The use of only one data strategy was reported by 46% (of 26 responses), while 15% reported using two and three strategies respectively. 8% reported implementing four data strategies with a customer focus, while 4% of insurers use five types. Another 12% (three respondents) reported using eight strategies for data to drive sales.
Upselling and cross-selling was the most utilized application of customer data with 39% (of 26 respondents) reporting use of this strategy. Customer segmentation overall and by product was next at 36% utilization.
As the importance of accelerated underwriting gains traction in the U.S. and abroad as a means to increase sales by processing applications faster and more efficiently, 32% of respondents reported having a strategy in this area. Interestingly, only 29% reported using underwriting data propensity models based on criteria such as smoking status, aggregate credit ratings, driving records, and behavioral history.
The use of additional data strategies with a customer focus can be found in Figure 7.
Figure 7: Data Strategies with a Customer Focus (26 Respondents)
Administration and Customer Marketing
Administration capabilities lagged among survey respondents, indicating a potential opportunity to build on these capabilities for customer support. Eleven out of 28 reported having policy e-delivery (a PDF of the policy) option, while do-it-yourself customer service processing in an e-portal was indicated by 12 participants. The ability to perform online policy transactions by the policyholders yielded just seven affirmative responses. Lastly, only one respondent reported the capability to facilitate policyholder activity tracking for predictive analytics. Figure 8 highlights the results.
Figure 8: Administration Capabilities
As illustrated in Figure 9, some respondents reported that online transactions make up as much as 40% of business. Generally, however, call center and direct mail channels still account for the majority of transactions.
Figure 9: Transactions through Channels
Customer Campaigns and Outreach
Figure 10: Transactions through Channels (21 Respondents)
The customer campaigns indicated by 21 respondents included policyholder cross- sell marketing campaigns employed by 60%, followed by 47% that use customer net promoter score campaigns, and 38% for policy upsell marketing campaigns. Only 7% reported employing policyholder referral marketing.
Figure 11: Outreach for customer campaigns (12 Respondents)
The most popular method of outreach for customer campaigns indicated by 12 respondents was direct mail (92%), followed by e-mail (75%) and the policyholder e-portal (42%).
Customer Engagement and Loyalty Plans or Campaigns
Thirteen survey respondents reported that they currently have engagement or loyalty plans in place, or are planning to implement these plans or campaigns in the future to increase customer engagement. As illustrated, below, in Figure 12, life and legacy planning programs are the most popular, with nine respondents having a program in place and four planning to implement one.
These programs allow customers to digitally organize, store, and share vital documents or policies with beneficiaries.
Identity protection programs were the second most popular response with five insurers reporting programs in place and another two that plan to offer it. Health programs or apps, such as tele-doctors, prescription discounts, and wellness check-ups, yielded three responses for current use and four for planned implementation.Read More +