Our culture is rapidly evolving into one of instant gratification. As services like Uber, Amazon Prime Now and TaskRabbit continue to grow in popularity, consumers expect to be able to order almost any product or service and have it delivered instantly. A recent survey by the Pew Research Center found that 72% of American adults have used some type of shared or on-demand online service – a number that will continue to grow. In other words, it’s time for businesses to embrace on-demand products and services, including commercial insurance carriers.
On-demand insurance is already gaining traction in the personal lines marketplace. Companies like Lemonade, Trv and Metromile help customers instantly insure everything from their apartment to their bicycle. Small-business owners want fast access to insurance coverage too. That means it’s up to commercial carriers to offer the same kind of customer service and on-demand sales experience that personal lines insurance companies are already providing.
Small-business owners are consumers first.
Small-business owners typically don’t have much experience buying business insurance. That means they will probably approach searching for business insurance the same way they did their renters, homeowners or auto insurance: go online. According to a study by J.D. Power, 74% of shoppers use the internet to research car insurance policies and get quotes. While only 25% end up purchasing their policy online, I suspect that number will grow as consumers and businesses get more comfortable with the concept of on-demand insurance. In short, if commercial insurance carriers want to stay competitive, they need to provide on-demand policies and service.
Annual policies are shifting to on-demand insurance.
Traditionally, commercial policies are issued to business owners for a specified period of time, typically one year. In fact, the entire insurance procurement and servicing process is geared round that annual cycle. However, the move to on-demand insurance throws the concept of the annual cycle out the window – and that could spell trouble for traditional insurance carriers if they can’t figure out how to adapt. That’s because unless there is a fundamental reworking of the processes for selling and binding insurance, as well as the underlying expense structure, most carriers will not be able to provide on-demand insurance while remaining profitable.
So far the insurance companies that have succeeded in the business of on-demand insurance have been non-traditional insurance companies such as Cuvva, Verifly and Slice. These companies have largely focused on insurance products for consumers that cover very specific items or needs, such as:
- Drones
- Electronics
- Cameras
- Renters
- Home sharing
- Personal auto
Because they are startups and not burdened with legacy systems or cost structures, they have been able to develop a customer-centric system with a mobile focus from the ground up.
The challenge for established insurers will be how to adapt to the on-demand model. Making the transition will likely require significant restructuring, including redesigning the mobile experience. These challenges will likely make it difficult for traditional carriers to compete with the on-demand options consumer carriers provide. However, any carrier that chooses to bury its head in the sand and pretend on-demand insurance isn’t something they need to worry about risks being left behind.
So far, the only on-demand product we commonly see in the commercial insurance space is special event insurance, which covers a single-day or short-term event, such as a wedding, sporting event, concert, etc. However, the distribution channel is still largely traditional. This means most customers still need to purchase special event coverage through an insurance agency. However, the reality is that this is a policy that could easily be sold online.
There are several more commercial insurance on-demand opportunities that could easily be tapped into, such as project-specific professional liability insurance or contractor’s liability insurance. The challenge for the insurance industry will be creating a product that provides the necessary coverage and developing the low-cost, customer-centric process that consumers and business owners alike are looking for.
Today’s customers expect you to exceed their expectations.
The final piece in the on-demand puzzle for commercial carriers is how to provide business owners with a superior customer service experience. As reported by the Boston Consulting Group, the three critical dimensions of customer satisfaction in insurance are transparency, quality, and speed. For a commercial carrier to attract and retain customers, they need to be able to:
- Ensure that the buyer understands where they are in the insurance process, i.e., purchase, policy change, renewal, or making a claim.
- Create a seamless buying process with zero errors, which includes the secure transmission of data and accurate rates.
- Respond quickly to customer questions and let customers view policy documents in real time.
A major component of customer satisfaction is the ability to provide quick responses to questions and decreased time from application to bind. Most commercial insurance customers don’t expect real-time processing. However, they are increasingly beginning to expect a turnaround time from application to bind that can be measured in hours, not days. If your insurance company isn’t able to provide that, your customers are likely to look elsewhere for one that can.
Finally, commercial carriers need to focus on creating an application that is easy to complete on a mobile device, which is where on-demand insurance really thrives. In fact, the entire customer-centric process needs to be designed with that in mind if commercial carriers truly want to remain competitive. That’s because it’s no longer carriers dictating how coverage will be sold — it’s buyers deciding how they want to purchase coverage. And for an increasing number, that’s on-demand.
Article by: Ted Devine
Source: Property Casualty 360
