As digitisation continues to shape customers’ attitudes and purchasing behaviours, insurers are being forced to rethink their distribution models and put a greater focus on the direct channel (D2C). Established players have the largest market shares for direct sales, but at the expense of having to invest more in marketing and advertising. These insurers centre their marketing campaigns on customer fairness, service, and claims.
Listed below are the top industry trends impacting D2C in insurance, as identified by GlobalData.
Making policies more understandable and transparent is a trend throughout the industry – one that goes hand in hand with digitalisation. An example is Lemonade’s Policy 2.0, which the home insurer launched in 2018. The policy dramatically cut down document lengths and removed legal jargon, using plain language instead. Moreover, Lemonade’s cover is fully paperless and instantaneous.
Customers expect seamless experiences across all channels: phone calls, website visits, apps on mobile devices, etc. Insurance companies need to be present in a broad range of direct channels, as well as to provide a consistent customer experience across them all.
In particular, the online channel will become increasingly important as younger generations outnumber other demographic cohorts. Customers demand online, user-friendly interfaces that are intuitive to use.
Building emotional connections
D2C gives insurance companies more control to redefine their brands and improve customer engagement. Retail banks are already looking into ways of building further emotional connections with customers. In similar ways, insurance companies are adopting more personalised content with the aim of establishing stronger customer relationships and provoking more positive emotions. As an example, a motor insurance company could give tips to customers on driving behaviour in different weather conditions, such as in the snow. But one digital challenger that can be used to exemplify the move towards emotional connectivity is Lemonade, which goes by the motto “Forget everything you know about insurance. Instant everything. Killer prices. Big heart.” Meanwhile Waggle claims that “Pet insurance sucks, so we changed it.”
This is an edited extract from the Direct to Customer in Insurance – Thematic Research report produced by GlobalData Thematic Research.