Catching Up

Canadian insurers are not meeting their policyholders’ expectations for managing their insurance online. Carriers that do not meet policyholders’ expectations risk losing them to competitors and may incur higher operational costs.

In a recent Deloitte survey of Ontario and Quebec auto and home policyholders, 79% of respondents indicated that interacting online with their insurer is important; however, only 4% felt they had access to these capabilities. Less than 5% of policyholders indicated that their last interaction with their insurer or broker was online. More than 90% of policyholders surveyed relied on the phone to interact with their carrier or broker, while the remaining policyholders either relied on e-mail or communicated with their broker or carrier in person.

Enable Self-service

Insurance carriers need to develop websites that provide self-service functions to policyholders, including processing payments, updating contact information and changing policy coverage. In developing these online strategies, carriers should not assume that their policyholders will be using traditional computers – rather than tablets or smartphones – to access their websites. Instead, carriers need to consider mobile apps.

However, the majority of Canadian insurers offer little to no online self-service functionality. The limited capabilities typically offered are locating a broker, generating a quote, retrieving copies of policy documentation and basic billing capabilities. With mobile capability/availability accentuating these online limitations and providing even fewer options, it is not surprising that less than 1% of Canadian policyholders have used a mobile app for their insurance company.

Insurers fall behind banks in online services

Customers are becoming increasingly frustrated with their insurance providers as they have become accustomed to a high degree of online services from their financial services providers. Retail banks have advanced their online platforms to allow customers to perform the majority of transactions or inquiries online and through mobile platforms.

Canadian insurers have not followed the lead of their financial services peers, instead choosing to continue servicing their customers via the phone, in person or deferring service to their brokers. This has resulted in a large difference between the online capabilities of banks and insurers – banks allow customers to perform complex equity trades online while most insurers struggle to manage billing online.

Direct insurers are best positioned to meet customers’ needs as they usually have an established brand and relationship with their policyholders. In addition, most Canadian direct insurers are associated with a bank and, therefore, their customers are accustomed to interacting with their brand online. Unfortunately a review of direct insurers’ online capabilities show that while they are further along than most broker-based carriers, they are still not providing customers with what they expect. The majority of carriers do not allow for changing policy or coverage options online, managing renewals, or allowing customers to manage billing online.

involve Brokers

Almost all the major Canadian broker-based carriers have no online policy self-service capabilities for their personal lines policyholders. The few broker carriers that offer online capabilities do not meet the needs or expectations of policyholders. Broker-based carriers have historically delegated the majority of policy servicing to their brokers and, therefore, have not built any online capabilities to service their customers.

In addition, brokers have typically wanted to own the relationship with the policyholder and there are concerns that if policyholders are interacting directly with the insurer’s website and brand that it may erode this relationship. Unfortunately, these assumptions can result in a failure on the part of broker-based carriers to meet customer expectations.

Insurers at Risk of Losing Customers

Investment is required by direct and broker-based carriers to provide the online capabilities customers demand or they risk losing customers. A recent survey from Deloitte Canada showed that more than half of policyholders indicated they would switch carriers if they were offered greater online services. When looking at younger generations, such as millennials, there is a growing trend for limited loyalty to organizations they interact with, demanding a strong self-serve online and mobile capability. The younger generation is more likely to switch providers based on product and servicing capabilities. This places significant pressure on carriers to not only provide competitive prices to their customers, but also to ensure that they offer innovative and engaging services to their policyholders.

Carriers need to develop online strategies to deploy self-serve capabilities. This will ultimately benefit the bottom line and help retain and attract policyholders while simultaneously reducing the operating expense ratio by two to five percentage points. Findings from a Deloitte survey show that policyholders were clear on the types of capabilities they are looking for: managing their billing information/processing payments, updating contact information, changing policy coverage (including adding and removing drivers), comparing prices and submitting/inquiring about claims. Surprisingly, while policyholders were interested in being able to produce quotes online, most were not focused on completing their new business transaction online. With this is mind, carriers need to focus their strategy on servicing existing policyholders.

Broker-based carriers should consider how they can partner with their brokers to offer online services that meet policyholders’ needs while continuing to emphasize the broker channel and brand. This can include offering portals that are branded by brokers and integrated into the brokers’ websites while being run and managed by the carrier. However, the broker and carrier will need to come to an agreement on determining who policyholders contact if they are having difficulty with the website. Is it the broker for whom the site is branded? Or is it the insurer that created and maintains the online capability?

Carriers Must Consider Mobile

Developing a web strategy without contemplating mobile apps or mobile web would be foolish in any industry in this day and age. Therefore, insurers need to consider their online capabilities in the context of current and potential future mobile use. This introduces challenges and opportunities for enhanced capabilities. For example, while regulations are still unclear on electronic pink slips, insurers should assume that being able to produce pinks slips on a mobile phone will be expected by policyholders. Conversely, when designing a quoting application, insurers should consider that customers may be using a mobile device which adds complications when entering large amounts of data and, therefore, creating a need to simplify quoting capabilities. Similarly, carriers should not assume that their policyholders will be able to access their website using a computer; many consumers rely solely on their tablets or smartphones.

The majority of large Canadian property and casualty carriers are currently in the process of modernizing their core systems through replacement of inflexible legacy technology with more modern agile systems. While these programs are already daunting in size, complexity and risk, they do offer the opportunity for carriers to align their core system strategies with their online strategies.

Based on policyholder opinion and reviews of other online capabilities of financial services, it is clear that, as a group, insurers are underserving their customers online. This is putting them at risk of losing customers to insurers that act first and is consuming a significant amount of time for staff and brokers who manual ly handle low-value routine tasks.