Picture this scenario: A MetLife home and auto policyholder visits Amazon's site over a two-month period to purchase products for a newborn on the way including food and clothing, a baby crib, stroller and wireless monitor.
Before an agent from Metlife learns of this coming "life event," an Amazon call center agent, shopping cart transitions in hand, offers the customer a life insurance policy through a partnering carrier, taking new business that, in years past, would likely have gone to MetLife.
Sound far-fetched? Think again.
According to Glenn Wintrich, a global director and principal consultant of Innovation Services at Dell, Amazon has applied to sell insurance (both life and P&C) in 37 states. It's only a matter of time, he warns, before the tech titan clears some hurdles (regulatory, among others) and jumps into the arena, presenting a potentially formidable threat to the industry's long-established incumbents.
To minimize turnover and maximize customer acquisition and loyalty, he added, the next generation of business solutions must be designed for socially connected, mobile consumers. This is a big and growing audience.
Market research cited by Wintrich pegs mobile phone users in 2017 at $5.3 billion or about 70 percent of the world's estimated 7.5 billion people. More than 4 in 10 people globally (2.3 billion) will using social media next year. By 2020, this huge population will be consuming 35 zettabytes (ZB) of data, up from 7.5 ZB in 2015.
How to best serve these socially connected and mobile users? Enter the "real-time 360-degree view of the customer." A comprehensive understanding of individuals’ wants and preferences, said Wintrich, requires software and systems that can gather and interpret both "data you own" (behavioral information collected from past transactions); and "data you don't own" (direct information collected from real-time, direct engagement with the customer; and derived information from real-time, direct engagement with the customer).
The data collection encompasses a wide range of sources. Among them: business systems data, 3rd party information, engagement through mobile and IoT (Internet of Things) solutions. It extends also to psychographic/social data, physiological information (such as from wearables), life events, affinity relationships and networks.
To illustrate the 360-degree approach, Wintrich noted that social media monitoring tools can be used to track customer complaints about a vendor on Twitter or Facebook. The provider can then "nip the problem in the bud" by proactively contacting the disgruntled individual to address the issue before the problem escalates and does real damage.
But there's still time for these players to fight back against "disruptive innovation" from the likes of Amazon. To that end, said Wintrich, a workshop presenter at the 2016 BenefitsPRO Broker Expo held in Fort Lauderdale, insurers must do some innovating of their own. That means getting a handle on the growing mountain of data about customers and prospects that's ready to be tapped.
"Industry Innovation needs to be systemic," said Wintrich. "That demands the right technology tools to gather, interpret and manage data. It also requires foresight: an ability to look at industry trends, determine what’s real, probable and possible, and stay ahead of the competition."
The industry's need for a better holistic view of customers and prospects is real and growing, particularly in respect to data available about them on social media. Wintrich said that social customers tell an average of 42 people about a good experience — and 53 people about a bad one. Customer satisfaction is a leading indicator of company financial performance.
The "voice of the customer" on social media carries more weight with prospects than does a marketing campaign; and retention of an existing client costs less than acquiring a new one.
"The cost of churn—replacing a customer who's left for another company—is about three years' worth of business," said Wintrich. "If you have such churn after two years, you make no money. If the customer leaves after one, you’ve lost money."
Data gathering tools can also be used to build a tailored policy based on an applicant's lifestyle, health, employment and marital status and other factors. For many, such customization can be a godsend, as in situations where an applicant would normally be declined or rated because of his or health condition.
Wintrich noted, for example, that accidental death and disability (ADD), life and disability income insurance are typically 3 to 5 times more costly for diabetics than for healthy individuals.
However, using a Fitbit and other tools for monitoring real-time changes in an applicant's health condition and activities —weight loss or gain, blood sugar levels, daily exercise and sleep — an insurer may be able to offer a policy for a premium at or near the preferred or standard rate. Or, if a policyholder veers off a prescribed dietary, medical or exercise regime, the insurer can offer coaching to get them back on track, dynamically adjusting the policy premium to suit the individual's health status.
"People who answer 'yes’ on an application to a question asking whether they're a diabetic are almost always declined for insurance," said Wintrich. "That means lost commission for the broker and revenue for the insurer.
"Now, a carrier can ask whether a diabetic applicant is enrolled in a company’s wellness program and is monitoring his or her health through a Fitbit, Apple Watch or other wearable device," he added. "If data from that device is connected to a company’s health-monitoring Web portal, an applicant may now become a low risk and eligible for conditional coverage."
For healthy policy applicants, he continued, technologies are coming to market that can quickly and seamlessly facilitate the sale. In Wintrich's example of the "digital insurer of the future," the entire sales process — delivery of a policy quote, ratings and reviews from friends on social media, underwriting validation, policy issuance, notification of the premium paid and access to the policy online — takes place within an 11-hour period. The information at each step is communicated to the applicant across multiple devices: the desktop, laptop tablet and smart phone.
Such end-to-end policy customization transaction capabilities, and the customer data underpinning them, will be key not only to securing and retaining new customers, but also the benefits brokers who interface with them.
"We’re telling insurers, 'You need to pay close attention to the data that people are giving you,'" said Wintrich. "It will be increasingly important for brokers and agents to closely align themselves with carriers that are adopting best practices in regard to data collection and analysis."