What Can The Amazon Dash Button Teach an Insurer?


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Recently, Amazon unveiled “Dash” buttons, which you attach to a household appliance or kitchen surface and then connect to the Internet (and the Amazon store) via the home Wi-Fi. For example, one of Amazon’s tidedashpartners is Procter & Gamble, so when you run low on laundry detergent, you just press the button and Amazon will send out a new box of Tide. So, does this have any relevance to insurance? Not directly, but it does illustrate that people will always seek out more convenient ways to select and buy products.

Yet when we look at our own industry, very few changes have been made to the business model in decades. Why do we assume we are immune to the demands? The most common response is that insurance, unlike Tide, is not a commodity. But if you can save 15% (or more) in just 15 minutes, it can’t be that complicated. And don’t put all the blame on GEICO – over $4 billion a year is spent on advertising, and much of that advertising helps create an impression that switching personal insurance providers is simple and in most cases will save money. That makes insurance a commodity – put that one on us.

Now is the time to think about how people want to buy and use our products and services. According to a study by Effective Coverage, just 24% of millennials would consider buying home and renters insurance from local insurance agencies. The study concludes that millennials are used to immediacy, to online access and to self-educating. Bottom line, they don’t want to buy in the way we want to sell. And it’s not just millennials – a report by PricewaterhouseCoopers reports that 7% of all Americans consider themselves to be providers in the sharing economy (think Uber or Airbnb), but that jumps up to 25% for people aged 55 and above. Many insurers have steadfastly refused to consider the sharing economy within personal policies, but are we potentially pushing away up to 25% of our loyal baby boomers because we are not able to support their desire, or need, to participate in the “gig economy”?

Customers are constantly exposed to new products and new ways to buy those products, and this will have a significant impact on the insurance industry as it has had, and will continue to have, on other industries. Zipcar provided an early indication – for between $8 and $10 an hour, a person can drive a car (and that includes fuel and insurance). Marmalade, a UK company targeting drivers who are between 18 and 24, offers car leasing packages that include car and telematics-based insurance. In the U.S., GM has already indicated a willingness to share OnStar data to help define insurance rates. When will BMW, GM and Ford dealers “bundle” insurance in the way they now add in routine maintenance?

The potential disruption of insurance does not suggest any loss of business in totality, but it does suggest carriers might provide components in a more comprehensive solution. Consider the technology industry – its use of complex language and terminology is as bad as anything the insurance industry has dreamed up, but it has migrated toward simplification to expand the market. Take Apple as an example; it has just three laptop models – MacBook (normal), MacBook Air (lighter) and MacBook Pro (more powerful). This really makes buying an Apple laptop very easy. Apple provides a further glimpse into a possible future of insurance with AppleCare (an extended warranty), which looks to us a lot like insurance. In 2014, it is estimated that $6 billion worth of AppleCare was sold, and it was AIG that banked the most of the business. Taking that one step further, Apple now leases the new iPhone 6S and for about $40 a month, you get the phone and insurance (AppleCare) in a standard bundle.

So, back to where we started. Are people going to buy existing insurance products from the existing sales channels? For a while yes, until someone comes along with an improved process. This might be a disruptive outsider (and there are plenty of organizations eyeing the insurance space with great interest) or, just as likely, it might be an existing insurer looking to establish a competitive edge. After all, GEICO and Progressive were once the disrupters.

So what should we do?

  • Accept that industry disruption is inevitable and the speed of change is accelerating.
  • Think mobile device first and foremost
  • Create internal disruption or innovation teams (and include people from outside insurance industry)
  • Disrupt yourself before others do it for you
  • Consider the whole cycle – not just how you sell policies but also what you sell

Insurance is a product that most people do not understand and certainly don’t want to use. Insurance offers few genuine touch points, and that limits brand loyalty. The perceived difficulty of switching carriers restricts customer churn as much as anything the carrier might do, but a simplified buying process reduce that barrier.

Republished with author's permission from original post.

Terry Golesworthy
As the president of The Customer Respect Group for 7 years, I focus on the online experience of consumers. Online experience has always been bigger than the company website, from the response to email to integration to other offline channels. It has now grown to include social media.


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