Today about one in fourCar insurance is sold online in Germany,1McKinsey Forum for Insurance Agents, 2019, McKinsey.com.and other personal and property insurance products are increasingly purchased through digital channels. These trends have continued to intensify since the start of the COVID-19 pandemic, which has increased customer comfort with digital and remote interaction models and tools. In an October 2019 survey of more than 3,000 people across Europe, 38% said their preferred life insurance distribution channel is digital. After the first weeks of lockdown, that proportion rose to 54%.2McKinsey online survey conducted with more than 3,000 people in two sessions: October 2019 and April 2020.
About the authors
This article was a collaborative effort ofStefan Folder,Ulrike Deetjen,simon kasler, Jörg Mußhoff and Felix Schollmeier.
Established insurers are investing heavily in digitizing their customer journeys and processes, and several new purely digital insurers or insurtechs have entered the market. Traditional insurers are well aware that their competitors in the banking sector have partially lost their customer interface to newcomers such as PayPal, TransferWise or N26. In addition, the large technology groups also show a clear interest in the insurance market, although they do not assume any risk on their own balance sheets. All of these developments have raised the stakes on key dimensions of the business model.
Established insurers are investing heavily in digitizing their customer journeys and processes, and several new purely digital insurers or insurtechs have entered the market.
To remain competitive, traditional insurers in Germany need to move quickly to a first-mover,omnichannel strategy. The most successful carriers in the post-coronavirus digital age are incorporating this approach by prioritizing three elements: availability of online shopping capabilities, ease of navigation through online customer journeys, and seamless integration of sales support and capabilities. of advice. To execute this strategy effectively, insurers must first establish a foundation focused on the customer journey, enabled by select technologies and organizational resources.3Because the stages before a potential customer arrives at an insurance company's website and after purchasing a policy are also very relevant and raise interesting topics and questions, we will probably discuss them in a separate article to be published later.
Key elements for a user-centric omnichannel approach
To get an idea of the digital marketing capabilities of German insurers, we looked at 22 carriers in 20 individual capacities throughout the conversion stage of the marketing funnel. Each player was rated from one (spring) to four (badge).
An effective, user-centric omnichannel approach includes three critical elements, listed here in order of importance: availability of online shopping capabilities, ease of navigation through online customer journeys, and seamless integration of consulting and resources. sales clearance (Table 1). Product complexity that cannot be eliminated through coherent redesign must be overcome with consulting capabilities that must be seamlessly integrated with the relevant touchpoints in omnichannel customer journeys.
Our analysis shows that the vast majority of operators have at least basic digital marketing skills throughout the funnel, with 77% of players achieving an overall score between two and three. However, the industry as a whole still shows significant room for improvement: only two insurers with a traditional, intermediary-focused, multi-channel sales model scored three or more. This is particularly relevant when you consider that customers tend to compare not only their online travel experience with other insurers, but also across industries (for example, shopping on Amazon or signing up for a Netflix account).
Insurers that focused on direct channels fared much more competitively, as their product offerings were fully digitized and their customer journeys were easier to navigate. Interestingly, this difference in performance largely persisted even when traditional and direct participants were in the same insurance group. Most notably, however, traditional players were not using their face-to-face advisory capabilities effectively in their omnichannel setup, on average, a huge missed opportunity.
Availability of online purchase options: Traditional insurers do not offer their customers the ability to purchase all products online.
In recent years, the digital maturity of the insurance industry has steadily increased and has even surpassed that of the banking industry.4The McKinsey Digital Quotient is an online assessment that measures the level of digital maturity of an industry in terms of strategy, organizations, culture, and skills. In 2019, insurance ranked third with 37 points, banking fifth with 34, and the world average was 34.However, while various operators and agents have made increasing progress in their efforts to digitize their business models, the industry as a whole relies heavily on face-to-face interaction for purchases. None of the top ten German multi-line insurers, including direct providers, offer all of their products online.5Insurance policies tested for the online purchase option were auto, personal liability, home, property, legal protection, collision damage waiver, dental, complementary hospital, unit-linked or traditional life, disability, and temporary life.
At the product level, more than 90% of multi-channel insurers offer online access to their auto and home insurance products, but only about 40% do so for comprehensive health coverage, and only 11% for unit insurance. traditional or traditional way of life. Only one of the players with life insurance products in their portfolio does not require personal interaction for the purchase. To date, none of the ten direct insurers surveyed offer a complete portfolio of property, casualty, life and health insurance products.
While simple and more complex insurance products generate equal amounts of search traffic, these two product segments show big differences in their respective levels of digital enablement (Figure 2). The reason: Complex insurance products often require insurers to make a more targeted effort to bridge the customer information gap. Products need to be simplified, product transparency and information improved, and experts often need to provide personal advice to help customers navigate the myriad of options and trade-offs. Insurance companies widely assume that personal counseling must be in person to be effective.
However, during the COVID-19 crisis, many business models that relied heavily on direct human interaction have become surprisingly active with remote interaction. The acceleration of the telemedicine industry is one example: almost no other field is more complex and should have a greater need for direct human interaction than personalized healthcare advice. However, telemedicine is thriving, showing that doctors can diagnose patients online. In another example, the financial services industry has successfully digitized complex products and customer journeys, such as B. applying for mortgages or hiring brokerage accounts or investment advisory services.
Easy navigation through online customer journeys: direct insurers lead traditional insurers
To better understand the ease of browsing for travel insurance, we divided the online browsing experience into three dimensions: insurance page speed, quality6Criteria for evaluating landing page quality include clarity of structure, easy navigation and accessibility of important customer journeys, design appeal, degree of customization, and interactivity.and landing page performance and user experience quality across the respective product journeys.7 Product journey quality evaluation criteria are easily accessible estimates (one or two clicks), modular presentation of products, length of journey, and number of data points required.
website speed There is a strong correlation between website speed and bounce and conversion rates (Figure 3). If the load time is longer than three seconds, 53% of users will abandon a mobile site.8Anonymous Google Analytics data from selected websites with permission to publish reference data, n=3700, March 2016.Even a one-second increase in load time dramatically reduces conversion rates on mobile, while a two-second delay can increase bounce rates by almost 100%.9Akamai, "New Perspectives: The State of Online Retail Performance," April 21, 2017, blogs.akamai.com.Since the average loading speed of German insurance websites on PCs and mobile phones is 3.2 seconds, website speed performance is an effective lever for improvement.
pages of introduction. While analysis of our sample landing pages showed strong quality scores,10 Criteria include landing page structure, average time per visit, pageviews per visit, and bounce rate.On average, there was quite a bit of discrepancy: many landing pages are still full of small texts about insurance products, thus not only overwhelming users, but also not drawing their attention to relevant biased magazines. Landing pages are easy to expand: Deutsche Familienversicherung, a German insurtech and direct insurer, for example, instantly creates a personalized experience by asking users their age. It then immediately adjusts all the prices displayed on the website.
product journeys Best-in-class players like Netflix, Revolut and Zalando have set the benchmark for simple and intuitive shopping and onboarding experiences. The famous Amazon has reduced the purchase journey to one click for previously registered users. In recent years, aggregators have begun to radically transform and simplify the way insurance is purchased, and new direct players have entered the market. Many traditional players are already partially at the forefront of offering quality online product travel, but only for less complex products such as auto, home and liability insurance.
Seamless integration of consulting resources – clients moving between digital and non-digital cannot continue their journey online
According to a recent McKinsey study, one in two customers seek advice offline before purchasing an insurance product.11McKinsey survey of 16,000 people in eight European countries asking which channels they used on their shopping trip in the last two years, 2019.Since the vast majority of customers research online and buy offline, most of the insurance companies we reviewed now have some form of routing leads from their landing page to their offline channels (inquire and buy). ). However, this main route is often a two-way street; Once you call an agent, you can no longer go back to the digital channel and continue the customer journey online. The use of a personal consultation usually leads to an automatic and irreversible switch from the online to the offline channel (Exhibit 4).
Due to this lack of real channel integration, most insurers are still unable to offer "remote personal advice". Our review identified three common barriers to making the best use of existing in-person consulting resources.
Inappropriate online marketing for clients seeking personal advice. The online channel is rightly considered the most profitable channel for generating sales. However, to understand which channel is the most profitable in terms of cost per sale, insurers must also consider the varying effectiveness of their individual channels in converting leads into sales. A German insurance company increased the efficiency of its sales conversions by a factor of six by allowing customers to request a callback number, find representatives, or simply enter their contact information to be contacted.
Lack of accessible face-to-face consulting resources at relevant touchpoints in the online customer journey.Highly effective lead routing from online to offline channels is a critical factor in turning captured online traffic into business. However, insurers' lead routing capabilities are only of fundamental importance: when online customers ask for personal advice, their current journey is inevitably interrupted, in most cases, even without a smooth transition to a channel. out of line. To help, several insurers have begun integrating chatbots (sometimes assisted by humans) or hotlines into the online journey to increase conversion rates, but without really leveraging their intermediaries. Traditional insurers have failed to fully utilize their large pool of qualified advisers, arguably one of their greatest assets.
Lack of digital assets needed for in-person remote consultation.The ability of German insurers to leverage their advisory capabilities on digital customer journeys is often already hampered by a lack of core digital assets. While some insurers have now integrated the option to set up a video conference with one of their intermediaries, full digital delivery of advisory capabilities remains elusive.12Enabling fully digital consulting capabilities involves the following process: customers book an appointment directly on an agent's calendar; They then discuss their individual situation via video conference using their normal web browsers, with the facilitator sharing their screen; Finally, they get access to additional information in a secure area where they can complete their purchase.
On the other hand, in a user-centric and fully enabled omnichannel environment, insurers provide advice when and where customers request it, e.g. B. through their computers or smartphones. When done well, this leads to positive self-selection from clients seeking personal advice on more complex products that can be passed on to agents, bankers, and brokers. However, the exclusive use of consulting capabilities, whether to fill gaps in the customer journey or to sell products, is highly inefficient and unsustainable.
Develop a well thought out and coordinated implementation strategy.
Implementing a user-centric omnichannel approach has far-reaching implications for an insurer's organizational and technological setup (Figure 5). As a result, there is certainly no single approach to start with. However, we recommend a comprehensive implementation strategy that aligns all channel functions with common business objectives to attract and retain customers by serving them where they are. Now more than ever this place is online.
Main requirements of the implementation process
This strategy generally requires a three-step implementation process.
1. Gain visibility into user behavior and channel performance.Because today's decision-making process often spans multiple channels, omnichannel users can switch between the same channels multiple times. First, insurers need to get customer journeys right and understand what drives decision making. To do this, insurers must not only combine data across all channels (to the extent permitted by data protection regulations), but also establish processes to continually measure customer traffic, customer experience, and value. converted commercial.
With this data, insurers can correctly attribute the impact of each of their advertising campaigns on the number of sales of a certain policy and measure the success of each channel in converting prospects into customers. This visibility is key to knowing where and how the lead was generated.
2. Fully enable and optimize your customers' online journeys.As lead generation costs rise, insurers must optimize conversion rates. The online channel is an integral part of the decision-making process of most customers. Therefore, insurers should enable and encourage customers to continue their travel on insurers' websites and shop online for as long as possible.
In order to convince online customers, insurers must first ensure that the technical requirements for online purchases are met. Second, they must regularly test the usefulness of the products, provide information on costs, benefits, and probabilities, and allow sufficient flexibility. Third, insurers must continually improve their landing pages and product journeys to create the best user experience possible. User interfaces must be attractive, intuitively navigable, and effective in drawing customers' attention to the purchase. Insurers must continually experiment and test to remove the obstacles that lead to higher attrition rates. Effective measures include providing pricing information as soon as possible, submitting calls explaining sensitive data requests, and including short videos to explain more complex contexts.
3. Orchestrate the counseling capacity.Digital journeys will not make personal advice redundant for the foreseeable future. However, clients may need advice to clarify a specific issue in their decision-making journey and may really appreciate the speed and convenience of the online channel for the rest of their journey. Therefore, insurers must orchestrate and deploy advisory resources specifically throughout their online and offline customer journey to consistently enable customer decisions and increase conversion rates.
Insurers can proceed in two steps: First, they should make contact options for resource inquiries (for example, call center, branch, or bank branch) prominently available at relevant touch points throughout of the trip online. In places where abandonment rates are high or many customers abandon the customer journey, carriers need to display targeting options. Second, insurers should try to identify leads as early in their online journeys as possible in order to proactively implement the advisory capability and follow up on promising leads.
Visit our insurance page
Organizational and technical moderators
Four enablers should be established parallel to the implementation process.
Activation, measurement and data analysis.To accurately map customer journeys and the factors that influence decisions (attribution), insurers need to merge their data across all channels. This typically requires feeding raw data (eg insurance contracts initiated digitally and completed offline by an agent) into the digital marketing system, where machine learning algorithms can be used to optimize sales activities. online (data activation) to match similar customer profiles. In addition, tools and processes must be put in place to facilitate and ensure continuous measurement of key metrics throughout the customer journey, using advanced deterministic and probabilistic techniques to match customers across devices and channels. Insurers must also implement the right data model, digital platform and IT architecture.
To accurately map customer journeys and the factors that influence decisions, insurers need to merge their data across all channels.
Agile collaboration methods in cross-functional teams.To provide users with a high-quality and seamless customer experience, the business needs to break down the silos between online and offline channels and call centers. In this context, cross-functional teams with end-to-end responsibility have proven to be very successful. By adopting an agile methodology, these teams can significantly increase the quality of their deliveries, reduce handoffs, and provide structure while keeping teams highly adaptable and flexible. The constant focus on the customer experience can also reveal the need for new talent, e.g. B. UI and UX designers, data scientists and agile specialists.
Modern and flexible technological infrastructure.A modern and scalable technology infrastructure is crucial for integration between microservice channels and data pools. To do this, insurer platforms must be flexible enough to continually improve customer journeys and tailor them to each customer segment. Also, APIs to integrate additional internal and external modules are essential. These modules must include the digital resources necessary to provide remote counseling capabilities, such as: B. User-friendly video conferencing applications and online scheduling tools.
Incentive and Performance Management.For users to experience a truly seamless journey between touch points, intermediaries must switch roles. To achieve this, insurers need to measure and incentivize intermediaries not only in terms of actual recruitment, but also to contribute to recruitment in other channels. The various sets of KPIs, how a channel's performance is measured, and how agents are rewarded all need to be aligned. Additionally, commission systems should allow for split commission payments and allow all intermediaries to access the same customer data and collaborate through information sharing tools.
For German insurers, further development of their current platforms and channels has never been as easy and promising as it is today. All the pieces of the puzzle—effective digital channel technologies, powerful computing hardware, a significant acceleration in digitization, and a widely anticipated shift in channel mix toward digital and remote interaction models and tools—are ready to be leveraged and scaled.
As individual best practice examples from insurance and related industries show, effective use of user-centric potential and an omnichannel approach throughout the customer journey can maximize willingness to buy, significantly improve the customer experience and increase sales.
Stefan Folderis a Senior Partner in the Zurich office of McKinsey,Ulrike Deetjenis a partner in the Stuttgart office,simon kasleris a partner in the Frankfurt office,Jorge Musshoffis a senior partner in the Berlin office andFelix Schollmeieris an Associate Partner in the Munich office.
The authors thank Philip Tigges for his contribution to this article. The authors would also like to thank Jan Meessen and Marcus Lommer of Google for their valuable contributions to this article.
Discover a career with us