ITIC Global: Digitisation, regulation and meeting the needs of individual customers

Ges Lonsdale, Head of B2B2C for Europe, Cover-More

Lonsdale said it was ‘unarguable’ that the coronavirus pandemic has had ‘a significant impact on how people behave’. “We’ve seen a shift in focus [in the travel sector], from it being the destination and experience towards the health and wellbeing of the travellers,” he said.

Lonsdale noted that the pandemic had also led to the widespread adoption of digital services. “In some ways it was mandated,” he said. “If you were travelling, you had to show a Covid certificate, and the easiest way to do that was to download an app.”

More broadly, he said, the widespread adoption of online shopping services, as well as the use of remote working practices such as video-conferencing, has led to a broader expectation that services can be accessed digitally.

Lonsdale also reported that the pandemic had heightened the public’s shared sense of ‘social responsibility’, potentially due to the emergence of widespread volunteering during the crisis – with interest in related issues such as sustainability rising in tandem.

While conversion rates had surged during the pandemic, Cover-More had since seen a significant drop in conversion in recent months. “For customers, Covid is old news,” he explained.

In the post-Covid era, fewer customers will see direct benefits from insurance, compared with during the peak of the pandemic. Lonsdale explained that currently, only around four to 10 per cent of customers receive payouts, with most paying a lot of money for nothing in return – he argued that insurers now need to find ways to ‘change the proposition’.

One way of doing this is to offer new digital services that can be used by customers without making a claim. Key examples included automatic free lounge access in the event of a flight delay, as well as translation and information tools.

Lonsdale also suggested that ‘cancel for any reason’ (CFAR) policies could be a potential incentive for customers, but noted that many insurers lack the confidence to implement them – in part because of a fear that policyholders would exploit them. “They don’t have experience with how it’s going to perform in these markets, so they raise the prices too high,” he said.

In many cases, the regulation of insurance in many markets was becoming ‘increasingly restrictive, and regulators are becoming increasingly aggressive – making it difficult to distribute products’. This, Lonsdale said, was a particular problem for many of Cover-More’s clients, whose online operations are conducted through ‘global platforms’.

He recommended insurers go further than simply saying that various regulations are problematic to customers when it comes to distribution, but should actively contribute their expertise in helping them overcome these challenges instead.

Noam Shapira, Co-Founder and President, Pattern Insurance

Shapira argued for a greater emphasis on gathering information in ‘real-time’. “We are not just targeting a very specific kind of customer – we actually try to understand customers and their needs. We need to take all the information in real-time,” he said.

When insurance policies first became available online, Shapira said, insurers adopted an ‘old world’ approach in which ‘one size fits all’. “Insurers basically took existing products and put them online – they didn’t use any information about the consumer and didn’t have a real-time application program interface (API) to decide what was best for them.”

These early efforts did not take advantage of the versatility which a ‘fully digital product’ can offer – in terms of creating coverage most closely tailored to the consumer – ‘breaking down traditional products into different fragments’ – and through the incorporation of parametric data, such as weather, to adjust the policy.

Additionally, embedded insurance – policies integrated into a client’s booking process – can be an effective way of better targeting customers. Shapira argued that integrated policies serve three ‘stakeholders’ – the customer, insurance carrier and distributor – with the employment of such a technique being a potential ‘win-win-win’ situation for all.

For customers, embedded insurance offers relevant coverage through a convenient and simple purchasing process. Distributors gain control over the quality of insurance being purchased by customers, alongside access to improved customer data. Meanwhile, the carrier gains a robust portfolio and built-in compliance.

However, he added, the delivery of embedded insurance needs to be carefully considered – Shapira warned that you don’t want to ‘disturb’ the main booking process, and you must make it as easy as possible for customers to understand what they are buying.

Efrat Sagi-Ofir, Founder and Chief Revenue Officer, Air Doctor

Sagi-Ofir claimed that the digitisation of travel insurance and assistance services should be a priority: “I want to have all the solutions on my phone – I want everything digitised.”

She agreed with Lonsdale that there was now a shift in the public’s enthusiasm for digital solutions: “The pandemic forced everyone to change,” she said. However, while interest in such products has grown, businesses need to be careful how they respond.

“When designing new products, we have to be careful what we are doing – this is true for insurance companies, but also assistance companies as well,” she said. ‘We need to put the customer in the middle and build the product around them’, rather than forcing customers to conform to pre-existing expectations.

An example given by Sagi-Ofir was the realisation that while Air Doctor provides access to a range of medical professionals via its platform, many users may not be interested in speed of service over access to a specific doctor.

“We were thinking that selection was great, but now maybe we think we should have an option for, ‘I don’t care, just help me now’,” she explained.