Why consumer education is needed in the digital insurance age

An explosion of technology innovation over the last several years has created digital-savvy consumers and digital-empowered employees. For the insurance sector, this has brought forth both new market opportunities and new market confusion.

The insurance sector has leveraged digital for new ways of working, and that has proven to be especially valuable in light of the current environment. Insurers have also leveraged digital to expand their product and services portfolio. In this digital environment, the trusted advisor is not necessarily available to help the consumer digest and understand the fine print. As a result, consumers now need to make decisions themselves without the benefit of having an advisor explain the value, which has resulted in a consumer gap in awareness and understanding of the products and services being offered. This creates a need for more digital education solutions that can replace the trusted advisor — for example, chatbots or artificial intelligence (AI) capabilities — to simplify the process.

Although consumer education has been a key service provided by the insurance sector, findings in DXC Technology’s 2020 Insurance Survey Report: The voice of the U.S. consumer highlight the need for more ways to close the gaps in consumer awareness of products, services and their value propositions. This includes educating consumers about the insurance business, their own risks, the safeguards and rigors within the industry, as well as the value of newer offerings. For example:

  • Only 1 in 10 consumers know that 90 percent of claims are successful across the insurance industry
  • Only 33 percent know that brokers require accreditation
  • As many as 59 percent say their chance of being in an accident is average, with just 8 percent rating it as higher than average
  • Only 30 percent are aware that they are likely as well-insured when using a rideshare service as when using a taxi.

Creative interaction

While insurers have used their websites extensively to help consumers better understand their offerings, the new digital ecosystem of tools and services offers a much greater variety of capabilities to segment and personalize experiences, while also recommending services tailored to individual needs. This augments the services typically provided by an agent in a face-to-face setting.

In essence, the digital ecosystem allows insurers to creatively place themselves in the moment — at the time in a consumer’s life when risks happen (or have the potential to happen) — to offer relevant, personalized awareness, education, advice and services.

Many insurers are investing in such digital education initiatives, engaging prospects and helping them understand, assess and mitigate risk. For example, some auto insurance campaigns have turned to blogs, Twitter, Facebook and YouTube to provide driver education and safety advice.

One large commercial and group carrier I’ve worked with has leveraged interactive digital video tools to engage prospects and customers, expressing complex policy information and coverage attributes in a visual and interactive way — delivered both online and on mobile devices. This significantly improved consumer knowledge and enrollment rates while creating a new brand perception of the company as a digital insurer.

Insurers must experiment with digital services that provide more interactive and contextual guidance and recommendations to consumers, becoming that digital trusted adviser. What is the consumer’s risk and what protection is needed? An example is a mobile application, leveraging a camera and augmented by AI, that consumers could use as they move around their house to receive asset-based advice on their risk exposure and the types of protection that could help them address those contextual risks, without directly selling or promoting a product.

Creative adoption

Some insurers are building awareness and education directly into the sales and service experience of introductory digital products, which creates awareness about the next tier of products and services.

For example, another insurer DXC works with is creating products with tiered levels, features and services. The first-tier product and service experience creates a simple offering for a minimal premium and allows a consumer to try out the product before making a significant commitment. This might be a $10-per-month premium to cover a set number of a consumer’s simple digital assets for specific set of incidents. As consumers start using the first-tier product and realize its benefits, the insurer strategically builds awareness and education about the next-tier product in terms of coverage and plans. This could be a $30-per-month premium to cover a complex set of consumer and professional assets (e.g., Nest thermostats, solar panels, etc.) for a broader set of coverage incidents, which may require a more nuanced process of underwriting and servicing. Alternatively, it could be a small premium increase for simple alerts, such as letting consumers know there are indications that their cell phone may have been stolen.

All of this still needs to be done within the confines of the regulations of state, federal and international governing authorities.

As our survey shows, a large percentage of consumers are comfortable with digital services. For example, nearly half are comfortable with smart technologies in the home and GPS tracking devices in cars, and 43 percent of consumers (57 percent for consumers under the age of 45) are comfortable with insurers using AI, creating opportunities for new ways of servicing policies.

The insurance sector is still struggling with historically low ownership of insurance among American adults. This is largely due to a lack of understanding of the full value of insurance, especially when compared against consumers’ competing financial priorities. Educating consumers to help them adjust their thinking to recognize their own vulnerabilities and better protect themselves takes commitment, creativity and time. But, in doing so, insurers can eventually pivot away from risk protection to risk prevention.

Sudhar Krishnamachary headshotSudhar Krishnamachary is a vice president in DXC Technology’s Insurance business and leads the global sales and enablement functions driving sales growth of the software and services portfolio, sales enablement, go-to-market messaging and analyst/media relations. He brings 25 years of insurance industry experience, serving in market-facing leadership roles both on the carrier side and consulting side.

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