When smart insurance is offered at the point of purchase, it can be the missing factor retail businesses need to thrive. By the same token, policyholders are benefiting from the associated efficiencies and cost savings.
Louw Hopley, CEO and co-founder of digital insurance platform Root, says: “Forward-thinking online retailers are adding insurance to their customer journeys. This not only increases their revenue but also offers their customers more value – and it’s much easier to do it via digital channels.”
Insurance products that require simple underwriting are best suited to digital channels, he says. Examples include some types of life insurance, critical illness, disability, funeral and device insurance cover. In other words, if underwriting decisions can be based on questions like age, gender, amount of cover and other simple yes and no questions (for example, do you smoke?), the products can easily be added to most retailers’ offerings.
Hopley shares six ways retailers can add insurance options to their existing product lines.
* Don’t let fear of regulatory hurdles stop you – There will always be some regulatory hoops for the retailer to jump through – access to a Financial Services Provider (FSP) licence, among others – but the process is deeply simplified for businesses that do not have the core competency if they partner with the right insurtech company. A good platform will take care of the day-to-day and regulatory minutiae of the insurance products, so the retailer can focus on the customer.
* Check the bottlenecks in your digital channels – Where do people get stuck when they’re making purchases via your app or online? Can you make it easier for the sale to be completed by adding an insurance option? For instance, would offering damage insurance on an expensive cell phone give buyers more peace of mind to complete the online purchase?
* Integrate seamlessly, don’t just add on – “The most effective insurance sold at retail level feels part of the experience to the customer”, Hopley says. It is integrated into the buying experience, rather than an afterthought or awkward add-on. He suggests retailers focus on finding moments during the customer journey where insurance can be easily added.
* Use the basics of your big small data – Retailers often already know their customers’ basic details – name, age, gender, physical address – which makes it much easier to go through the application process for simple insurance products like funeral cover.
* But also tap into life stages and ages – Related to the above point, retailers often know additional data that can prompt customers to buy insurance. Do you know – based on their buying history – which of your customers have children or older relatives? Could you offer them simple death cover or basic accident cover while they’re travelling on public transport? What about an education policy? Have they recently bought new curtains, indicating they’ve moved and might need householder’s insurance?
* Cross-sell and upsell – Once your customers are used to enjoying one insurance offering, add a few more options. This has the added benefit for the retailer of improved customer engagement. Think extended warranties, protection plans (against specific damages or accidents), or indemnity insurance for excess payments. Retailers that investigate leveraging their existing customer relationships, insights and data can add more value to their offering, drive customer stickiness, and increase their top line, Hopley concludes.