A huge selection, low prices and everything under one roof–are many reasons people love supercenters. Can this concept of piling-high-and-selling-cheap apply to the insurance industry that is largely regulated and distributed by intermediaries? How can digital play a role in powering the “Insurance Supercenter?”
Stocking Up the Insurance Supercenter
The primary requirement for any ‘supercenter’ business model to work is “high market demand” potential. Insurance definitely qualifies, with their varying products and services being applicable to every individual and business. But how do the other parameters stack up?
Here are five areas insurance should stock their supercenter and how digital technologies can make this possible:
1. Simple and easily understandable product offerings. Insurance is known to be a complicated transaction with customers required to understand more than they would like to about plans, sections, coverages, limits and deductibles. Nationwide Insurance surveyed their customers to learn that 53% of customers felt their insurance policy was too long, while 43% felt it was too complicated or was confusing (29%).
A digital insurer must find ways to simplify the explanation of their products and plans. Oscar Insurance is one such start-up that aims to sell insurance to new-age customers in a simple and easily understandable manner. Even traditional companies are making efforts to simplify this process for customers. American Family Insurance (AmFam) uses interactive videos to explain the product and its nuances to customers (for new business and renewal).
2. . For a product to sell ‘off-the-shelf’ (digital or otherwise), it is extremely important that customers and businesses clearly understand the value the product provides. Digital technologies, through online training and education programs (maybe even led through concepts like gamification) can help educate consumers about their insurance requirements. For example, Mass Mutual partnered up with ‘IDEO’ to create a ‘society for grown ups’ to educate young adults on the need for life insurance and retirement planning.
3. Get internal systems and processes in order to support the business. Insurance companies are often plagued by legacy systems that bring with it challenges of product configuration, underwriting and administration. This is aggravated by non-standardized and people dependent processes. To be able to support characteristics of the ‘super market’ business model, such as large number of products, low costs and instant gratification, it is imperative for carriers to focus on digitizing and providing agility to IT operations, business processes, systems, employees and partners
In varying extents, projects efforts are underway at most insurance companies, to build digital capabilities while re-vamping their core applications and systems of record.
4. Use of the ‘data explosion’ to provide everything (and exactly what) a consumer wants. In the last two years, 90% of the world’s data was created. To be able to succeed in capturing consumer interest (in a crowded place), carriers need to effectively use new streams of data (e.g. social, location, behavioral) and sophisticated analytics to create and provide offerings that meet implicit and explicit customer needs.
Smart usage of data by supermarket chains, for targeted marketing, product placement and inventory management is well-known.
5. The product offer can itself be a deciding factor. The ‘supercenter’ business model lends itself to specific types of Insurance products. Property and Casualty versus Life’ insurance and even within P&C, tilts more towards personal insurance offerings and small commercial product offerings. The model may be more difficult to execute in large commercial and specialty insurance context which is almost always subject to comprehensive risk assessment.
Insurance Supercenters in Action
While this concept of “Supercenters for Insurance” are already fairly mature in certain financial services (Merrill Lynch brought the concept of ‘supermarket’ to investments through its umbrella company years ago), can this grow to be mature concept in insurance as well?
Leave your thoughts below.
Aditi Saraf (187506), works on solution design and business development for Cognizant’s Insurance Digital team.
Sreenivas Rangamani (107308), works on Digital Consulting, Program Management and Innovation as a part of Cognizant’s Insurance Digital team.