New research from TransUnion shows COVID-19 has hurt heavily intermediated, non-digitally transformed insurers more than others. This points to COVID as a multiyear driver of digital transformation with a shift from an intermediated world to one of faceless onboarding and servicing. Robin Wagner, Senior Vice President, International Insurance at TransUnion, explains why digital transformation will become a top priority for insurers and how a new “touchlessness” paradigm requires new digital assets like seamless onboarding with robust identity verification at point of contact.
A world of change
Today around the world, technology is accelerating change; digital transformation and rapid innovation are global business imperatives.
Behind this: a global data explosion unlike anything in history. It’s estimated that 90% of the data in the world has been created since 2016, and production is only accelerating as more pieces of our lives become connected1.
Some insurance carriers are meeting these challenges, using digital technologies to better harness data, transform business models and create new value propositions. However, overall the industry has been slow to transform. According to Accenture, insurance ranks as the fourth most disrupted industry; previously strong barriers to entry have weakened and traditional strengths are being challenged by disruptors2.
The ongoing COVID-19 pandemic has become a powerful new impetus for digital transformation, driving an acceleration of the global digital economy and additional disruptions. New research from TransUnion (“TransUnion research”) on the performance of insurers during the pandemic shows this clearly3. The pandemic has sparked a fundamental shift in consumer demand and buying behaviour, pointing to an emerging new paradigm requiring new digital assets like seamless onboarding with robust identity verification at point of contact.
TransUnion research: COVID-19 driving acute needs for digital, end-to-end platform solutions
An analysis by TransUnion of quote volumes during COVID-19 revealed considerable variations across regions. In the UK, for example, we found that volumes were relatively flat, whereas South Africa and India experienced a substantial decrease.
To find out why, we then looked at how insurance is sold in different regions, broken down by distribution channel — digital direct, intermediated or aggregated.
In the UK, where volumes were least affected, around 80% of auto and property insurance is sold through digital platforms (about 70% digital aggregation and 10% digital direct). These platforms offer customers an end-to-end service, from quote to policy document. The remaining 20% of sales are from intermediated channels, where a broker or sales representative plays an important role in the process.
An analysis of volumes at client level provided further insights. Regardless of region, those that were managing better through the crisis had three characteristics in common, all of which relate to digital transformation.
3 key factors top industry performers have in common
- Differentiated, digital distribution: They offer some intermediation, but most sales are conducted through direct, digital channels.
- Quote and bind online: The complete buying journey is conducted online, from the quote right through to the application process and delivery of policy documentation.
- Digital policy servicing: Customers can perform a range of policy services online, too, from changing coverage ratios and named drivers to logging a claim.
Data conveys a paradigm shift and new impetus for digital transformation
In light of measures taken to address the pandemic, it makes sense that organizations offering a full suite of services online will be in a stronger position to continue with business as usual than those relying heavily on intermediaries or telephony-based contact centres. Going forward, the ability to conduct business online and support a remote workforce will be a standard feature in business continuity plans.
We’re also likely to see a shift in buying behaviour as work-from-home and lockdown policies require people to do just about everything online, from work meetings and classes to grocery shopping and social hangouts. Consumers will demand a different experience and buying journey.
Research shows businesses lose up to 70% of potential customers because of cumbersome onboarding processes.4
As a result, digital onboarding and self-service will no longer be a differentiator but a must.
Enter seamless onboarding
Seamless onboarding is an end-to-end solution that combines software automation with intelligence technologies. It gives firms a scalable plug-and-play platform that pulls together a wide variety of data sources. This allows data to be organized and analysed in new ways that support rapid development of new analytics insights and capabilities. Further, it supports orchestration of strong consumer experiences and winning brand moments.
Identity management for a faceless distribution channel
In today’s environment, defining the identity of who you are transacting with is more critical than ever.
Synthetic or stolen identity fraud is likely to increase as consumers across the globe are being targeted in COVID 19-related scams (see TransUnion’s Consumer Financial Hardship Studies for detail). Data-driven verification will assist in identifying potential fraud and reducing losses, while still meeting consumer expectations for seamless onboarding.
Linking personal and device identity at the onboarding stage also improves the customer experience later, when customers use the platform to manage their policy or log a claim.
Verification of both the individual and device transacting on a digital platform is key to protecting your bottom line as well as your customers. On short-term books, loss ratios are between 10% and 20% higher for policies where identities have not been verified or addresses have been misrepresented. 5
Despite talk about digital transformation in the insurance industry for years, many insurers still rely heavily broker or agent intervention. As the COVID-19 crisis forces a fundamental shift from face-to-face and contact centre channels to faceless, digital platforms, the need to verify personal and digital identities will become even more critical. Insurers with a digital onboarding journey that can service customers and underwrite digitally will emerge from the crisis in a much better position and will be favoured by the market.
TransUnion’s suite of identity management solutions enable fast, seamless onboarding, end to end. See how we can help you accelerate your digital transformation without compromising on security or the customer experience.
Visit https://www.transunion.com/industry/insurance for more information on our data-driven digital solutions for identity verification, quote prefills, underwriting and document signature.