I'll soon be celebrating my 20th anniversary within the insurance industry. Quite frankly, I did expect a greater industry shift towards digital onboarding and self-service by this time.
Don't get me wrong; there have been small and subtle improvements along the way. You can certainly get yourself an insurance quote online, that is if you really like to fill out long-formed forms.
The fact is; few (or none) Norwegian insurance companies are getting online conversion rates at a satisfactory acquisition cost. Marketing is too pricy, and conversion rates are too low. That's why they are still reliant on humans to do the heavy lifting.
But staffing up that phone is both time-consuming and costly. Not to mention the annoyance your potential customers feel when they get that call from your sales representative.
Cold calling is still a thing...
The Norwegian insurance industry is still heavily reliant on agents to get sufficient distribution in the market. Agents are independent entities, often small companies with 2-10 employees, and the way they work is rather inefficient.
Agents need prospects to call. The insurer provides this, or the agent is frantically cold calling in his local area. Once they get a positive response from someone answering the phone, they need to get the information necessary to send off an insurance quote.
This type of inefficiency is a problem. A 30% of your premium type of problem. Yeah, that's right, insurance companies pay agents upwards, and in some cases even more than 30 percent of the customer's annual premium. And that is only to get you onboarded as a customer.
Do you still wonder why premiums are rising already the first time your policy is about to get renewed?
Why are we still working this way?
Why is the use of agents so prevalent among insurance companies is probably the right question to ask.
Well, they deliver sales pretty consistently at a high level. And since the insurance company "only" pay commission, they don't see any reason to change it.
But what would happened if an insurance company would invest the same amount of money into a digital onboarding solution as they yearly spend in commission to their agents?
Would they be able to create the Tibber of the insurance industry? The lack of a fully digital insurance company in Norway is striking. The gap in the market is huge, but no one seems to seize the opportunity.
Change your mindset
To go fully digital, you need to change your mindset. You have to create a service that your customers actually want.
Nobody likes to fill out long-formed forms, not even government employees. So you need to be a tad more creative than just exposing your insurance IT-systems API to the frontend and let the customer do the work.
Besides the SaaS solution we offer insurance companies, there is a wide range of possibilities for those who put in the effort and money. Developing an easy and engaging user experience can yield your company great results.
The insurTech revolution isn't coming anytime soon, but the next Tibber of the insurance industry can emerge from nowhere. The question is, who are you going to be, Kodak?
About the author
Øyvind H. Bergesen has worked in different positions and for different insurance companies in the Scandinavian markets (Norway, Sweden, and Denmark) since 2004.
Øyvind is now the CEO of Hotkey AS, a technology & consultant company based in Norway that builds web applications and SaaS solutions for the insurance and power industry.