On Tuesday, Amazon announced the launch of Amazon Pharmacy. This may not have been a big surprise. Two years ago, Amazon bought PillPack, a prescription delivery service. Last year, Amazon launched its own series of over-the-counter drugs. With the acquisition of companies like Whole Foods in the US and support from auto insurance through Acko in India, it's obvious that Amazon has one thing in mind – customers – who own the customer relationship (and wallet) in all aspects of their lives.
Give customers what they want, when they want it. Suggest what they might want when they need it. Keep track of customer purchases. Use customer data to get to know the customer. Expand offers through an ecosystem of acquisitions and partnerships. Expand channels through association and partner programs. And all with a fantastic customer experience.
For example, AmazonSmile registers schools and non-profit organizations in a purchasing sharing initiative. Organizations encourage their donors to shop through Amazon in exchange for a percentage of the purchase. Is it philanthropic? Yes. Is it an additional revenue channel for Amazon? Obvious. Partnerships pay when both parties have something to gain by serving customers.
The insurance industry in general and the Program and Affinity business, in particular, have much to gain from the era of ecosystems and partnerships. The customer is also our focus. The future of insurance will require us to redefine our products, partnerships and customer experiences based on the customer … not from an internal view of how we have always done business.
In this new era of insurance, market leaders are experimenting with new possibilities. They create new strategic partnerships. They offer innovative new products. They experiment with offering insurance when and where customers want it. Fortunately, both startups and traditional companies are experimenting and creating new models that help meet new expectations and drive growth.
In Majesco's latest thought leadership report, A Roadmap for the Future of Insurance: Programs and Affinity Businesses written in collaboration with the Professional Insurance Marketing Association (PIMA), we take a look at customers' needs. We then look at the opportunities that new technology, partnerships and ecosystems provide, and we find some examples that lead us forward. In last week's blog, we looked at how opportunity maps can give us an edge in development. In today's blog, we look at how start-ups and innovative established insurance companies reinvent the program business to suit customer behavior. We start with the multifaceted financial company Sofi.
One of the best examples of a company looking at the customer throughout life, health, wealth and well-being is Sofi, a Fintech organization. Sofi started as a student loan consolidator and supplier and has quickly expanded to own the entire customer relationship with financial services ̵
Due to its original focus on student loans, Sofi has captured the next generation. customers – Millennials, Gen Z and eventually Gen Y. They now have over 1 million members and 7.5 million contacts, where members can represent family units. They have provided over $ 30 billion in loans and have developed a sophisticated digital platform and ecosystem that enables the overall financial health of life, wealth, car and home experience, as shown in Figure 1.
- They offer insurance through their ecosystem of partners including Ladder Life for life insurance, Lemonade for tenants or homeowners insurance and Root for car insurance. All of these are InsurTech startups that focus on creating innovative new products and different digital customer experiences.
- They offer value-added services including career counseling, membership discounts, unemployment protection programs, membership events, financial planning, referral bonuses, exclusive membership discounts.
- They have expanded their ecosystem with MasterCard and Samsung Money to support digital payments.
Grab and Gojek
Grab started in Kuala Lumpur, Malaysia in 2012 and is now Southeast Asia's largest mobile technology company. It connects millions of consumers to millions of drivers, traders and businesses. During COVID-19, it has become particularly valuable for customers, which strengthens their customer relationship and loyalty and thus opens up future opportunities.
Gojek started in 2010 in Indonesia as a service for motorcycle tours. It has been developed into a suite with more than 20 services and is recognized as a leading technology company serving everyday solutions to millions of customers across Southeast Asia. Grab and Gojek create seamless experiences for customers while providing a positive socio-economic impact for millions of partners (drivers, traders, service providers).
Phil at Home by AG Insurance
Aging safely and comfortably on site will become a major necessity for millions of people in the coming decades. When health awareness technologies emerge, there is room for P&C insurance companies (which use IoT devices to protect the home) to add value to those who choose to age on the spot – connected home and health all in one. (I discussed this in detail in my 2019 blog, insurance at the intersection of protection and prevention.) With more than 10,000 baby boomers retiring every day, this is a huge market opportunity.
AG insurance in Belgium, with an offer called Phil at Home, is an example that uses home IoT to support the elderly who are at home and safe. They use smart technology to protect their customers and their homes while providing access to a range of services including home repairs and maintenance, food delivery, medication reminders and more. The concept is a creative use of traditional P&C and life & health when it comes to protection and services. It is an expression of a focus on a customer-first strategy, rather than a product strategy. In today's COVID-19 environment and with the increasing cost of nursing home care, this alternative provides a unique value for its customers.
Imagine Now – Smart Insurance for Families by Generali
A number of years ago, the concept of a single insurance policy that would be customized as you went through life was an idea discussed by a number of different companies. But the idea could not be made because of the old mainframe, analog systems that prevailed then. Fast forward and the idea has transformed and emerged as a reality. Imagine Now by Generali in Italy offers a single policy that meets the needs of the family, including aspects of home, accidents, health and pet protection – all wrapped up in a digital service. Services that connected homes, pets, health and safety were delivered via an app that helps manage common, high family needs during the life of the policy. This concept is radically different – approaching the need from a customer point of view, not from our long-standing traditional insurance point of view.
Allianz TravelSmart App
Buying travel insurance through a travel app is now just the basics. How can the insurance promote the customer experience? Allianz, a pioneer in travel insurance, takes it to a new level by moving from an insurance transaction to providing a broader customer experience – increasing commitment, value and loyalty. Travelers receive recommendations on where to go, safety and security alerts (using geographic location from their mobile phone) and other valuable services that enhance the experience and reduce risk. It is an excellent example of thinking beyond the traditional "risk policy" to a broader customer relationship.
The New Program and Affinity Business: A 4-Part Strategy
Future market success increasingly depends on multi-channel strategies as part of a broader ecosystem, including how to support the traditional agent / broker channel and new strategic partnerships. These are crucial to insurers' ability to maximize growth strategies today and in the future. Insurers must master the science and art of creating relevant and fast digital contacts with customers who are motivated by life events and make it easy and satisfying for them to complete the insurance purchase process. To make this transition and capture the true growth potential of affinity and programs, business insurers must:
Adopt a strategic multi-channel strategy to reach customers on their terms. The insurance industry's profitability is basically linked to demographic trends, market trends, customer opinions and the introduction of new technology. If the insurers lose contact with our customers, both current and future, the insurers will lose business. The result is a porous market where commitment is everything and the relationships between companies, customers, channels and partners are crucial. Insurers who are not prepared for a new dominant insurer may find that they are no longer relevant after this major change.
Innovate and create new affinity and software business models. Insurers need to think proactively about the traditional business model and product assumptions for affinity and program operations to meet a broader customer need and expectations that adapt and change in real time based on customer needs and behaviors.
Include innovative partnerships. , ecosystem development and connections. Insurance companies are increasingly competing in a new paradigm in addition to their brand, product, price and distribution – the latter being mainly agents. This new paradigm uses innovative approaches and value creation by moving from vertical market boundaries to porous market boundaries – or ecosystems. By leveraging these ecosystems, leading companies are rapidly developing innovative business partnerships that drive growth through embedding products in other companies, revenue sharing, white marking and new channel alternatives.
Realize that next generation business platforms are mandatory.
Insurers need to adapt their strategies to the next generation of core system platforms, digital experience platforms, next generation technologies and broad ecosystems that differ technically and architecturally from the previous "modern core solutions" of the past. The heart of the insurance platform is an orchestration of next-generation technologies including cloud-based computing, microservices, APIs, low / no code, new data sources, artificial intelligence (AI) and machine learning (ML), combined with an ecosystem of partners providing innovative or complementary products and services. Digital experience platforms create the opportunity for constant points of contact with customers in simple ways by connecting to functions that enable cost-effective growth while the insurance coverage approaches the customer and becomes more personal. This creates an enormous potential for both penetrating existing markets and reaching or creating completely new markets.
Channel expansion is a feature found in insurance managers
In our research on strategic priorities from earlier this year, we found leaders – those focused on new channels, partner ecosystems and technology – are far ahead of Followers and Laggards. Leaders expand channels at a staggering rate of 20% more than Followers and 60% more than Laggards – expand market reach and ability to acquire and retain customers and revenue.
How does your business strategy adapt to what leaders do? What is your multi-channel strategy? Will your technology support your strategy? What specific plans can you take to improve your chances of success? Take advantage of additional insights by downloading A Roadmap for the Future of Insurance: Programs and Affinity Businesses .