Tapping into new source markets to drive loyalty

Written by FinTech Futures
22nd May 2019

Graeme Dean, Cover Genius: a partnership can make or break you, so choose wisely

The global e-commerce market is pegged to reach $24.3 trillion by 2025 (according to Meticulous Research), largely driven by tech advancements, a rise in mobile penetration, and a host of online payment options creating greater opportunities for e-commerce businesses.

Until now, legacy systems and rising risk factors have kept insurers at arms’ length from connecting their products to the world’s largest e-commerce companies. But the tides are changing, with new-to-market technology-powered insurance providers slicing through the complexities. And as they do, they open up the opportunity for this underserved global e-commerce market to tap into new source markets and drive loyalty as well as increase ancillary revenue.

Graeme Dean, head of insurance at Cover Genius, shares his insight on how global e-commerce businesses can deliver an insurance “A” game, and compete with the giants for a share of the market.

Meeting consumers’ needs in today’s always-on world is no mean feat. Smarter and more informed than ever before, consumers expect instant and hyper-personalised solutions delivered to the palm of their hand. And while a fintech revolution has engineered a hotbed of promise for e-commerce businesses, enabling them to meet these shifting demands, it’s also created an intensely competitive playing field.

But where there is challenge, there is opportunity.

E-commerce brands’ successes come from satisfied and loyal customers. To stay ahead in the game, it’s more important than ever to differentiate your business in terms of customer experience. Tapping into new source markets that help drive loyalty, while also building an ancillary revenue stream for your business, is one exciting way forward. But where to start?

Until now, legacy systems, an absence of data, and climbing risk factors have kept insurers from connecting their products to the world’s largest e-commerce companies. But emerging technologies on the insurance scene are helping new-to-market providers cut through the complexities.

And so, for e-commerce businesses looking to deliver a superior customer experience, insurance could be one solution to the differentiation problem.

However, they will need to find the right partnerships to ensure their standards are met through the entire customer journey, from policy manufacture to claim.

Finding a seamless match

In light of consumers’ demands for a tailored experience, it’s important to note that cover-all insurance policies are quickly becoming inadequate. The best insurance journeys that will match the needs of today’s savvy consumers are those that take a customer-centric approach: starting with the policy wording and finishing with an instant payment of claims.

The seamlessness of the journey comes from having the ability to tap into an underwriting and regulation framework which then offers that policy bespoke to the customer, in their own language, in their own currency of choice, using a platform relevant to them – from tablets to desktops and mobiles.

The insurance experience should blend perfectly with the wider experience: not be seen as an awkward add-on component .

The journey should then flow just as naturally throughout the amendment or cancellation stage. By creating a bespoke and satisfying experience for the customer, the business will benefit from strong net promoter scores (NPS).

Getting the next stage – the claim component – right, will be vital for global e-commerce businesses who extend an insurance offering. Can the customer lodge the claim easily and in their own language? How quick is the response time? And more importantly for the customer, how quickly can they get their money back? If this stage fails, the full insurance journey will fail. In turn, this could reflect badly on your own brand and increase the risk of losing customers.

To ensure your insurance offering delivers a greater customer experience, you have to get the message right. It needs to clear, concise, tailored and consistent with the rest of the experience associated with your brand. Why? Because consistent experiences resonate with customers, and technology can help deliver the consistency you, and they, need. For instance, by having automated processes in place for the insurance element, it’s possible to avoid unexpected variations or confusion that might be experienced along some of the human touchpoints.

The global challenge

In the world of insurance, delivering a first-class customer experience which runs from policy creation to claim, is inherently difficult for global insurers. This is due to three major challenges:

Manual processes in getting correct bank details, especially where the bank transfers are international and where there are different rules for 90+ currencies.
Global insurers are encumbered by monolithic legacy software systems and internal bureaucratic processes that delay claims and payment approvals.
Banks can be slow to notify payees if their payment fails.

All of the above combined can mean that the global insurers have post-claim approval payment times exceeding 20 days.

That said, the speedy evolution of the payments industry is opening up routes to overcoming these challenges.

With the advent of fintech service providers everywhere in the payments value chain, there’s plenty of potential to resolve the points of friction that get in the way of faster payments. An example is instant payments. Making payments into almost any currency is now possible, however, there’s two important things needed:

There’s a large service design effort that accompanies the creation of bank accounts in all those countries. While the service design ensures that customers get clarity on the micro details of payments into their preferred currency, the second major piece of work is incredibly important: a microservices approach.
A microservices approach means that the customer communications, interface, payment delivery and notifications all need to come from separate application programming interfaces (APIs) that sync together, but the process is seamless to a customer. It’s impossible to deliver a frictionless experience from legacy systems that encumber global insurers.

In short, it’s one thing to invest extensively on data centres, labs and digital transformations, but ultimately the entire technology platform of a traditional insurer is not suitable or flexible enough to take advantage of the innovations currently underway in the payments space.

Integrate or lose out

Innovation in insurance has allowed for a deeper learning experience: you can drill down into your customers’ demands, understand their needs with more clarity, and deliver the right solution.

Ultimately, what this new wave of tech-powered insurance providers bring to the table is the ability to make customers happier, as they can benefit from world-first features such as instant payment of claims via an API or the removal of excess on policies.

This new level of customisation enabled by technology not only means the customer is happier, but is also receiving highly relevant policies delivered to them. With an upswing in customised policies, the days of the one-size-fits-all policies will be numbered.

What’s also important for those e-commerce businesses that are leveraging this new breed of insurance offering, is that the technology is contributing measurably to the overall customer experience: developments such as the instant payment of claims have been seen to push NPS scores skywards, well above the industry average, by as much as 75 points.

Thanks to the advancements being made across other industries, customers have a new level of expectation around personalisation and delivery of a service. And as innovation strengthens what is already a fiercely competitive global e-commerce landscape, it’s becoming harder than ever to retain consumers who are not only fickle in their demands but are often brand-promiscuous.

It’s therefore critical that e-commerce players integrate these latest technologies that are now emerging. If they don’t, they risk not having the ability to offer their customers custom policies in multiple jurisdictions and the ability to manage global distribution of instant payments to claimants.

Partnerships as dealbreakers

If you’re an e-commerce business looking to raise your loyalty game – and add a healthy ancillary revenue to your bottom line while doing so – then partnering with an insurance provider could prove to be a lucrative path for you.

But take heed – a partnership can make or break you. Here’s our top reasons why you should look to find the right partnerships with those tech-powered insurance providers who are at the bleeding edge of customer experience delivery: