Taking our special report on mobile a bit further, let’s discuss a longstanding issue facing insurers today: attrition rates. While some companies like USAA and Amica pride themselves on longstanding customer relationships (10 years + is considered outstanding), the average customer switches insurers every 2.5 years.
Given that mobility increases customer knowledge and convenience, insurers have legitimate concerns about it also increasing customer attrition. A significant proportion of insurance executives (38%) fear that the proliferation of mobile services will increase customer churn. Half of respondents who fear increased attrition also believe that mobile will exacerbate the trend towards commoditization of basic insurance services. Many say mobile will remove barriers to entry for potential competitors, especially on the distribution side where aggregators have already increased customer churn.
However, many believe the opposite: that mobile will reduce attrition. They base their opinion on a number of factors, especially the idea that mobile makes it easier for customers to manage their insurance. If an update or renewal is required, a customer can act instantly from any location.
Insurers plan to expand the mobile features and services they offer policyholders over the next three to five years, according to industry research. Cigna, of Bloomfield, Connecticut, has incorporated wearable technology into the various services it offers, including Cigna Health Matters, a suite of health-coaching tools that uses mobile, online, social media and gamification technologies that is designed to help employer health-plan customers set and meet health goals. “Cigna Health Matters integrates the latest insights and practices of the sociology of engagement, motivation and rewarding behavior change with the latest health tools and technology,” says Eric Herbek, vice-president of product development for Cigna’s Consumer Health Engagement unit.
Cigna’s vision involves the “instrumentation of the individual”, or the use of wearable devices that collect and transmit medically relevant information. For example, a device could help a diabetic monitor blood glucose levels and share those readings with a health coach who helps co-ordinate dietary adjustments. Transmission of this personal information is anonymized to protect an individual’s privacy, says Mark Boxer, the insurer’s executive vice-president and global CIO.
The insurer has formed an exclusive alliance with Samsung as a co-developer of the S-Health platform for the manufacturer’s smart devices. S-Health enables users to track health statistics, such as blood pressure, glucose levels and weight, as well as environmental conditions and details of an individual’s exercise program.
Perhaps within five years, consumers will have the option to use implanted devices to transmit accurate readings on important physiological factors like blood glucose levels, heart rate and blood pressure, says Kevin Murray, group chief operating officer and CIO for the UK unit of AXA, a French financial-services firm. However, consumers’ willingness to adopt such devices and share these data will require clear value in return, for example, useful medical advice or discounts on insurance premiums.
AXA is looking for ways to deepen customer bonds through engaging apps like its Gate Who prototype, which enables users to identify people at the same airport gate or flight, access useful travel information and buy travel insurance before boarding the plane.
Mr Murray believes the next breakthrough in mobile will be voice analytics because it addresses two of the most common limitations of devices: the size of the screen and the difficulty of inputting information. “Devices that can respond to vocal commands will break the threshold of confidence for many consumers.”
Voice plays a key role in USAA’s concept of a virtual assistant or agent that accompanies the policyholder through mobile and remote technology, including sensors within a home. “We’ve worked on visual avatars and ideas around active help, where a policyholder can simply ask the app to show an insurance ID card, give navigational advice or begin the claims process,” Mr Hudson says. “This is a concept of an agent in a broader sense: someone who can act on your behalf.” USAA is also experimenting with a mobile savings coach who can encourage good spending habits. “We’re starting with savings, but it can extend to any risk factor where behavioral change is the goal, such as aggressive driving,” he says. The company is also working with IBM to integrate Watson cognitive-computing capabilities into customer service. The idea is to enable “complex virtual advice in response to a life change, such as leaving active military duty,” Mr Hudson says. “We’re trying to introduce advice at scale in digital, and we think that cognitive computing will be a big part of that.”
Read on for More on Mobile:
The Changing Insurer-Agent Relationship
Insurer Success Stories: Using Mobile Efficiently
Can mobile expand insurers’ relationships with consumers?
With reporting from The Economist.