Mobile application guide for the insurance industry

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Mikołaj Saik
Mobile application guide for the insurance industry

We are aware that the low-touch nature of the insurance industry can be a barrier to enabling innovative online services. Along with it come other challenges, like technical debt which is difficult to fight, while the attachment to traditional distribution channels also remains high. On the other hand, modern customers are already used to buying and managing pretty much everything via their smartphones - and insurance products are no different. Meeting such expectations, therefore, might soon become necessary to grow your business. 

In this article, we will showcase the potential mobile products have in the insurance industry, analyse the most interesting benchmarks and inspiring cases, and show you how to introduce valuable mobile products that delight customers - both online and offline. 

Mobile insurance market overview

Digital customers

There are more or less 4 billion people using smartphones worldwide who spend on average 3,7 hours a day using their mobile devices. What’s more, the average number of financial applications installed on a user's smartphone is 2.5, which might be because six in ten smartphone users prefer using an app over a mobile version of the site to check their finances. This trend applies to the insurance market as well, as 40% of insurance research time is already being spent on mobile devices. On the other hand, mobile insurance solutions seem to be much worse than delivered by organisations in other industries, judging by their reviews. 

Insurtechs

Even though it’s not the most innovative market out there, insurance definitely plays a very important role in the finance sector. Interestingly, the technological gap of even the biggest insurance companies is existing and growing. At the same time, however, the number of innovative fintechs capturing new segments of the market is increasing. 

In fact, these fintechs are implementing new solutions or even game-changing business models that are shaping the market and making it more challenging for the incumbents. They are still not strong enough to offer and maintain their own insurance services, though. Most of them cooperate with big insurance players to bring their own products to the market. Munich Re can serve as a good example since it provides services to many well known insurtech start-ups. 

Of course, there are many more examples like that. As a matter of fact, they can be divided into 3 sections: 

  • challengers, that have an entirely new business idea and are advanced technologically once they’re at it,

  • distributors, who are using technology to their advantage to make insurance products more affordable for customers,

  • enablers who are providing their tech solutions to market leaders.  

Where does mobile fit into the equation, then? To start with, the importance of mobile solutions in the insurance market has already been emphasised in Bain’s Customer Behavior and Loyalty in Insurance report. According to it, the loyalty of the customers (which is a crucial factor for the insurance companies in the first place) is being shaped by the ecosystem services. Basically, the “ecosystem” means a range of comprehensive services, which traditionally had to be arranged with multiple suppliers separately. With such services in the offer, though, customers have more reasons to engage with the insurance company - as a result, their loyalty increases and the low-touch nature of the insurance market starts to disappear.

A powerful tool that helps with creating an ecosystem for customers is surely a mobile application. Especially since mobile products are expected by plenty of them - as you can see below, the percentage of customers looking for insurance products on their mobile phones is already high and is likely to increase further. 

This doesn’t change the fact that the insurers still have some catching up to do if they want to meet their customers’ expectations. Some of them are looking up to the bankers and their mobile solutions, and rightly so. The banking sector is about two steps forward -  according to the Citi Mobile Banking Study from 2018 almost half of the US customers have intensified their usage of mobile solutions when it comes to banking in 2018. What’s more, the bankers already know how to create touchpoints with their customers and use them to make them come back to the application to eventually become loyal users. There’s still a long way to go for the insurers to achieve the same.

Advantages of investing in mobile

Meeting customers needs

To better recognise the main goals and advantages of mobile, it’s essential to know what the needs of the customers are. To start with, the clients surely need clear and transparent information and a good selection of policies at reasonable prices. They value the possibility to research, get familiar with relevant options, and pay for the most suitable insurance package using their mobile device. To some extent, these expectations have already been met. According to the Apteligent Report, even now 11.3% of insurance-related activities are performed via mobile apps - 50% of the time or more. These numbers will most likely continue growing.

Building a competitive advantage

Mobile products paired with attractive services can easily give a competitive edge. Let’s take a look at health insurance specifically. Thanks to the transition from one-off compensation to the model of active protection, this market is changing a lot - and as a result, it gives a lot of opportunities for mobile applications to leverage these changes. 

In fact, most of the apps created by health insurance providers are easy to use and offer many useful features like treatment history, prescriptions, and the ability to schedule medical appointments on the go. It’s hard to disagree that all of this makes the services of these companies much more attractive and convenient in the long run. Plus, such health-related services can be an example of a mentioned earlier ecosystem, which is highly demanded by the clients.

Boosting the number of touchpoints and customer loyalty

At the moment, one of the biggest challenges for insurers is to maximise the number of touchpoints with their customers. Insurance clients have an average of 2.7 interactions with the insurer per year and these interactions concern mainly prolonging the insurance or reporting damages. 

In such circumstances, an intuitive and affordable app can make these interactions much more meaningful. Basically, if the app doesn’t fail the users in these “moments of truth”, they might as well be willing to try other functionalities of it too. In fact, a well-developed mobile application can keep customer’s attention for longer and encourage them to use more products - especially since modern customers are more and more interested in extending their insurance wallet.

The most interesting apps and their features

It’s clear to see that investors are aware of the potential that lies in the use of mobile solutions in the insurance industry, especially since startups providing such solutions are already well-financed. Not to mention that then investments are increasing every year.

Source: Unpacking the Insurtech Landscape - CBinsights

There are some examples from the market that are highly innovative when it comes to solutions they provide, namely:

  • Car insurance applications: Allstate or Progressive, for example, are providing services based on usage-based insurance (UBI). This means that the cost of insurance is calculated is based on the customer’s behaviour which can be tracked with their smartphone. An interesting example of the car insurer is also GEICO - its mobile app doesn’t only allow reporting damage by sending a photo of it but also shows the driver closest free parking places, thanks to geolocation.

  • Metromile, on the other hand, introduces a new business model when it comes to car insurance. It’s the best option for drivers that rarely use their cars because the paid amount depends mainly on the distance travelled. 

  • One of the most successful startups in the US, Lemonade, is transforming the business model of insurance. Basically, it makes it easy to manage renters and home insurance - and it uses AI in the process (to run 18 anti-fraud algorithms, as an example). Lemonade’s competitive advantage is that it’s fast in processing claims and easy to use, which are only a couple of its benefits.

  • Healthcare insurers, as mentioned earlier, are also worth mentioning - mostly because of the comprehensive service they provide. Take Oscar Health, as an example. It’s already well-financed and successful, as can be seen in the chart above. Its strengths are in-app member benefits and outstanding customer support.

  • Neos is an interesting example of smart home insurance. Except offering standard home insurance, it leverages a smart home IoT network to help household owners avoid dangers like fire, theft, smoke, and gas while informing the owner about external threats as well. This kind of active protection can be a good business model for insurance companies because of the reduction of costs caused by the payment of compensation. 

  • Revolut - travel and hardware insurance connected with financial application based on currency swap. A good example of creating a kind of ecosystem. 

  • While on the subject of ecosystems and all-in-one solutions, it is worth to distinguish Liberty Mutual Mobile or Progressive - apps that connect a wide range of products and offer the right tools for the users to manage all their policies via a mobile app. 

  • Another interesting example that also shows the direction that insurtech startups can take in the future is Flock, which specialises in insuring drones. Actually, new technologies and expensive devices or activities are a good opportunity for insurance companies, but they should be observant enough to take it before the competition does. Insurtech startups often cover some new segments of the market before market leaders do, and then they are cooperating or being acquired by those leaders.

  • Future Mind has also some contribution in creating innovative applications for the insurance sector. Together with important international player Generali, we’ve implemented a mobile solution accelerating the process of rewriting data from documents. Data is automatically collected from the photos of the documents taken with the app. It makes the sales process of Generali much faster and more efficient.

Chinese market examples

In the case of Chinese mobile solutions, ‘examples’ might not be the best word. Given that the Chinese market is one of the most developed when it comes to mobile applications, benchmarks might be a better word for them. 

Let’s take a closer look at Zhong An, for example. It’s the first fully digitalised insurance company which holds quite a big market share in China (460 mln users). It was created by the connected forces of Ping An, Tencent and Alibaba. What’s also interesting in this solution is the ecosystem that is created around it. The company delivers a full range of insurance products since it cooperates with many smaller providers of more specialised services as you can see below.

The benefits don’t stop here, though. Thanks to Big Data analysis, Zhong An offers accurate pricing and risk control. The company is also cooperating with big Chinese banks and biotechnology company Orig3n, looking for the development of the product based on genetic research. In addition, Zhong An uses AI and blockchain technologies to settle online claims and help reduce fraud.

Xiaobang represents an interesting approach. It targets middle-income families with online courses on insurance and financial education. Once they finish the courses, the company approaches them with one-to-one consultants who tailor insurance plans specifically to their needs. Xiaobang claims to achieve a 40% conversion rate.

Another example from China is InStony. It focuses on only one segment of the insurance market: travelling, and it has to be successful in it, given the number of downloads that exceeds 25 mln. Since Chinese society can now afford travelling abroad and the number of tourists is drastically growing, the app is perfect for meeting their expectations. Main functionalities are dealing with flight delays, luggage loss, traffic accidents, as well as device, health, and dental insurance - products especially needed during long travels.

These apps show a completely different approach to the insurance market, mobile applications, and innovations. Of course, leapfrogging in China has something to do with it, but it only shows how the market will look like in the US and Europe (and beyond) in just a few years. 

For now, though, we can distinguish three main stages that have already happened in China and contributed to the current state of mobile solutions:

  • The first stage was all about introducing online channels and automating backend processes

  • The second phase focused on offering solutions that differed from traditional core insurance products. The goal was to create digital solutions such as, for example, a health insurance app with day-to-day active protection, which would increase the number of customer interactions and build loyalty in the long run.

  • The last stage revolved around creating a wide range of services, a kind of an ecosystem, which would affect the customer's life in multiple ways and become present in it all the time. This phase also results from the need to merge customer’s financial services accounts with digital services and make the insurance processes more and more effective, fast and diverse.

What does it mean for European companies? That adapting them to new technologies and mobile solutions as soon as possible is a huge opportunity to achieve competitive advantage and disrupt the market. All that's needed is to be open for innovations, have a clear vision and determination, and be willing to meet customer’s needs.

Features of the valuable insurance mobile apps

When taking a look at insurance apps nowadays, it’s easy to notice that their basic (and sought-after) features are alerts & reminders, access to personal health records, ability to track insurance claims and browsing insurers’ products. All of them should be part of every relevant insurance app that strives to offer comprehensive products and services. 

Nonetheless, we have prepared own set of insurance applications features, based on our experience and customer needs:

  • Seamless, fast, easy to use. In fact, intuitive user experience is a key to create a successful application,

  • Possibility to buy insurance on demand - linking the app with online payments,

  • Push notifications about close policy expiration, product deals, upcoming visits, and plenty more,

  • Alerts on any dangerous events around, showing that the insurer truly cares about the client’s safety,

  • Guidelines on insurance rules for people who are just starting their adventure with such services, showing also why it is worth it to use insurance products and why it pays off in the long run,

  • Creating an ecosystem that connects various services (for example many different insurance products or not only insurance - but also financial or medical services),

  • Discounts for loyal and long-term customers,

  • Speaking of loyalty - a referral program is one of the best ways to promote the app and boost retention, especially when both sides are rewarded in the process,  

  • History of medical treatment or vehicle service history, connected with the ability to make an appointment with a doctor or mechanic on the spot, 

  • Chatbots using AI or another kind of virtual, 24/7 support via the application,

  • ML-based algorithms that are counting the insurance premium based on customer behaviour and geolocation to better tailor the offer and minimise risk

  • Photo-based damage reporting - customers can send photos of the damage to report it via the app, allowing the insurer to easily confirm the damage and pay the compensation really fast without unnecessary documentation and effort. 

Applications are not only about their features, though - main principles that products like insurance mobile apps should be based on are also personalisation and added value for the users. Customers should have lots of autonomy in creating plans for life, while the insurer’s products should be able to fit their plans - not the other way round. 

Challenges

Strategy

Let’s face it: developing an app is a complex process, which requires a proper plan in order not to lose sight of any important aspect of it. To start with, every mobile product should start with its high-level concept - with specific goals and business problems, user description and app features in mind. A well-outlined concept then makes it easy to create a successful mobile strategy and an effective mobile app RFP on top of that.

Technology

It’s not only meeting customer expectations and inventing new solutions that can be challenging at times. To make room for growth, incumbents need to focus on modernising their legacy systems first, by implementing APIs and microservices architecture. Optimising internal processes is rarely easy, especially since technological debt often comes into the equation - but it proves to be necessary. This way, all new products and services can be connected and work around transactional legacy systems - and luckily, since we’ve worked with many incumbents ourselves, we know exactly how to do it effectively. 

Privacy

An important challenge that all the applications face nowadays is privacy, especially when some of their features revolve around tracking user activity and data. Users generally don’t want to be “observed” too much, which is not always possible when keeping in mind what the applications do and how they operate. This doesn’t change the fact that users are quite sensitive in this area and one wrong move can easily start a crisis. The solution for that is to keep them well-informed about the use of their data and make up for it with relevant offers and personalised support.

Promotion

Another important challenge stems from the necessity to promote the application well. Otherwise, there will be no users at all - even if the app itself is outstanding. A good benchmark when it comes to promoting mobile apps is definitely the retail industry. While launching a new app, many retailers focus on its promotion - both online and offline. They often leverage multiple advertising channels and involve shop assistants in the process, who are informing every customer about the app and discounts for the users at the checkout. Analogically, when it comes to the insurance industry, a good way to promote application could be through insurance agents. 

Younger people are using mainly mobile to do anything anyway, so it shouldn’t be difficult to convince them - but when it comes to older generations, their ties and trust to insurance agents are sometimes so strong, that their recommendation can be crucial in promoting mobile solutions. What’s in it for the agents, though? For many of them, promoting applications might mean fewer customers, less work, fewer provisions and even unemployment as a consequence. But the solution for it is to provide special remuneration for these agents, for example for the number of new users of the app coming from their recommendations. Also, as the business model is constantly changing - when the number of mobile users is growing, insurance companies should also strive to facilitate the agent’s work. 

After all, mobile solutions don’t have to serve only your customers - but employees as well. 

To sum up

Insurance companies still struggle to provide their customers with the value they’re looking for. The problem is that on the market where all the products and prices are similar, there are not many opportunities to stand out. Thanks to a well-developed and tech-advanced mobile application, you can easily find yourself two steps ahead of the competition. 

Contact us and together we’ll define what activities will be the best for your business.

Authors

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Mikołaj Saik

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