Selling Personal Insurance 100% Online: Six Keys to Success from Spain

More than three quarters of internet users in Spain buy online, yet only 0.01% of life insurance policies are closed through the digital channel^1,2. 

Resistance to online purchasing has been a persistent challenge for insurers, but signs indicate the COVID-19 pandemic may be shifting consumer attitudes, even as it disrupts lifestyles.

Could an evolution in insurance distribution be on the horizon?

Never has the opportunity for change been so great. A recent study by researcher Smartme suggests that Spaniards’ daily mobile consumption increased by 44 minutes on average in just the first week of lockdown³. This shift has not been limited to Spain – or to screen time. For example, last spring India’s largest online insurance comparison shopping site reported that the sale of life policies increased by 40%⁴.

Still, insurers cannot assume greater willingness to shop online will translate to more mobile and web-based insurance sales. The Spanish market presents a valuable case study in the realities of online insurance distribution. Consumers in Spain use mobile devices to buy clothes and electronics and even to manage finances. Yet while mobile purchasing in general has increased in recent years, on average, Spaniards purchase fewer online insurance policies today than in the past, and these typically involve property and casualty coverage to protect an electronic device, scooter, or car. Online purchases for life insurance remain rare.

Six Steps to Success

At RGA and RGAX, we are focused on building digital life and health insurance distribution channels across diverse markets and product types, from insurance for sick leave, critical illness, and death to niche products for diabetics. This experience has revealed six common features of a successful online life and health insurance sale. While each feature is necessary, no single one is sufficient in isolation. All six must work together. Insurers should offer:

1. Simple, easy-to-understand, and transparent proposals. If a product is too complex, consumers will not purchase it online. It must be understood by anyone, regardless of profession and level of education. Insurers should focus on adapting product descriptions and language accordingly. At a recent RGA focus group with potential self-employed temporary disability insurance consumers, one of them told me, "It's confusing, it's not clear to me what insurers want to sell me." She was an entrepreneur, a dentist by profession who had just opened her own clinic, and her comment was eye-opening: We were failing in communication.
   
   
2. Digital "native" products. It is not enough to adapt an existing product to a digital channel. The underwriting process, for example, must be adjusted, be agile, and reflect insights from behavioral science to ensure a smooth consumer journey. This applies to any online process, such as premium payments and claims management.
   
   
3. Affordable premiums with high perceived value. Insurance is a financial product; it should not be viewed purely as a consumer good. Still, it is interesting to note that the average e-commerce sale in Spain comes to only €68⁵. The price for coverage has always been and always will be important, and this is even more true for online sales. The consumer should be able to factor in the cost of any insurance product as part of a quick calculation of monthly income and expenses. Additionally, because consumers are likely to compare the premium to the potential benefit, insurers must positively influence value perceptions through effective marketing.
   
   
4. Optimal brand positioning. It is critical to get into the mind of the ideal consumer to anticipate purchasing behaviors. Our potential buyer is likely to comparison shop and research products on the web before making a purchase. He or she also may explore comments and ratings on social networks. To reach this consumer, insurers will need to use these same communication channels and invest in digital marketing. We must initiate the relationship with the potential policyholder early, before he or she even considers insurance, by generating content that attracts attention and builds trust. This way, when a life event occurs that prompts the consumer to consider insurance, a bond has already been developed and facilitates the sale.
   
   
5. A dedicated and diverse team. Digital transformation in insurance requires great technology; it also demands great people. It requires expertise across all traditional insurance disciplines: product development, actuarial science, underwriting, sales, and project management. Additional specialists are also needed: in digital marketing and big data analytics to measure and optimize digital campaigns, and in online programming and design to create the best possible purchasing experience. Success comes from the integration of capacities, abilities, and knowledge of people from diverse backgrounds.
   
   
6. Process excellence and detail orientation. It is critical to get every detail right throughout each stage of the digital purchasing journey. Insurers must avoid introducing moments of friction that lead the customer to become frustrated and abandon the buying process. New methodologies, such as design thinking, can help by allowing carriers to test concepts with a sample of potential consumers in a realistic environment. Agility is also important when a process isn’t working in the online channel. This need to design, test, and adapt rapidly remains one of the most significant barriers to digital transformation in the insurance industry.

Rebranding Life and Health Insurance

A change in consumer perception must accompany the digital transformation. Life and health insurers have struggled against a traditional and somewhat retrograde image, yet paradoxically carriers are not viewed as trustworthy despite the fact that protection and security are precisely the vital products they offer. A recent pre-launch analysis of a senior product that RGA jointly conducted with the Investigación Cooperativa entre Entidades Aseguradoras y Fondos de Pensiones (ICEA) here in Spain only reinforced this perception problem. When asked about the intention to purchase insurance, 18.2%⁶ of respondents answered that they did not trust insurers. Imagine now that the survey asked about the purchase intention, for example, of a television. These same participants could indicate that they don’t need it, like it, or can afford it, yet it seems unlikely that consumers would respond that they do not trust television manufacturers.

To address this misperception, insurers must find mechanisms to more effectively communicate the value our products provide. Put simply, insurance offers financial help in our moments of greatest need. In Spain, millions of euros have helped families in critical situations this year, yet the importance of insurance coverage still remains unrecognized in the Spanish market and many other markets around the world. Changing views requires coordinated communication and financial education. Only by building greater awareness of potential risks and value of protection can insurers begin to break down this persistent lack of awareness. In addition, insurers must become more transparent with customers at every level to overcome distrust.

Consumer behaviors are changing, the digital channel is maturing, and new opportunities are emerging. It is essential that insurers accelerate processes to enhance the online customer purchasing experience. This new, more digitally aware consumer represents a greater percentage of our future policyholders.

At RGA, we are eager to speak with clients about any support needed as we confront this challenge together.  Contact us to learn more about the resources, solutions, and services available.