Esben Toftdahl Nielsen, Co-founder of Penni.io and an advisor to the Open Insurance Initiative, on the best defence against the aggregators
Recent years have seen an increase in online sales of insurance, largely as a result of customer demand and the inexorable rise of the aggregators to meet it.
That said, you don’t see the same picture across the whole of Europe, nor, indeed, across all verticals. While McKinsey estimated that by 2017 aggregators were already responsible for more than 50 per cent of the UK’s motor gross written premium (GWP), that figure fell to just 10 per cent in the Netherlands. Stats from the Danish insurance industry suggest that only three to five per cent of all insurance there is sold online.
Whatever the volume, it’s clear that only a comparatively small percentage of purchases take place through the insurers’ own online channels. It’s primarily the aggregators that are successfully driving digital sales. In fact, insurance policies were among the first products to be successfully sold or brokered by aggregators when they began to emerge in the 1990s and, in many major European markets, insurance products still account for 75 per cent or more of aggregators’ total revenue, according to McKinsey. This must be a troubling fact for insurers.
As I see it, the lack of online success is due to the fact that many of today’s insurance providers take an insurance-centric approach when it comes to selling their products online, with little regard for the end-customer’s journey. By contrast, for the aggregators the journey is everything.
We’re seeing a clear shift in customer expectations. Rather than being content with whatever insurers have to offer and how they want to sell it, customers now make use of multiple channels for buying insurance and demand greater added value throughout the entire buying process. Moreover, customers expect to be able to shuffle seamlessly between offline and online channels.
In response to this, insurers must be able to provide flexible customer experiences and adapt easily to whichever digital channel the customer decides to use. And, in order to do this, they must change their insurance distribution model. In other words: insurers must be in the right place, at the right time, with the right offer in order to be successful with online sales.
Bridging the gap with embedded insurance
That’s easy to say but, in reality, it’s incredibly challenging, because the customer buying journey is becoming multiplex: they expect to be able to buy insurance through ecosystems, car dealers, retail outlets, banks, and other places.
The winners in online sales will be those that are able to seamlessly embed insurance anywhere, and the foundation for that is open application programme interfaces (APIs) because they act as interfaces for cross-platform communication between businesses.
At Penni.io, we provide open RESTful APIs to clients, specifically optimised for use in online sales solutions. With embeddable insurance widgets, customer onboarding frontends and conversion optimisation, the platform enables insurance providers to sell any insurance product online through any distribution partner and it can be white-labelled. This enables them to provide real-time quotes to partners, giving insurers the ultimate competitive advantage in online sales.
That competition for insurance customers is getting fiercer is obvious. Online sales are a big part of that battle. And open APIs are the most effective weapon for an insurer determined to remain competitive in a digital world.