When life gives you lemonade, make digital transformation
Lemonade just blasted into the European market. What does it mean for the incumbents?
In its first move outside the US, Lemonade launched in Germany with its innovative policy, dubbed Policy 2.0, for its disruptive potential.
Powered by digital experiences, bots, and AI, Lemonade is a whole different animal from the old-school insurance companies. Now consumers in Germany can get content and liability insurance instantly, anytime, on any channel, file claims in real-time, and get paid in seconds.
With the local European upstarts such as Friday and Wefox quickly gaining popularity, German consumers embrace digital insurers. Indeed, from a customer point of view, it is a welcome departure from the slow-paced experiences of yesteryear. How will the incumbents respond?
What does Lemonade’s policy 2.0 mean for the European insurance market?
Compared to other industries, insurers have been slow to embrace the call for digital transformation fully. For a while, insurance remained sheltered from the perfect digital storm by regulation, product complexity, and formidable balance sheets. Lemonade’s entry into the European market means that the insurance industry is no longer impregnable. Moreover, it means that more disruptors are on their way.
The good news: Incumbents can win big
A closer look at what is already happening in industries such as banking, retail, and healthcare reveals just how disruptive digital transformation can be. If the past teaches us anything, it is that companies who prioritize digital transformation to cut costs, get better ROI, and improve customer experience flourish in a consumer-driven market.
I firmly believe that there are opportunities for extreme growth associated with digital transformation for the incumbent insurance companies. But those rewards are reserved for those companies that will move swiftly and decisively and will do so now. Insurers that continue relying on traditional models and processes will find it increasingly challenging to generate attractive returns.
Insurers are up against the best digital experiences the world has to offer
Most traditional insurers are still holding back, but consumers are no longer willing to tolerate subpar experiences. They are used to simplicity and speed with one-click shopping, instant customer service, real-time updates, and on-demand access.
When it comes to customer experience, you are no longer competing just with other insurance companies. You are facing off against digital giants such as Google, Amazon, Alibaba, and disruptors such as Lemonade, Insurify, Metromile, and others.
Need for speed
Insurers must catch up to other industries when it comes to digitizing customer journeys. Insurance companies still tolerate extremely long release cycles for digital processes that are unthinkable in other industries today. The situation where it takes an insurer up to 6 months to update a single customer-facing process is not unheard of.
Maintenance is another challenge. Processes often need to be updated due to regulatory changes or in response to marketing needs.
Now that Lemonade has blasted onto the scene, European incumbents can no longer postpone the overhaul of their customer-facing processes such as customer onboarding, claims, and quoting.
Companies that bet big on the overhaul of the customer journey in insurance are poised to win big. According to research by McKinsey, a large insurance incumbent could more than double profits over five years by digitizing existing business.
The rest of the industry must catch up. Insurers must flex their digital muscle, boost speed and embrace the ongoing optimization of customer-facing processes - or render themselves obsolete.
The challenge is clear: what’s next?
Many insurers still do not know how to approach the seemingly impossible task of going digital.
Ask any CIO, CDO, or CTO who are in the midst of a digital transformation project, and they will attest that tackling this task without the right technology partner is nigh impossible. Indeed, digital transformation is a formidable effort that touches every part of the organization. So, where do you even start?
Digital Transformation doesn't need to be hard
Given digital's formidable impact to date in the industry after industry, it would be foolhardy for insurers to continue with the business as usual. They need to overhaul the way they connect with their customers - and they need to do so fast.
InsurTech partnerships make it possible to move rapidly. And as we already discussed - the speed is of the essence. EasySend’s end-to-end digitization platform enables insurance companies and financial institutions to deploy fast, intelligent, and straightforward digital processes on any device. Among other things, we empower insurers to:
- Create any customer-facing process without writing a single line of code
- Reduce release cycles for digital processes from months to days
- Optimize customer-facing processes based on data and user behavior