Rethinking Insurance from the Consumer’s Perspective, Part 2: Business Customers

Just as with individual consumers, technology has a major role to play because companies of all sizes and their employees need to have the autonomy to be able to digitally consult information and perform transactions without depending on third parties.

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In my first article of this three-part series, I analyzed how individual consumers relate to the insurance industry: What are their problems? What are their basic needs? And what are the key factors in order to satisfy those needs? In this 2nd article I will do the same analysis but from that of insurers’ business customers, including internal managers of the relationship with the insurer or as end users of an insurance product associates of a company enjoy as a benefit. The observations in the article apply to companies of all sizes that purchase insurance—from giant multinationals operating in different countries to local micro businesses.  These companies may also be public, private, family owned, etc.

How do Companies and their Employees relate to the Insurance Industry?

Throughout the world (though of course markets vary) companies and their employees relate with the insurance industry two ways:

  • Through the HR Department
  • Through the Admin. / Finance Department

Companies differ in many ways, but for the purpose of this analysis I will assume that all companies have an HR and a Admin. / Finance Departments. In both cases they will have these relationships, either by law, as a benefit to its employees or be it the companies own decision to purchase insurance.

So, what are the main problems/questions that companies and their employees have when dealing /relating with the insurance industry? They can be summarized as follows:

  • What products do I have?
  • Where do I have them?
  • How do they work?
  • Will they work?
  • What is administrative workload is needed to support them?
  • Will they provide adequate customer service for internal customers/employees?
  • Do they include dependence on third parties?

It’s also important to consider that these relationships have different actors or participants such as, brokers, agents, carriers, financial institutions, service providers (hospitals, auto repair shops, adjusters, funeral homes, etc.), to name a few. On top of all of this we are dealing with a very complex industry that is mostly analog.

Also in the case of multinational companies this is even more complex because these entities operate in different countries with disparate laws and regulations. The burdens of regulatory compliance may force companies to purchase insurance from local carriers, in addition to the multinational programs they might have with a multinational carrier. Furthermore, multinational carriers and brokers don’t necessarily operate in every country and their service is not necessarily the same in every country.

What are the needs of companies and their employees?

 Companies and their employees basic needs can be summarized as:

  • Knowing what products I have
  • Knowing where I have them
  • Knowing how they work
  • Knowing who can help me in case I need help
  • Being able to share this information with other employees
  • Being able to consult information and perform transactions (Buy, Pay, Use, Modify and Renew), without having to do it through a third party. Remember companies have two types of consumers.

What are some of the key factors in order to satisfy these needs?

 There are two main factors in order to satisfy these needs, the roles of both brokers/agents and carriers, and the relevant technology.

 Brokers’ & Agents’ Roles

Presently big brokers do a good job when we are talking about big and medium-sized companies, including multinational companies that multinational brokers service. However due to their nature (very local and limited resources) it’s very difficult and almost impossible for small brokers and agents to service these accounts,

On the flip side, due to their nature, small brokers and agents have a big opportunity to serve small and micro companies. These companies are in need of proper advice when purchasing insurance and it’s almost impossible for big brokers to serve them properly because of their nature (it’s not in their DNA: they don’t understand these segments).

Irrespective of the size of the broker or agent, we must keep in mind that they have a strategic advantage because of the two roles they have—they can act as advisors/consultants and also as a distribution channel.

Carriers’ Role

As with brokers and agents, the biggest challenge is with small and micro companies.  Developing products that fit the needs of these companies will be key. The work that carriers do in conjunction with brokers and agents will also be key in satisfying the needs of these companies. Selling direct by carriers is not necessarily the answer, because these companies need advice.

Technology

Just as with individual consumers, technology has a major role because companies of all sizes and their employees need to have the autonomy to be able to digitally consult information and perform transactions without depending on third parties.  Also, in the case of multinational companies it is very important to be able to integrate information from the different operations they may have around the world, currently this is very difficult.

This here is where web services/API’s and especially open web services/API’s come into play. Incumbents must be able to interact digitally with their clients.  We must also keep in mind that it’s the consumer who gets to decide to share his information—it’s not the broker’s/agent’s or carrier’s information, it’s the consumer’s information.

I know there will be different questions and thought that will come up when reading this article, I am happy to hear them and exchange ideas about how to move forward.

In my third and final article, I will show that consumers (individuals and companies) have similar problems, similar needs and the same key factors to satisfy this needs apply to both of them.  Also, how the same solution (business model) can apply to both individuals and companies.

Rethinking Insurance from the Consumer’s Perspective, Part 1: The Private Consumer

Carlos Miguel Vidal // Carlos Miguel Vidal is the Chief Commercial Officer at Red Salud, a health insurance company based in Peru that is helping bridge the protection gap by making health insurance affordable for everyone.  Vidal over 28 years of experience in the insurance industry, having worked in the personal lines segment as a retail broker in Peru and as a reinsurance broker, in the U.K.  He has also has held various positions at Pacífico Seguros an insurance company based in Peru.  Before joining Red Salud he founded and managed Hello ZUM an InsurTech company, based in Peru.

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