It’s Very Convenient to Be Convenient
Start with why.
Why are we here?
And what’s all this innovation/insurtech about?
In their 1917 Spring catalog, Sears encouraged people to use electricity for more than light.
With nearly 99% of urban homes powered by electricity by the end of the 1920s, Sears introduced different household appliances that run on electricity. Their first bestseller came in 1927 with the release of the Kenmore washing machine – selling over 1 million units by 1936.
For more than a century brands have been introducing solutions to make our lives more convenient. In 1908, Ford’s Model T was one of the first cars accessible to the masses. In 1953, Swanson & Sons introduced TV dinner, a packaged frozen meal that requires no preparation aside from heating – in the first year the company sold 5,000 units and 10,000,000 the year after that. In 2007, Steve Jobs announced the iPhone which brought convenience into our hands.
Convenience or Quality?
There’s the ultimate debate whether people prefer convenience over quality or vice versa. Facebook offers a convenient way to interact with family and friends, but the quality of these interactions are questionable. TV dinners are without a doubt the most convenient alternative to home cooked meals, but although there’s a Thanksgiving meal option, you probably wouldn’t serve it to your guests on Thanksgiving.
The reality is that different people value different things; in some instances people prefer convenience, in others they look for quality, and in rare occasions they are lucky enough to get both. But the fact remains… today’s most dominate brands – Amazon, Apple, Google, and Facebook – are all about convenience. Amazon gave us a convenient way to shop. Google gave us a convenient way to search the web and navigate the real world. Facebook gave us a convenient way to express ourselves and keep in touch with family and friends. And Apple gave us a mobile device that holds all these convenient options and then some. So while electricity is arguably the greatest invention in history, the internet, which enables these digital brands, is proving to be the most convenient invention of all times.
As convenience changed the way we shop, communicate, watch movies, get around, and book our travels, it is now coming for insurance. From Ladder’s “life insurance just got easier” to Esurance’s “discover insurance that’s surprisingly painless,” many companies are looking to win over customers with convenience – something some would pay extra for.
According to a recent report by Lux Research, new food business models capture 5-25% premium for added convenience; on a global level, online grocery commanded a 15% premium over in-store purchases, while meal kits were priced 11% higher than online grocery, prepared meals cost 5% more than meal kits, and restaurant take-outs were priced 25% higher than prepared meals. But when it comes to insurance, convenience takes the back seat as ‘price’ is a better driver. Most choices we make involve several factors – meal kits style Blue Apron are more expensive than preparing your own food, but for some, the time saved on grocery shopping and the quick preparation are worth paying extra. At Coverager we say that disruption is adoption. If you look at disruptive companies like Dollar Shave Club, Netflix, Uber, and Blue Apron, you’ll notice that they all offer a convenient solution for a service or product of frequent use; people shave, watch movies, take cabs, and eat frequently. To be disruptive, a company needs wide adoption. Can you Imagine how Uber would look like if people only took a cab once a year? Insurance isn’t a product of frequent use – it was designed to be used in emergency situations. This means that convenience doesn’t deliver a strong effect – after all, the more you do something – the more you appreciate and get used to the convenience that comes with it. So while customers will appreciate a convenient way to buy insurance, most would still regard price as a stronger factor.
“I came to Root because they were new and it seemed like they were doing things differently,” said Nate Thiry after switching from Root to Allstate.
https://twitter.com/natethiry/status/1070401110698020864
Nate, the cofounder of Bidscrub, an Oklahoma City-based company helping commercial subcontractors find the right work, while saving them time and money, found Root via social media. At the time, he and his wife had an auto and home policy with AAA – the cheapest option they could find. Then, “as is customary apparently,” according to Nate, their rates went up despite not making claims or having any marks against their driving records. But unlike your average consumer, Nate understands how insurance works: “The best drivers in the world will pay the insurance companies their whole lives without making a single claim or really accepting any benefit from them in return other than the almighty peace of mind.” It was this understanding that made Root so appealing to Nate. “When I heard Root say they put a greater emphasis in their formula on driving ability – something I can control that might lower my premiums – I jumped on it,” he said. As Nate was sold on the Root concept, the process itself was a bit bumpy. He first had to wait for them to launch in Oklahoma, and when they finally did he encountered issues with their process which forced him to take two driving assessments. But the wait was worthwhile – Nate and his wife found significant savings compared to AAA and they took out a home policy with Allstate which also turned out to be cheaper. “If we stopped here, it would be about how their (Root) superior tech aided in reducing their risk by finding a safe driver in myself which allowed them to charge lower premiums for better coverages,” he said. But it didn’t stop there – after 6 months the rate went up despite no claims or driving record blemishes to speak of. “The cost of insurance in your area has gone up so your rate has gone up,” was the official answer by Root when Nate inquired about the increase. When Nate learned that bundling his auto and home with Allstate will save him almost $300, Root’s concept and “superior tech” as he puts it, became less appealing. “That’s the price of a Netflix and Spotify membership. I was on board with lower premiums than the competitors because of superior tech, but the superior tech started yielding results that were not distinctly superior from competitors so I stopped caring about it. All I care about is how much money I can allocate to things I use all the time (groceries, utilities, gasoline, Spotify, Netflix, Hulu, internet) versus things I rarely use, if ever because I’m a fairly safe driver.”
If Nate’s story hasn’t busted the ‘insurance companies must be convenient to win’ bubble just yet, allow me to offer another take that goes beyond price. Convenience comes in different levels. It is very convenient to buy travel insurance online from AIG’s Travel Guard, but it’s even more convenient to add it at the checkout process when booking your trip on Expedia.
“Our work with AIG will help more people go places with confidence and with the knowledge that we are looking out for travelers. Travel can have disruptions, and together with AIG, we are creating real-time, hassle-free solutions aimed at delighting travelers.” – Aman Bhutani, President, Brand Expedia Group, in a press release announcing the partnership earlier this year.
It is very convenient to get renters insurance and find an alternative for security deposits online, but it’s even more convenient (for all parties) when it’s part of the application process.
“By integrating LeaseLock into our Yardi suite we greatly enhance the speed of the applicant process, as well as the fidelity of the applicant experience. LeaseLock allows us to get away from security deposits – converting leases quickly with enhanced protection. We also reduce resident friction at move-out by eliminating refunds, collections and resident disputes.” – Damon Evert, CFO at ROCO Real Estate.
It is very convenient to buy car insurance online, but it’s even more convenient (and often cheaper) when it’s included in your car subscription program, as highlighted by Canvas, the Ford Motor Credit Company subsidiary offering an alternative to car ownership.
“Today we stream media rather than buying DVDs and CDs. We get clothes, food, and toiletries regularly delivered rather than trudging to the mall. Now, thanks to car subscriptions like Ford’s Canvas, you can shop online for a car, make your selection, and have it delivered to your house a few days later. Time-savings and convenience factors alone are winning over new generations of drivers. The cost for a monthly car subscription, usually in the neighborhood of $400 to $500, includes maintenance, insurance, and any subscription fees. Compare that to the $706 monthly average cost in 2017 for owning a car, if you drive 15,000 miles, according to AAA. That $706 doesn’t include depreciation, which in the first year alone can represent as much as 30 percent of the car’s value.”
And in case you’re thinking there’s just one obstacle to overcome, keep in mind that greater convenience doesn’t just revolve around the purchase process – it can also make the claims process smoother. Expedia can start tracking flights and automatically trigger a claim when there’s a delay, along with helping the traveler book the next available flight. With advanced car technologies, an insurer can get real-time notifications on breakdowns, crashes, and theft, which will help provide a faster and more convenient solution for the policyholder. So while insurance companies make their process more convenient, insurance is most convenient when integrated with other products or services, and that’s a real challenge because there aren’t enough partners out there for everyone.
“It used to be when you eat, you eat with people. But instant noodles are so instant that people eat by themselves. And it’s a very convenient way of eating but also a very lonely way of eating.” – Wong Kar-wai.
We’re Living in Convenient Times
NYC, probably one of the most convenient places in the world, is the home for many tech companies that are all about convenience. Casper, the “global sleep company” recently launched The Dreamery, which is basically a nap store. Jackpocket is the first mobile app in the US that allows people to play official state lottery games. Feather is a furniture subscription service that allows people to renew, swap, buy, or return furniture with delivery and set up included. And Seamless is “how New York eats,” because offline interactions are inconvenient.
But this level of convenience – delivered by a digital world–is taking a toll according to Cake & Arrow’s latest research on millennials: “By the time Millennials reach their thirties, they feel burned out. They are overwhelmed by technology, by the pace of life and the speed at which things change, by feelings they that must do and experience everything, and are overcome by feelings that they are not ‘far enough along’ in their lives. In the haste to keep up, they feel that their personal lives are taking a toll. Their relationships, their mental health, and their general sense of wellbeing are all suffering.” In the past several months, the Cake & Arrow team traveled the country to learn more about what will soon be the world’s largest living generation and they discovered a paradox: “So much of what has made their generation great–their immense capacity for productivity, their ability to adapt almost instantly to the evolving world around them, their incredible digital savvy, and their hyper-educatedness–are now emerging also as impediments to their happiness, their sense of wellness, their resilience, and their confidence in the future,” wrote Emily Smith Cardineau, Director of Content Marketing in a post highlighting the key findings.
While technology made their lives easier, millennials are starting to experience the side effects that come with being the most connected generation in history, according to the research. Unlike smartphones that signal when the battery is running low, humans aren’t wired the same way. The pressure of being connected in their professional and personal lives is resulting in high levels of digital fatigue, anxiety, and stress. Perhaps this is why Apple recently launched screen time – a new tool that shows people how much time they spend on their phone with the option to set time limits for specific apps.
In recent years we’ve seen different opinions on the struggles (or complaints) of millennials. Some called them spoiled and lazy. Some suggested they should stop buying avocado. And others stood up against those who blame them. I’d like to offer another take that may impact their well-being – millennials are overwhelmed by the options around them – a number that is significantly higher than previous generations. In a study found in The Paradox of Choice, a book by psychologist Barry Schwartz, researchers set up two displays of jams at a gourmet food store for customers to try samples, who were given a coupon for a dollar off if they bought a jar. In one display there were 6 jams and in the other 24. The researchers found that 30 percent of people exposed to the smaller selection bought a jam, compared to only 3 percent of those exposed to the larger selection. But even when we overcome the ‘paralyses’ and make a choice, as Barry Schwartz puts it, we end up less satisfied with the result of the choice then we would be if we had fewer options to choose from. Because if the world has one pair of jeans to offer us and we don’t like it, we blame the world. But if the world offers us 100 different pairs of jeans and the one we chose isn’t to our liking, we blame ourselves.
Perhaps it comes as no surprise that American workers are quitting their jobs at the highest rate since 2001. Sure, you can blame this on ungrateful, spoiled millennials who can’t commit to anything, but millennials, currently the largest generation in the U.S. labor force, are simply taking advantage of convenient options around them which weren’t available to previous generations. “We’re seeing high worker confidence in their ability to strike out and find a better job opportunity elsewhere,” says Dr. Andrew Chamberlain, chief economist at Glassdoor. Do you remember how miserable your job made you feel but you were afraid to quit? Afraid of not finding a better opportunity, or even an equal one fast enough to pay the bills. In the old days people had to mail in their resumes which made the process long. They had to find time for in-person interviews. With today’s technology and options presented by the gig economy, people have more confidence that they can do better. And as people catch up with technology this reality impacts everyone – young and old – as pointed out by Brian Kropp, VP at Gartner: “Younger employees have always quit at a higher rate. That was true when Gen Xers were in their 20s. That was true when Boomers were in their 20s. That’s just a fact. What’s interesting, is that we are now seeing employees who are more established in their careers also quitting at higher rates.”
Enter Insurance
This is where you – the insurer – comes in. While many in the industry talk about customer engagement, do you really want to add more interactions to the exploding minds of millennials? “Brands tend to strategize around how they can claim any sort of real estate in a consumer’s mind so they can then inundate them with messaging; but rather than manipulating users by forcing them to react, brands need to allow consumers to set the terms of engagement,” says Emily Smith Cardineau. “Apps and products that are not sensitive to these needs will be the first to be deleted when burnout sets in.”
Instead of forcing engagement, you should understand your product. Insurance is a product that lacks the five basic human senses – you can’t see it, smell it, hear it, touch it, or taste it. In other words, insurance is neutral which believe it or not, puts you in a great position to have meaningful relationships with millennials. Whether it’s helping them make the right choice and sticking with it because life is not easy, or making sure they possess adulting skills, insurance companies are generally seen as neutral forces with a product that doesn’t come with harmful side effects. For companies looking to design and innovate for the future, the key, explains Emily Smith Cardineau, will be finding ways to break through the noise, and rather than simply piling onto the heap of experiences, products, and endless choices, helping Millennials sift through, take stock of and put to good use all that the digital universe has placed at their fingertips.