The Digital Disruption in the Insurance Sector

The digital age has caused significant disruption to many industries, but no sector has felt a complete shake-up in comparison to the competitive insurance industry. In fact, prior to the shift to digital, consumers and insurance companies shared a closed relationship where information from the insurer to the consumer was simple and easy to digest.

However, as technology evolved, consumers increasingly rely less and less on insurance advisors, flocking in the masses to digital platforms to seek out information.

This has ultimately led to the ultra-competitive insurance industry, which holds the title as the sector for the most expensive cost per clicks (CPC) in the world, intense compliance and advertising regulations, increasingly cut-throat SEO and rivalry across all online channels. Not to mention, the growing fintech (financial technology) industry is further threatening the insurance space, with a recent study conducted by PwC, highlighting that 90% of insurers are fearful of the increased competition such companies impose.

Therefore, in order to stay relevant and adapt to the ever constant disruptions that the digital media landscape brings, insurance providers must ensure they implement a range of integrated online marketing services. Key digital advertising and marketing services that need to be explored within the insurance sector include search engine advertising and pay per click services, along with social media marketing, mobile optimisation and understanding the opportunities that up-and-coming innovative technology provides.

Search Advertising

More than ever, consumers are relying on digital mediums to research and purchase products, particularly seemingly “boring” insurance policies. In fact, in 2016, leading global management and consulting firm, Bain and Company, discovered that over 50% of consumers in the United States purchased a property and casualty (P&C) insurance product through an online digital channel, with organic search, pay per click advertising and direct to site, being the most common ways to research insurance products.

Furthermore, complementary studies also determined online trends for consumers researching products, and discovered that while those shopping for furniture spent the longest time researching, at an average of 1 hour and 3 minutes, insurance consumers spent the least time researching online at an average of only 22 minutes! Studies such as these highlight the necessity for a search strategy to be implemented in conjunction with other digital marketing services to ensure optimal visibility online, particularly through search engines.

However, executing a search advertising strategy can be quite challenging and problematic, as paid search advertising services in the insurance sector come with a hefty price tag. In fact, in Australia, the keyword “low-cost life insurance” costs insurance providers $148 per click, while other relevant Google Ads (formerly known as Google AdWords) can reach a potential of $195 per click with no guarantee of a conversion. The challenge, however, is that for consumers, Google Ads and paid search advertising has been identified as the highest performer of first and last clicks, meaning that it is a approach that insurance providers must seriously consider. By understanding how consumers interact and research with the brand, as well as the factors that lead to conversions, will provide great insight into determining the best possible results for the expensive pay per click industry in the insurance sector.

Mobile

In conjunction with paid search advertising, mobile visits to research, purchase and pay for insurance has gained significant traction amongst over 3 billion smartphone users. In fact, according to Adobe Digital Insights and their recent report on mobile usage, discovered that in the past two years, mobile visits to insurance corporations offering automotive, home and life insurance policies have increased by a huge 84%, demonstrating the growing consumer preference for mobile interactions. However, in stating this, many insurance companies fail in key areas of the digital consumer journey and struggle to deliver the growing demand for exceptional mobile experiences to their consumers and ultimately affect the likelihood of securing the all-important conversion.

In fact, mobile applications can be an effective and powerful way to increase engagement with consumers via smartphone devices, while personalising and tailoring the experience to be more suitable to the consumer’s needs. For example, insurance provider AAMI has executed this extremely well, when with the help of their chosen digital marketing and advertising agency, the brand revolutionises the currently outdated driving logbook system for learner drivers. The award-winning mobile application satisfactorily meets the consumer’s needs, while also positions the brand fittingly in front of prospects who may soon be needing to research automotive insurance policies as they prepare to begin driving on their own. Further to the point, consumers can easily engage with the brand and the products in a way that’s personalised to them, rather than browsing the internet and costing an insurance company excessive amounts of money in potentially wasted clicks through search.

Social

Recently, online insurance news contributor, Insurance News Net, revealed that the competitive insurance industry has ramped up their social media expenditure from $301 million last year to $381 million in order to vie for customers. While this price may seem astronomical, it can be notably more affordable than implementing marketing and advertising services that are not guaranteed results for their investment. In saying this, part of the competitiveness of the industry is a result of consumers failing to differentiate between brands and products, therefore the creation of a social media strategy or recruiting an experienced social media ad agency can be an extremely valuable investment.

In fact, as consumers become ever more mobile and interact with social media platforms on a regular basis, it makes sense to disseminate valuable information across various platforms they are likely to engage with. Utilising social media can encourage stronger branding and product differentiation as platforms facilitate two-way, real-time communication, in comparison to researching information through a website, which can at times be difficult to understand or compare.

However, while social media has disturbed traditional aspects of communication, arguably the greatest benefit that it provides to insurance companies is the accessibility to reach new audiences. For example, Pew research identifies that approximately 86% of 18-29-year-olds are active via social media. This provides an exceptional opportunity for insurance brands, as this age group tends to be buying homes, cars and constructing insurance portfolios for the first time, and therefore potentially seeking out information on the right insurance policy for their needs. Communicating with this group of individuals, through platforms they are familiar with, at a key stage within their life can help contribute to a potentially long-term and profitable consumer relationship.

Technology

The disruption to the insurance sector has also been fuelled by constantly evolving technological innovation. From products to services, consumer’s needs are continuously adapting, therefore forcing the industry to remain dynamic and reactive in order to respond to shifting demands.

One major technological advancement that has placed great disruption in the insurance world, is the wide-spread acceptance of non-traditional insurance models by consumers. In particular, Millennials, some of which are purchasing insurance policies for the first time, are more open to seeking policies from banking institutions and online corporations. For example, start-up online insurance technology company, Lemonade, has responded to a to the behaviours of the Millennial consumer, by charging a flat fee and donating unclaimed funds to chosen charities in response to the preference for greater social responsibility. Such an example highlights the various innovative opportunities that established insurance brands can provide, in order to deliver more personalised, valuable and differentiated products to consumers.

Further to the point, insurance companies are missing the opportunity to connect with potential customers, despite the growing accessibility to extremely personalised data. Bain and Company discovered that less than 50% of property & casualty insurers use data that can help signify a new purchase, despite having the ability to. As an example, the study noted the change of a residential address could imply the purchase of a new home, therefore the potential to purchase a new insurance policy. 

Meanwhile, updates in technology for consumer products are also causing much disruption in the insurance industry. The development of semi-autonomous and autonomous vehicles could impact current automotive insurance policies, while the increasing connected home may have an influence home insurance. While such developments may change the perceived necessity amongst consumers for certain policies, insurance companies are presented with great opportunity to develop new and more relevant products that respond to the demand for new forms of coverage.

The acceptance and usage of online platforms has led to a disruption of the insurance industry’s established and policy focused business model and created an ultra-competitive market. To thrive and compete in the digital environment, insurance brands must become consumer-focused and understand the various ways potential customers interact with online mediums in order to provide personalised and valuable products and brand experiences.

At RGC Advertising, we are a full-service digital media agency based in Sydney and place great focus on connecting consumers to brands. To find out how we could help your brand adapt to constantly evolving digital disruptions in order to connect with consumers, please contact Richard on (02) 8883 2988 or email This email address is being protected from spambots. You need JavaScript enabled to view it.