Digital Insurance Agenda

Moving to a User-First, Omnichannel Approach

Written by Stephan Binder, Ulrike Deetjen, Simon Kaesler, Jörg Mußhoff and Felix Schollmeier (McKinsey & Company) on Jul 27, 2021

As new digital players and ecosystems converge to offer basic insurance products, carriers need to evolve their digital capabilities and online user experiences to remain relevant and competitive.

Today, about one in four motor insurance policies in Germany is sold online, and other property- and personal-insurance products are increasingly being purchased through digital channels. These trends have been further strengthened since the outset of the COVID-19 pandemic, which has increased customers’ comfort with digital- and remote-interaction models and tools. In an October 2019 survey of more than 3,000 individuals across Europe, 38 percent reported that their preferred sales channel for life insurance is digital. After the first few weeks of the lockdown, this share rose to 54 percent.

Established insurers are investing heavily in digitizing their customer journeys and processes, and numerous new, purely digital insurers, or insurtechs, have entered the market. Traditional insurers are well aware of how their peers in the banking industry partially lost the customer interface to new entrants such as PayPal, TransferWise, or N26. Moreover, large technology groups also show clear interest in the insurance market, even if they refrain from taking risks onto their own balance sheets. All of these developments have raised the stakes across key dimensions of the business model.

To remain competitive, traditional insurers in Germany will need to quickly move to a user-first, omnichannel strategy. The most successful carriers in the post-coronavirus digital age are integrating this approach by prioritizing three elements: availability of online purchasing capability, ease of navigating online customer journeys, and seamless integration of sales support and advice capabilities. To implement this strategy effectively, insurers must first lay a foundation focused on the customer journey and enabled by selected technologies and organizational capabilities.

Key elements for a user-first, omnichannel approach
To gain a picture of the digital marketing capabilities of German insurers, we analysed 22 carriers across 20 individual capabilities along the conversion stage of the marketing funnel. Each player was scored from one (nascent) to four (distinctive).

An effective user-first, omnichannel approach includes three critical elements, listed here in order of importance: availability of online-purchasing capability, ease of navigating online customer journeys, and seamless integration of sales-support and advice capabilities (Exhibit 1). Product complexity that cannot be eliminated through rigorous redesign needs to be bridged with advice capabilities, which must be seamlessly integrated into relevant touchpoints across customers’ omnichannel journeys.


Our analysis reveals the large majority of carriers has at least foundational digital-marketing capabilities across the funnel, with 77 percent of players reaching an overall score between two and three. However, the industry as a whole still shows significant room for improvement: only two insurers with a traditional multichannel and intermediary-focused distribution model scored three or above. This is especially relevant when considering that customers are likely to draw comparisons not only between their experiences of online journeys with other insurance players but also from other industries (for example, shopping on Amazon or signing up for an account on Netflix).

Insurers focused on direct channels earned much more competitive scores, as their product offerings were typically fully digitized and their customer journeys easier to navigate. Interestingly, this difference in capabilities largely persisted even when traditional and direct players belonged to the same insurance group. However, most notable was that, on average, traditional players did not harness their in-person advice capabilities effectively within their omnichannel setup—a huge missed opportunity.

Availability of online-purchasing capability: Traditional insurers do not provide customers with the option to purchase all products online
In recent years, the digital maturity of the insurance industry has increased steadily and even surpassed that of the banking industry. However, while several carriers and agents have made incremental progress in their efforts to digitize their business models, the industry as a whole primarily relies on face-to-face interaction for purchasing. None of Germany’s top ten multiline insurers—including the direct players—offers all its products online.

At the product level, more than 90 percent of multichannel insurers provide online access to their motor and household insurance products, but only about 40 percent do so for full health coverage—and a mere 11 percent for traditional or unit-linked life insurance. Just one of the players with life insurance products in its portfolio does not require face-to-face interaction for purchasing. None of the ten direct insurers analysed offer a complete product portfolio across property and casualty, life, and health insurance products yet.

Although both simple and more complex insurance products generate similarly high levels of search traffic, these two product segments show large differences in their respective levels of digital enablement (Exhibit 2). The reason: complex insurance products typically require a more deliberate effort from insurers to bridge the information gap with customers. Products need to be simplified, transparency and product information need to be improved, and experts must often provide tailored advice to help customers navigate the plethora of options and trade-offs. Insurers largely assume that personal advice must be delivered in person for it to be effective.

However, during the COVID-19 crisis, many business models that relied heavily on direct human interaction have been surprisingly active with remote interaction. The acceleration of the telemedicine industry is one example: few other areas are more complex and were assumed to have a stronger need for direct human interaction than personalized health advice. Yet telemedicine players are flourishing and proving that doctors can diagnose patients online. In another example, the financial services sector has successfully digitized complex products and customer journeys, such as applying for mortgages or signing up for brokerage accounts or investment advisory services.

Ease of navigating online customer journeys: Direct insurers are leading the way against traditional insurers
To better understand the ease of navigation for insurance journeys, we disaggregated the online navigation experience into three dimensions: speed of the insurer’s website, quality and performance of the landing page, and quality of user experience across respective product journeys.

Site-speed. There is a strong correlation between site speed and bounce and conversion rates (Exhibit 3). If the loading time takes longer than three seconds, 53 percent of users leave a mobile site. Even a loading time extended by just one second reduces the conversion rate on mobile devices drastically, while a delay of two seconds can increase bounce rates by almost 100 percent. Since the average loading speed of German insurers’ websites on desktop PCs and mobile phones is 3.2 seconds, site speed performance is an effective improvement lever.

Landing pages. Although analysis of our sample’s landing pages showed solid quality scores, on average, there was a rather large disparity: many landing pages are still packed with small-font text on insurance products, so they not only overload users but also fail to guide their attention to relevant sub journeys. Landing pages can be easily improved: for example, Deutsche Familienversicherung, a German insurtech and direct insurer, instantly creates a personalized experience by asking users for their age. It then immediately adjusts all prices shown on the webpage.

Product journeys. Best-in-class players such as Netflix, Revolut, and Zalando have set the benchmark for easy, intuitive onboarding and purchasing journeys. Amazon famously cut the purchasing journey to one click for preregistered users. In recent years, aggregators have started to radically rebuild and simplify insurance purchasing journeys, and new direct players have entered the market. Many traditional players have now partially caught up and offer online product journeys of a similarly high quality—but only for less-complex products, such as motor, household, and personal liability insurance.

Seamless integration of advice capabilities: Customers who switch between digital and non-digital cannot continue their journeys online
According to a recent McKinsey survey, one in two customers seeks advice offline before purchasing an insurance product. Since the large majority of customers research online and purchase offline, most of the insurers we analysed now have some type of lead routing from their landing page to their offline (advice and purchasing) channels. However, this lead routing is usually a one-way street; after calling an agent, it is no longer possible to switch back to the digital channel and continue on the customer journey online. Thus, requesting in-person advice typically leads to an automatic and irreversible switch from the online to the offline channel (Exhibit 4).


Due to this lack of true channel integration, most insurers still cannot offer a “remote in-person advice” option. Our analysis identified three common impediments to the optimal utilization of existing in-person advice capabilities.

Insufficient online marketing to customers seeking in-person advice. The online channel is rightly regarded as the most cost-efficient channel to generate a sale. To understand which channel is the most economic overall by costs per sale, however, insurers also need to take into account the differing effectiveness of their individual channels in converting leads into sales. One German insurer was able to increase the efficiency of its sales conversions by a factor of six by providing customers with the option to request a call-back number, look up agent offices, or simply enter their data to be contacted.

Lack of accessible in-person advice capabilities at relevant touchpoints in the online customer journey. Highly effective lead routing from online to offline channels is a crucial factor in converting the captured online traffic into business. Yet insurers’ lead-routing capabilities are barely foundational: when online customers request in-person advice, their current journey is invariably interrupted—in most cases, even without a seamless transition to an offline channel. To remedy the situation, several insurers have started to integrate chatbots (sometimes human-augmented ones) or hotlines into the online journey to increase conversion rates—but without actually leveraging their intermediaries. So far, traditional insurers are missing out on fully harnessing their deep pool of skilled advisers, arguably one of their greatest advantages.

Lack of digital assets required for delivering remote in-person advice. The ability of German insurers to deploy their advice capabilities into digital customer journeys is often already undermined by a lack of basic digital assets. While some insurers have now incorporated the option to set up a video conference with one of their intermediaries, full digital enablement of advice capabilities remains elusive.

By contrast, in a fully enabled and user-first, omnichannel setup, insurers deliver advice when and where customers request it—such as through their computers or smartphones. If done right, this will result in a positive self-selection of customers seeking in-person advice on more complex products who can then be channelled to agents, bankers, and brokers. However, merely deploying advice capabilities, either to compensate for deficiencies in customer journeys or to sell products, is highly inefficient and unsustainable.

Our recommendation is an overarching implementation strategy in which the capabilities of all channels are aligned toward the common business goals of acquiring and retaining business by meeting customers where they are. That location is online. Stay tuned for our next article, where we will discuss the key prerequisites of this implementation process and the organizational and technical enablers.

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