The notion of value has changed dramatically in the insurance industry over the years. What value is derived from a grudge purchase that will be utilised in the event of an emergency? We are currently in a crippling economy, where the majority of the population are not able to provide food and basic amenities for their families, but now they must purchase insurance? Value is derived in different forms, but when you consider the value you may possibly derive from shopping from the same corporation, or meeting exercise targets to win freebies, additional free benefits from your insurer or broker (where one does not have to meet certain goals) may be an easier achievement than you thought.
What if the additional Value-Added Products, that are bundled into your insurance purchase, could fill the gaps? Could ensure your car is towed in a timely fashion, to the correct yard, within your Insurer or broker’s allocated budget? What if you in dire need of medical assistance? Or require a qualified counsellor after a traumatic experience? And better yet, this was all available at the click of a button?
According to Investopedia, VAPs are defined as “the enhancement a company gives its product or service before offering the product to customers,” thus creating increased value on homogeneous product. Insurance is generally seen as a grudge purchase, and price sensitivity is a central consideration factor for potential and current customers. VAPs add a dynamic factor into customer considerations when choosing an insurer or broker, as the increased value included in their grudge purchase is seen to add qualitative and quantitative value to their lives.
VAPs within the insurance industry include the ‘regular’ roadside assistance, medical assistance, legal assistance, and more, but innovative cyber products and IoT VAP offerings are taking the market by storm, addressing pertinent insurance centralities of risk mitigation and avoidance. IoT devices in geysers and cars, for example, are assisting in this regard by sending warnings about arising issues whilst solutions can still be implemented, before the need to submit insurance claims arise. VAPs are continually transforming and are being offered in accordance with economic and technological trends, becoming necessary and relevant utilities for policy holders in an advancing world.
Differentiated VAP products are becoming major differential factors for insurers and policy holders and offering these through state-of-the-art solutions is becoming a necessity, as it allows for accurate and immediate customer service through the utilisation of location-based services. There is often great important placed on the products being offered by service providers, but ease of access and usability of the product is equally important, because if policy holders cannot conveniently access the additional benefits and products, and receive assistance in a timeous and accurate manner, they will not make use of the VAPs, and hence will not find any value in the additional offerings.
Aside from the convenience factor VAPs bring to policy holders and the instilled differentiated product offering for insurers and brokers, successful VAP inclusion in insurance offerings dramatically increase customer engagement and retention through enhanced and personalised customer experience. It is a means for developing more regular customer engagement (Capgemini, 2017), a challenge most insurers and brokers face. This is an imperative component in gaging audience reception and successful implementation of new products in the market, as the analytics embedded in the mobile app and web-based self-help platform to track policy holder engagement provides insurers and brokers with an understanding of their clients’ requirements and desires, assisting them to align their offerings and VAPs with the clients demand, leading to increased client satisfaction and in turn increased customer retention and acquisition.
In our research and product development of VAPs over the years, we have found that the combination of the right VAPs, marketing touchpoints, customer engagement strategies and technologies to bring the product to market are incredibly powerful solutions for insurers, underwriters, brokers and all service providers in the insurance industry. This will ensure they remain competitive in the market and deliver accurate, relevant, tailored and valuable services and products to their clients.
Article by: Alexa Seligmann, New Product Development Manager at One Loyalty Rewards
Resources:
Capgemini, 2019. Insurance Reinvented: Value-Added Services. https://www.capgemini.com/resources/insurance-reinvented-value-added-services/
Investopedia, 2019. Insurance. https://www.investopedia.com/terms/i/insurance.asp
