To answer the question posed in the title: Yes. U.S. consumers have become accustomed to purchasing almost anything online. And when they shop, they expect choice and convenience. Now that consumers have such expectations, are health insurers ready to meet demand for easy online shopping and more product choices?
The shift toward e-commerce is moving faster than many insurers anticipated. Experts predict e-commerce will account for 30-to-57 percent of retail sales within the next five years. Add to that the trend toward mobile, which some predict will account for 80 percent of all online sales by 2018. Although the shift has been slower for the insurance industry than for retail, the e-commerce revolution is well underway.
According to Gartner: “The insurance industry worldwide is undergoing a radical transformation, driven by shifting consumer expectations and behaviors, heightened competitive pressures, and rapid technological evolution.” With the wide-scale adoption of a consumer-centric retail model across all industries, health insurers are moving to an e-commerce model, with some already implementing private exchanges, which are e-commerce websites for health insurance.
A key tenet of an e-commerce approach is easy access to a wide array of product options. Although many insurers held the belief that premium price is the key deciding factor for consumers, according to a recent McKinsey & Company report, consumers, in fact, want to mix and match health and voluntary insurance products. Plus, they are willing to pay more to assemble the benefits that best meet their needs.
When e-commerce is done well, not only do consumers benefit from the expanded choice and rich consumer experience, but companies also benefit financially through the affiliate relationships that are an essential part of an e-commerce ecosystem. For all these reasons, today’s environment is ripe for insurers to do what other industries have done for years: Build strong relationships with affiliated companies to expand their offering and generate more revenue. The travel industry is a good example. Airlines offer convenient one-stop shopping for complementary products provided by affiliated companies right alongside their own anchor product.
For instance, when a shopper visits the United Airlines website to purchase an airline ticket, they have the option to add on hotel reservations, car rentals, travel insurance, even cruises. United Airlines does not directly provide these products and services but makes it possible for their affiliates to offer products through their e-commerce website, including convenient payment at the end. United has mutually beneficial financial arrangements in place with these affiliates and they all benefit from increased sales and consumer loyalty.
Similarly, health insurers have the opportunity to make their private exchanges a one-stop-shopping site through partnerships with other companies that offer vision, dental, disability, life insurance and financial products, such as health spending accounts. This approach can serve all lines of business, including groups and individuals. In short order, the insurer’s product shelf can expand significantly, as illustrated, below:
Affiliate marketing programs are not new and work well in many industries. Oftentimes, insurers already have affiliate relationships with ancillary or voluntary product vendors. With a private exchange, insurers can expand their performance-based marketing approach and reward those companies with the complementary products consumers want most. All three key stakeholders – the insurer, the affiliates and the customer – benefit.
With a well-crafted program modeled after what airlines do so well, insurers can use their private exchange to elevate their brand in their market, build their product shelf with an attractive product mix, and grow both revenue and market share.