If one is going to be at home, one may as well invest in that home. As Cover Genius Vice President of Partnerships Peter Paine told PYMNTS, that has been among the lessons of the last several months. Consumers suddenly forced to be at home most of the time have started investing in making their environments more enjoyable through major and expensive purchases like appliances and furniture, along with smaller buys, like the kitchen tool for “perfecting that sourdough bread recipe.”
Case in point: Cover Genius’ partner, Wayfair, whose total net revenue increased from $1.5 billion to $3.8 billion in Q3, up 66.5 percent year over year.
“The Wayfair shopping experience is really, really easy for their customers,” Paine said. “They make it really seamless with easy checkout and easy returns, and they have great prices and huge product selection. Wayfair and Cover Genius are such a great fit because we’re both technology companies that put the customers first. Wayfair saw the importance of the Cover Genius value proposition that can distribute personalized warranty products to their customers. Our simple and fast claims servicing for customers, our pricing capability, our global framework — all of this makes sense for our partnership with Wayfair and also their future growth aspirations.”
And as Wayfair‘s Q3 results show, consumers, pushed by necessity, have concurrently gotten a lot more comfortable making any and all of those purchases online, sight unseen.
“Since the start of COVID, customers have become really comfortable purchasing everything online, from small purchases, like everyday groceries, to really large purchases, like major appliances,” Paine said.
It’s an environment that has created an ideal situation for an InsurTech firm like Cover Genius. In a world where all kinds of accidents can happen, a growing share of consumers is willing to pay more for a purchase if offered to add protection against the unexpected. According to Cover Genius’ data, nearly a third (32 percent) of consumers are happy to spend more if they are offered an opportunity to insure what they buy — and that is a general average. Over the course of the pandemic, specific verticals like travel, retail and logistics have seen attach rates for insurance products increase on the order of 400 to 600 percent since last December 2019.
“As consumers look for peace of mind for their purchases, consumers are also looking for protection — and they don’t want another thing to worry about in the current uncertain climate,” Paine said. “These days, peace of mind is top of mind for everybody.”
But while consumers want protection, that doesn’t mean they want to work hard to get it. As Paine said, no one wakes up in the morning excited to get up and buy insurance. That means it’s important to present the offer in the right context — at the transaction point.
However, 59 percent of consumers are not offered a warranty or insurance policy on their purchase, even though roughly 60 percent report an affinity for purchasing insurance from the brands they know and trust.
It’s not enough for retailers to offer an online experience, noted Paine — they have to aspire to offer something best-in-class. Consumer enthusiasm and preference is making it increasingly clear that a warranty offering is critical to that offering in the same way as free delivery or curbside pickup.
“Another really interesting insight we found was that average order value is actually 62 percent higher when purchase protections are offered at the point of sale. It helps the merchant build the basket size overall,” explained Paine. “When you step back and look at those numbers, you understand there is an untapped opportunity for retailers to drive customer lifetime value, which is a really important metric for better serving their customers as a whole.”
And it’s not just about offering insurance, he said, but offering it in a modern and digitally proffered way through the entire value chain, from product development all the way through claims administration. Insurance is a highly regulated industry with an extremely complex licensing structure and regulatory framework that has historically slowed new product development, Paine noted. Cover Genius aims to help its partners deliver customized products and bundles to their global customers that are designed uniquely for their insurance base, including offering instant payments on claims as they are processed.
“It is also important to make sure people are protected when the unexpected happens, and that they’re compensated instantly and not after weeks or months of waiting for that claim payment,” Paine said. “We know that on average, it takes up to 22 days to get paid for a claim from a traditional insurer. So, when an InsurTech is able to make instant payments for claims, it is a game-changer for consumers.”
Because, as Paine pointed out, those consumers have changed in terms of what they want and how they want to buy it. And to really provide the new value consumers are seeking when they purchase insurance, the game has to change to suit their changing needs.
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