How CX can help the insurance industry survive in 2020 and beyond.

The insurance market is starting to harden with insurers reducing the cover they offer and increasing premiums. Therefore, consumers in need of insurance will find it harder to get insurance, the cover will be less than is offered currently and likely cost more in premiums.

For insurers to win business, the Customer Experience that they offer becomes much more important. Those who are seeking insurance will be faced with getting less for their money, so as insurers can’t really compete on price, they need to look for other ways to differentiate and Customer Experience is one way to do this.

There is no denying that the Insurance sector has been under pressure to switch up its game for a number of years now. The industry still has a long way to go in making connections and using Customer Experience (CX) to really resonate with its customers.

Insurance is a complicated consumer product, borne out of necessity (like car or business insurance) or for peace of mind, like home and personal cover. Consumer loyalty is shrinking and relationship building and platforms that inspire trust can help brands to build better experiences and drive scale.

Recent research from YouGov highlights, the pressure is mounting for the industry to attract and retain customers. In fact, only 6% of UK customers intend to stay with their current provider, and almost three quarters (73%) of policyholders are actively shopping around for alternatives.

This will quickly become a race for survival, and insurance companies that do not rethink their business, transform and offer innovative customer orientated services, and centre the experience around what the customer wants will fail to gain traction in this new world.

So, what do insurance customers want – and how can excellence in customer experience help deliver this.

The two key moments to focus on:

  • The insurance industry has two main opportunities to create a winning customer experience (CX): during the initial sales and on-boarding process and during the claims process.

  • A great CX at the point of sale can ensure the customer converts and creates a positive first impression.

  • Meanwhile, a great CX during the claims filing process cements that positive impression and ensures customer retention.

CX at the point of sale

A great opportunity is often squandered by excessive friction in the sales and on-boarding process. Great advertising campaigns, word of mouth, and brand reputation aren’t enough to close deals if the insurance on-boarding process is too slow or difficult. Between the desire for digitisation and the actual implementation of a seamless digital process, there often lies a gap.

CX at the point of claiming

The emotional and financial hit of a damaged home or car is hard enough. The last thing claimants need is for their insurance company to be yet another source of stress. Protracted FNOL insurance processes, back-and-forths with the insurance company, and not-in-good-order (NIGO) documents that have to be redone all exacerbate the difficulty of the situation. So, insurers need to work harder than most other sectors to create a positive customer experience during this stressful period.

Amazingly, a survey of 8,000 auto and home insurance customers across 14 countries found that 41% of policyholders who had submitted a claim were likely to switch insurers within the next 12 months. Rather than cementing customers’ loyalty, the claims process too often alienates customers and leads them to seek greener pastures.

So, how can the insurance industry improve through CX?

Data is vital

· One way to get back on even terms with your customers is ensuring that you are making the most of the data you have and use it to ensure your are delivering the best possible customer experience.

· By gaining actionable insights from data and bringing disparate and complex intelligence together in one place, businesses can gain real value.

· Having the ability to generate greater insight into customer data and understanding the trends that can be identified with data visualisation, companies suddenly have the tools to make a real difference to their ability to offer the best possible customer experience, without having to rip and replace existing infrastructure.

Tackle the digital challenge

· We’re in a world where we live through our devices, so to improve customer experience insurers need to keep pace with the digital age.

· A recent survey by Altus Consulting revealed that slow adoption of digitisation holds many insurance firms back, with only 4% of UK insurers currently running digital claims processes. Meanwhile, Eptica similarly found that the UK’s leading insurance companies routinely fail to accurately answer 68% of questions asked through the web, email, Twitter, and Facebook.

· McKinsey predicts that a motor insurer fully embracing digital could double its profits in five years, it’s important to note that digitisation isn’t just promising for profits. It’s about cost and time-saving benefits for consumers, which could lead to increased engagement, loyalty, and advocacy.

Covering the basics to drive retention

· In an increasingly competitive market, CX can effectively make insurance firms stand-out. A McKinsey report from 2017 estimated that CX leaders in the insurance market are 80% more likely to retain customers, and have been able to grow sales at double the rate of those not embracing CX.

· The reduction of customer churn, whether it is in the B2B or B2C markets, has to be one of the main focuses for the insurance sector in 2020 and beyond.

· Retaining customers is the most effective way of growing a business. Invesp found that it cost 5 times as much to attract a new customer, than to keep an existing one. In a hugely competitive market ensuring that customers are not attracted to rivals is crucial, especially with margins being squeezed as a result of premium deflation.

· Indeed, the insurance sector is now catching up to the idea that different demographics and customer segments require tailored products and different communication styles.

Agility creates a competitive advantage

· Many in the insurance sector have been relatively slow to react to the increasing expectations of their end users. However, there are a few disruptors making a move in this space, such as the smaller, more agile, players in the market that have a ‘customer first’ strategy. As a result of this these smaller organisations have been particularly effective in taking customers away from the larger, more traditional, insurers.

· It has appeared that these large insurers have been unable to react, with new, smaller, agile players running rings around them, offering a superior customer experience. These agile companies have an additional advantage, not having spent thousands on IT infrastructure in the past decade, investment that simply can’t be ignored, or scrapped. However, it is this infrastructure that is holding many insurers up.

· Their IT systems often contain out-dated customer portals, poor levels of responsiveness, and very poor user experience for those customers trying to use out-dated technology on phones or portable devices. Contrast this with new insurers who are immediately prioritising a mobile user experience.

Digitising elements of customer service

· In order to allow the customer to experience the type of CX they get in almost every other aspect of their personal and professional life, insurers and brokers have to develop an intelligent digital offering.

· By using solutions to provide the customer/broker experience, insurers can immediately make a huge impact on the level of customer experience they are able to deliver. The use of customer portals, apps and online chat, will give the end user, the type of experience that they now expect.

· Those large insurers who do not, or feel that they cannot, commit to such changes due to legacy infrastructure, will be left behind. The new, more agile companies, whose businesses have been set up with customer experience at the front of their offering, will and are taking customers, who are no longer loyal to the older, slow moving brands, but prefer to have a great customer experience instead.

Diversifying your offerings to create richer relationships

· Insurers should look for new reasons to engage with customers. They can then remove the perception of only being a necessary point of contact during a time of crisis or renewal, to a provider, which offers on-going and relevant support.

· A good example of this is Aviva Drive, a free app to help customers hone their driving skills. It records customer journeys via their phone’s GPS and once a customer has completed 200 miles, they’ll receive an individual driving score out of 10. Aviva use that score to calculate the customer’s personalised discount, compare the score to the national average and provide feedback on their driving.

· Consumers often view insurers, as ‘protectors’ which offer peace of mind should disaster strike. So, when you consider this, it’s clear there is an opportunity for firms to diversify their offerings.

Unfortunately, due to its very nature, insurance has become associated with endless amounts of paperwork, difficult conversations and stress. But this needn’t be the case and the customer experience isn’t a lost cause because of it. Insurers need to recognise the importance of customer transformation and understand the variety of new ways it is possible to add value to customers’ lives.

By diversifying offerings outside their current remit, they will be in a good position to break out of the poor customer experience cycle they’re currently stuck in and improve their Customer Satisfaction Index scores next year.

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