In the digital age, consumers have more power than ever before. They have a plethora of choice through multiple channels and their loyalties are often as mobile as their devices. Trust in insurance firms remains low while expectations of service and personalization are only getting higher.
By its very nature, insurance is a complex industry. There are a large numbers of products, a multitude of intermediaries, complex pricing and underwriting models, and insurance events that are often highly bespoke to the claimant.
Simplifying the customer experience is essential if insurers are to drive higher engagement and meet the expectations that consumers are experiencing in other sectors such as banking or retail.
Fundamentally, insurers need to understand and cater for the full needs of customers across the various stages of their lives. Doing business needs to be easy for customers, who need to believe they can rely on their insurer when things go wrong.
Here are five key areas in which insurers can work to simplify the customer experience.
Be clear about what a good customer experience means
Whatever lines you specialize in, and whether you are an established player or an InsurTech startup, the principle is the same: outline what the customer's experience should be for your core customer journeys and continuously improve it. We find it helps to think in terms of the Six Pillars of customer experience that KPMG Nunwood, has identified:
- Empathy – The degree to which the organization demonstrates that it cares and understands its customers.
- Personalization – The degree to which the experience is tailored to the individual, and to which the individual feels valued and important. How firms increase contact with the customer and use data to inform the experience is critical.
- Time & Effort – The fluency of the experience. The degree to which it is easy, simple and quick for the customer.
- Expectations – The degree to which expectations are set, managed and delivered against. Our research shows us that clear, concise communication about what is covered, what is driving price and why premiums have changed before they do, are all areas that still require substantial improvement.
- Resolution – How well problems are rectified when things go wrong? How hard are insurers working at turning a bad customer experience into a good memory that builds loyalty?
- Integrity – The moral code of the organization. The degree to which it stands for more than making money for shareholders. Its competency and ability to keep its promises. Educating the customer about what they need to do to prevent bad things happening, and prevent rejected claims if they do happen, is fundamental to improving the customers trust in the insurance sector.
Streamlining through digitization
In an increasingly digital world, digitizing the customer experience is a key priority. Customers expect frictionless, connected services that are easy to interact with. InsurTechs are leading the way, rethinking, streamlining and simplifying the entire customer experience. The big insurance players, meanwhile, are partnering with InsurTechs to develop more agile and innovative digital propositions.
It is vital to ensure that the digital proposition is focused on what the customer actually wants and that it will add value by improving the interaction, rather than just make the service look better. For large insurers, it's essential to resolve legacy infrastructure issues as well as build new digital front-ends. Many insurers are weighed down by a monolith business and technology estate inherited over many years of acquisitions and technology purchases that have been made without a clear view of the technology end state architecture. Resolving legacy issues and creating digital solutions has to be done simultaneously. Otherwise, companies aren't able to innovate and extract the data they need to personalize the customer experience.
Focus on the customer journey
It is also essential to think about the customer's journey through all aspects of the value chain, whether that's taking out a policy, renewing or making a claim. Firms need to identify the pain points (the things that cause customers frustration or inconvenience) and the gain points (the aspects customers value most). It's about vigilantly focusing on continuously improving those experiences for all of the core journeys.
Remember your employee is also your customer
It's vital that employees are motivated and supported. If they are not, this will come across to customers and service will suffer. If you're an InsurTech, this means helping your employees grow with you as the business develops. If you're an established insurer, it means helping employees be ready for change. It's about providing the training they need, especially in areas such as analytics and automation, so that employees don't feel left behind. Firms need to bring employees with them as they grow.
Product and market simplification
Increasingly, products are being tailored to specific needs, e.g. on-demand insurance, and, in the case of managing commercial risk, being consolidated into fewer products. By drawing on a broader range of insight and data, insurers can provide more bespoke products that meet individual needs.
This is a trend that should continue. In the future, for example, why should customers have multiple separate products across personal lines such as home, health and motor? Why not consolidate the cover across the range? What fundamental changes to our ecosystem could blockchain ultimately enable? We need to continue to strive to simplify the products and the insurance eco-system so that the customer experience is less complex, more efficient and more tailored. Bespoke. Simpler. Cheaper.
If the industry is serious about digitization and a more streamlined customer experience, then this must surely be the endgame.
In the meantime, the providers who can simplify and make insurance 'easy' will be the winners in a market that is poised for further disruption.
Article original published in The Digital Insurer's April 2018 newsletter – Simplifying the customer experience.