Keeping the insurance customer satisfied

Before the first indus­tri­al rev­o­lu­tion, eco­nom­ic trans­ac­tions were effort­ful. Hag­gling over prices, for exam­ple, was the norm. Now, in the fourth indus­tri­al rev­o­lu­tion — the ongo­ing automa­tion of tra­di­tion­al prac­tices, using smart tech­nol­o­gy — many eco­nom­ic trans­ac­tions need no human inter­ven­tion at all. 

The huge quan­ti­ties of data col­lect­ed by the inter­net of things – with IDC expect­ing devices to gen­er­ate 79.4 zettabytes by 2025 – and analysed in real time by arti­fi­cial intel­li­gence (AI) can enable accu­rate deci­sions to be tak­en by com­put­ing sys­tems faster than peo­ple blink. 

Think of look­ing for a book online. As if by mag­ic, sug­ges­tions pop up that can be acquired with a cou­ple of clicks. 

Great expectations

Design­ing and imple­ment­ing a cus­tomer-cen­tric jour­ney for buy­ing paper­backs is rel­a­tive­ly straight­for­ward. It was already fea­si­ble 20 years ago when online data was lim­it­ed and com­put­ing pow­er expen­sive. The prob­lem is that it has set a high bar for oth­er seg­ments, such as insur­ance, where smooth cus­tomer sup­port is a com­plex under­tak­ing. 

“There is a huge cor­re­la­tion between cus­tomer sat­is­fac­tion from a claims per­spec­tive and how that trans­lates to reten­tion,” says Paul Dixon, UK head of claims propo­si­tion and mar­ket insight at Zurich Insur­ance. “We are acute­ly aware of this and invest­ing heav­i­ly in both tech­nol­o­gy and in our peo­ple so claims can play an even big­ger part in demon­strat­ing to a cus­tomer why they should want to stay.”

There is a huge cor­re­la­tion between cus­tomer sat­is­fac­tion from a claims per­spec­tive and how that trans­lates to reten­tion

Insur­ers face a two-pronged chal­lenge: an online claims expe­ri­ence that the user real­ly likes and needs, and that is accu­rate and com­pli­ant with reg­u­la­tion.  How­ev­er, it is only in the last few years that insur­ance com­put­er sys­tems have been able to access the quan­ti­ty of data they need to make “autonomous” deci­sions well. 

ERGO, a sub­sidiary of Munich Re, set up pure-play dig­i­tal insur­er Nex­i­ble in 2016 as an exper­i­ment “to explore the bound­aries of digi­ti­sa­tion”, says Mark Klein, chief data offi­cer and chair­man of ERGO Dig­i­tal Ven­tures.

There is no call cen­tre sup­port. We offer chat­bots, email and the online por­tal. All sales are pure­ly dig­i­tal via aggre­ga­tors and our own web­site.” Nex­i­ble cur­rent­ly has around 60,000 cus­tomers for car insur­ance in Ger­many and Aus­tria and around €30 mil­lion in pre­mia. 

Automation assistance

Will ERGO auto­mate all its process­es? In par­tic­u­lar, will it be pos­si­ble to sort out claims with just a cou­ple of taps on a mobile?

“We don’t believe in the 100 per cent automa­tion of claims,” says Klein. “For exam­ple, where per­son­al injury is involved there can be very com­plex sit­u­a­tions that require the empa­thy of anoth­er human being to ful­ly under­stand. We believe we can get to 60 per cent.” 

He points out that even sim­pler claims, which could in prin­ci­ple be auto­mat­ed, such as cov­er of minor dam­age to a car, have poten­tial chal­lenges. “Where an exter­nal lawyer is con­sult­ed, the process becomes too com­plex and makes full automa­tion inef­fi­cient,” he says. 

Dixon at Zurich says: “There has been and con­tin­ues to be a big push towards dig­i­tal, sub­mit­ting claims online via por­tals being one exam­ple. For our per­son­al lines prop­er­ty claims we have seen about 14 per cent of all new claims sub­mit­ted this way.” 

But he adds it should not mat­ter how a claim is pre­sent­ed and points out an online claim does not nec­es­sar­i­ly equate to bet­ter ser­vice. “That being said, we now see a sig­nif­i­cant amount of claims set­tled with­in 24 hours and usu­al­ly by those who have embraced dig­i­tal oppor­tu­ni­ties,” says Dixon.   

Imagining what needs to be intuitive

Because intu­itive inter­faces are every­where, the chal­lenges of devel­op­ing a real­ly smooth online process can be under­es­ti­mat­ed. For insur­ers, it means reimag­in­ing the claims jour­ney.

When ERGO set out to do this it asked cus­tomers to give feed­back and ran a num­ber of work­shops. “We spent a lot of time reword­ing infor­ma­tion, sequenc­ing ques­tions, choos­ing one-tap pic­tograms and mak­ing the lay­out as intu­itive as pos­si­ble,” says Klein. “We delib­er­ate­ly launched a mobile web­site rather than an app so the cus­tomer would not face the hur­dle of a down­load.”

One par­tic­u­lar chal­lenge was pre­sent­ing infor­ma­tion in a way that is unam­bigu­ous. “For exam­ple, dam­age to cables in vehi­cles from small rodents, espe­cial­ly martens, is a com­mon prob­lem in Ger­many and typ­i­cal­ly includ­ed in car insur­ance,” says Klein. “When we asked peo­ple what they under­stood by major dam­age caused by an ani­mal bite some thought it meant car acci­dents caused by being bit­ten in the leg by a dog in the car.” 

A personal experience

So what would the opti­mal claims jour­ney look like? “For some cus­tomers the claims jour­ney would involve no human inter­ac­tion at all, every­thing would be done dig­i­tal­ly, includ­ing pay­ment and they would want their claim set­tled on the same day,” says Dixon.  

“For oth­ers, an opti­mal claims jour­ney would be much more about the oppor­tu­ni­ty to engage and speak to some­one, for them to be helped and sup­port­ed through­out the jour­ney.  And then there are those who want a hybrid ver­sion.” 

But even when cus­tomers like their claim processed auto­mat­i­cal­ly, as quick­ly as pos­si­ble, many still want the feel of human inter­ven­tion. 

“We learnt cus­tomers do not want the claims jour­ney to be as fast as the algo­rithms can make it,” says Klein. “They pre­fer a two-hour wait for a deci­sion. Oth­er­wise they feel that it hasn’t been thought through, even though the deci­sion is the same.”

Keep­ing insur­ance buy­ers hap­py, at least for now, then is not just about automa­tion. But that could change quick­ly. Coro­n­avirus lock­downs have made mil­lions of peo­ple much more will­ing to “live” online. At the same time, the insur­ance indus­try is bat­tling a num­ber of head­winds. Those include tight reg­u­la­tion, the abil­i­ty of retail cus­tomers to cher­ry pick ser­vices, and the threat of online com­peti­tors from just out­side the reg­u­la­to­ry perime­ter, as the Asso­ci­a­tion of British Insur­ers (ABI) points out.  With­stand­ing the gales will require heavy invest­ment in smart online process­es. 

In the short term, it looks as though it will be invest­ment in get­ting cus­tomer ser­vice right that will be the best use of cap­i­tal – and not just because it improves the front-end cus­tomer expe­ri­ence: “One of the biggest cost dri­vers in insur­ance is the cost of man­ag­ing the claims process,” says Klein. “So hav­ing a faster process with good cus­tomer con­sent can lead to sig­nif­i­cant sav­ings.”

The best claims jour­ney will be easy and high­ly per­son­alised, which will boost sat­is­fac­tion and reten­tion as well as cut­ting costs, but it will be far from easy to imple­ment. It will also have to con­stant­ly evolve as more data and more ana­lyt­i­cal capac­i­ty come on-stream.  

It looks as though the insur­ers that thrive will be the insur­ers that can make all of their sys­tems work togeth­er to deliv­er an agile expe­ri­ence that cus­tomers love – one fit for the fourth indus­tri­al rev­o­lu­tion. 

To find out more, read Con­sumer Finan­cial Ser­vices 2025

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