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Improving customer experience in the insurance industry

There can’t be many peo­ple who want to be insur­ance sales­men when they grow up. Train dri­vers, yes; chefs, per­haps; DJs and Olympic gold medal­ists, under­stand­able. But insur­ers?

Per­haps one rea­son is that most of us only encounter insur­ers when we have a prob­lem. Research from Accen­ture shows that near­ly a third (30 per cent) of insur­ance cus­tomers have not had a pos­i­tive expe­ri­ence.

The indus­try is well aware of the prob­lem. Accord­ing to the Asso­ci­a­tion of British Insur­ers (ABI): “For an indus­try full of peo­ple pas­sion­ate about mak­ing a dif­fer­ence for cus­tomers, it is extreme­ly dis­ap­point­ing that the sec­tor has so bad­ly failed to secure their trust.”

So what can be done to improve the cus­tomer expe­ri­ence? Dig­i­tal tech­nol­o­gy has been cit­ed as the answer to solve not only some of the consumer’s most hat­ed aspects of insur­ance, such as the speed of a claim, but more impor­tant­ly to offer new expe­ri­ences that will change how we look at insur­ance.

“Dig­i­tal trans­for­ma­tion isn’t sim­ply about insur­ers mak­ing bet­ter use of tech­nol­o­gy,” says John Cusano, senior man­ag­ing direc­tor, glob­al insur­ance indus­try, at Accen­ture. “It’s about enabling their peo­ple to accom­plish more with tech­nol­o­gy.”

Digitisation

The digi­ti­sa­tion of insur­ance has been hap­pen­ing for some time. Con­sumers, ever­more demand­ing of ever-high­er stan­dards of ser­vice, are look­ing for the same kind of expe­ri­ence they can now find else­where in their life. They want an unprece­dent­ed lev­el of choice; they want price trans­paren­cy; they want imme­di­ate answers to ques­tions.

Dutch gen­er­al insur­er InShared was one of the first of the new breed of com­pa­nies to be a ful­ly dig­i­tal insur­er, offer­ing a vir­tu­al assis­tant on its web­site from 2012 that answers 56 per cent of the company’s non-claims cus­tomer con­tacts. From ini­tial quote to mak­ing a claim to book­ing any nec­es­sary repairs, every­thing can be done online, which keeps costs low and makes the cus­tomer feel in con­trol.

The lead­ers are devel­op­ing deep­er, more per­son­al and longer-last­ing rela­tion­ships by using their dig­i­tal capa­bil­i­ties to gain an enhanced knowl­edge of their cus­tomers

But estab­lished insur­ers have been slow­er to meet the chal­lenges of this brave new world, ham­pered part­ly by lega­cy sys­tems, and the costs of updat­ing and upgrad­ing, as well as part­ly by a lack of under­stand­ing of what is required. “Their focus on risk, rat­ings and prod­ucts means that their under­stand­ing of their cus­tomers lags behind the advanced tech­niques being devel­oped by inter­net and telecom­mu­ni­ca­tions busi­ness­es,” accord­ing to a report from PwC, Insur­ance 2020. “Most insur­ers are still pri­mar­i­ly focused on e‑commerce, doing what they do already, but dig­i­tal­ly.

“The lead­ers are devel­op­ing deep­er, more per­son­al and longer-last­ing rela­tion­ships by using their dig­i­tal capa­bil­i­ties to gain an enhanced knowl­edge of their cus­tomers.”

As insur­ance has become increas­ing­ly com­modi­tised and con­sumer deci­sions increas­ing­ly price dri­ven, insur­ers have found mar­gins squeezed and cus­tomer engage­ment decreas­ing.

That digi­ti­sa­tion is what cus­tomers want is not in doubt; 79 per cent of con­sumers world­wide say they will use a dig­i­tal chan­nel for insur­ance inter­ac­tions over the next few years, accord­ing to a 2015 report from con­sul­tants Bain & Co. What has been miss­ing from some insur­ers is a recog­ni­tion that going dig­i­tal is an oppor­tu­ni­ty to win back the rep­u­ta­tion, loy­al­ty and engage­ment loss­es of the past few years.

So, digi­ti­sa­tion can lead to more engage­ment with the cus­tomer. PwC research found that 68 per cent of con­sumers would be will­ing to down­load and use an app from their insur­ance provider; two-thirds (67 per cent) would be will­ing to have a sen­sor attached to their car or home, if it meant a reduc­tion in pre­mi­ums.

factors that would help customer experience with insurers

Deeper relationships

Accord­ing to David Law, insur­ance glob­al leader, at PwC: “Tech­nol­o­gy is going to be an impor­tant part of insur­ers’ abil­i­ty to cap­ture and analyse new sources of cus­tomer data and devel­op deep­er rela­tion­ships. Yet, the real dif­fer­en­tia­tor is how effec­tive­ly this infor­ma­tion is turned into insights and a readi­ness to lead the inno­va­tions in the mar­ket­place.”

Chal­lengers such as InShared have prompt­ed exist­ing insur­ers to raise their game. Flex­i­bil­i­ty and per­son­al­i­sa­tion are the watch­words as com­pa­nies learn to use cus­tomer infor­ma­tion bet­ter, not just to cut costs by reduc­ing pre­mi­ums, but to change behav­iour and increase loy­al­ty.

But none of this detracts from the need for real humans. Accenture’s Mr Cusano says: “Tech­nol­o­gy will change many insur­ance jobs and even elim­i­nate some. But a much big­ger trend is the sup­port that tech­nolo­gies like arti­fi­cial intel­li­gence will pro­vide, enabling insur­ance pro­fes­sion­als to spend less time on rou­tine admin tasks and more on adding val­ue: engag­ing with cus­tomers, solv­ing prob­lems, mak­ing bet­ter deci­sions.”

After all, all the data in the world is of no use if it isn’t analysed and if that analy­sis isn’t con­vert­ed into action. So the trick for insur­ance com­pa­nies now is to trans­late data pat­terns into bet­ter prod­ucts and ser­vices for their cus­tomers – and that’s where humans come in.

Instead of devel­op­ing and sell­ing prod­ucts, it means work­ing back­wards from cus­tomer needs and expec­ta­tions

“Peo­ple are being deployed in high­er val­ue roles that include more cus­tomer con­tact than ever before,” says Mr Cusano. “They like that.”

It means an about-turn in how insur­ers have oper­at­ed his­tor­i­cal­ly. Instead of devel­op­ing and sell­ing prod­ucts, it means work­ing back­wards from cus­tomer needs and expec­ta­tions – and that requires the right peo­ple.

preferred channels of communication with insurers

Internet of things

Accord­ing to the ABI: “Insur­ers will become real-time risk con­sul­tants. Through big data and the increas­ing preva­lence of con­nect­ed sen­sors in our lives – the inter­net of things – cus­tomers and insur­ers will be able to con­stant­ly share insights with each oth­er.”

So your insur­er might be warn­ing you about skip­ping a red light; point­ing out that you for­got to lock the front door; even spot­ting a poten­tial med­ical con­di­tion before it devel­ops into some­thing dan­ger­ous. Of course, insur­ers have been pric­ing accord­ing to per­son­alised risk for decades, as smok­ers and new­ly qual­i­fied male dri­vers will tes­ti­fy; but the dig­i­tal world will help break down the per­son­al­i­sa­tion fur­ther and poten­tial­ly change the riski­er behav­iour.

“Giv­en the inex­tri­ca­ble link between phys­i­cal risks and finan­cial risks, insur­ers have always had an inter­est in their cus­tomers mit­i­gat­ing risk in order to min­imise finan­cial loss­es, but until now have not often been in a posi­tion to help. The con­nect­ed world will change this,” says the ABI.

To do this bet­ter, insur­ers will need to form part­ner­ships with oth­er com­pa­nies. Insur­ers are start­ing to devel­op clos­er ties with car man­u­fac­tur­ers, offer­ing low­er pre­mi­ums for cus­tomers who opt for safe­ty fea­tures such as self-park­ing. The inter­net of things brings more change; Avi­va, for exam­ple, has linked up with Home­Serve, to tri­al Leak­Bot, a device that will spot water leaks. Giv­en that the insur­ance indus­try han­dled water dam­age claims worth £650 mil­lion last year, it could make quite a dif­fer­ence.

So far, so tra­di­tion­al; much of the data gleaned from social inter­ac­tion is sim­ply help­ing insur­ers to price their prod­ucts and tar­get the risks bet­ter. Instead of the cost of risk being spread through a wide pop­u­la­tion, it will be borne by the indi­vid­ual dis­play­ing the risky behav­iour.

But insur­ers will also be able to devel­op ser­vices that reward not only through low­er-priced pre­mi­ums, but by tak­ing a leaf out of retail­ers’ books and devel­op­ing, for exam­ple, loy­al­ty pro­grammes that allow more reg­u­lar inter­ac­tion than the once-a-year renew­al. PwC research sug­gests that more than half of glob­al par­tic­i­pants would be pre­pared to pro­vide their insur­er with addi­tion­al per­son­al and lifestyle infor­ma­tion to enable them to seek the best deal for rel­e­vant ser­vices on the cus­tomers’ behalf, mov­ing insur­ers from reac­tive to proac­tive.

So insur­ers will move from being sales­men focus­ing on the ben­e­fits of a prod­uct to con­sul­tants focus­ing on an out­come for the cus­tomer. Now who wants to be an insur­er when they grow up?