You know the drill, your insurance comes up for renewal, you need to find the best price as quickly as possible and you know there is a one-stop shop for finding out who can give you the lowest premium.
Insurance has been commoditised. We don't care who insures us, who underwrites the premium or how we interact with them. Essentially, we have become fickle. We only care about how much will come out of our bank account each month.
As the need to reverse desertion reaches critical status, UK insurers must evaluate their options on the table. From rethinking pricing models, reimagining products and re-invigorating the customer experience, we explore some of the ways digital can help
attract customers, and keep hold of them.
Firstly, what exactly is the problem?
Brand loyalty is the aspiration of any consumer-facing organisation. After all, it’s far more cost-effective to keep a customer than find a new one.
Academics such as
Cătălin and Andrea (2014) describe consumers attaching brands to their personal identity in the theory of self, fostering a deep loyalty as the brands become an inward and outward reflection of their
personality.
Unfortunately, this applies far more to products than to services.
A customer’s choice of travel agent, mobile phone network or insurance provider is far less representative of their persona than their preferred footwear, mobile phone or automobile brand.
For insurance providers to build customer loyalty, they have to consistently deliver on three focal areas:
And really, they have to nail all three.
This is far from an easy task, however - remember, most incumbent insurers were not set up in the digital age. Back office processes, IT infrastructure, middle office and customer channels are often built on outdated tech that is rigid and inflexible. It’s
hard to create a new digital product if the intertwining systems can’t integrate.
For insurers to capitalise on changing consumer needs and evolving technology - rather than simply keep pace with it - they need to reconsider their outlook on developer operations and agility. By experimenting constantly, organisations must learn to fail
fast, find out what works, and optimise their digital products to suit.
Insurers can then offer a full suite of modern customer channels to prevent friction in the online/offline customer experience, with the necessary infrastructure in place to support new and regular releases. Otherwise, clientele default to picking up the
phone and ringing the expensive, unscalable call centres we strive to advance from.
It may take investment to get there, but it’s an investment that pays dividends.
So, how can digital help?
Let’s break it down into its constituent parts.
Outstanding Customer Service
This doesn’t just refer to a friendly phone manner and a well-wishing text on your birthday. Outstanding service means giving customers exactly what they want, exactly when they want it, and keeping close contact is the best way to go about it. Close contact
as in, wherever they are and whatever device is most convenient.
Over 87% of adults in the UK curretly own a smartphone, meaning mobile applications are the quickest route to touchpoint a brand can get. Leading with premium information, personal details, comprehensive FAQs, relevant links and rewards mean customers can
settle their own curiosities or benefit from a brand interaction before reaching the ‘better give them a call’ stage.
Customers must be enticed, encouraged and rewarded for habitually engaging online, transitioning into a new paradigm of digital customer experience (CX). From there, all interactions from renewal reminders to settling claims can be directed through digital
channels that are safe, secure and accessible.
Engaging customers in-app with conversational AI is another route to enhancing CX through digital. With chatbots, clients can talk through their issues without the inconvenience of call centre
queues.
This applies to all aspects of the insurance customer journey. Any standard process you’d expect from your provider should be available in-app and on-demand, as well as an ever-expanding range of new ones to draw your clients in.
Furthermore, as 75% of users who attempt to purchase insurance online describe difficulties with the process - getting this right is a sure-fire route to competitive advantage.
But don’t stop there. Crafting an omnichannel experience through social media, email, SMS and other touchpoints can in some cases keep the conversation alive. Regular communication with your client base - not just when renewals are approaching - helps build
a relationship between your users and your brand. The deeper the engagement, the stronger the loyalty.
Balance automation with a hint of human touch and you get a customer-centric model that’s ready to serve at all times.
Consistently improving products & experiences
Stagnation is rife in insurance which means the opportunity bell is ringing.
Offering novel product models are helping Insurtechs break the mould. Incumbents are at risk of static policies that
require customers to pick one that fits best. In a modern, digital landscape, and such a competitive market, this strategy simply won’t cut it.
Customers want options. The ability to curate customised plans by selecting desired features is made easy on a digital platform. Users need flexibility around what they want to insure and how long to insure it for. By empowering customers with this level
of control they are less likely to find a better fit elsewhere.
With only 22% of incumbent insurers offering personalised premiums and contextualised mobile-first digital services, and a mere 15% of customers claiming to be satisfied with their insurance provider's digital experience, moving toward a truly customer-focused
model requires crafting an experience that’s built for the individual.
The key to such an experience lies within customer data.
Leveraging information gathered throughout the customer journey, including claims, renewals, purchases and more lets insurers understand their customer and their behaviours. This, in turn, allows offers, plans and communications to be tailored through the
right channel at the right time showing customers that they are valued and understood.
Competitive Pricing
First-hand digital data capture can benefit customers’ pockets too.
While the ‘black box’ car-insurance model has been around for some time, the growth of the mobile and IoT means connected devices
are impacting models across health, home and commercial insurance markets in a similar fashion. Tapping into the ubiquity of mobile technology can turn data capture from clunky and abrasive to smooth and un-invasive.
Understanding a client's situation gives greater accuracy in risk assessment and mitigation, and potentially a lower premium for the customer… and who doesn’t love a lower quote?
Caution must be thrown to the wind, however, as telematics are unlikely to give competitive advantage by themselves. While augmenting services with connected devices may mutually benefit insurers and their customers, widespread adoption means they won’t
be enough to differentiate from rival firms. Focusing on the wider market ensures pricing is competitive regardless of the tech at their disposal.
The other route to optimised pricing is to save on overheads and pass those savings on.
Incumbents are bogged down with time-consuming, resource-heavy back end processes like fraud detection, account servicing, policy administration and claims processing.
Banks like Monzo entice users to divulge information about their spending through in-app features, which in turn communicate trends and value through machine learning (ML) and artificial intelligence (AI). By encouraging users to share details about their
driving, spending, lifestyle or travel plans, any data relevant to their insurance policy can feed into an ML model. With enough data on an individual, processes such as underwriting can be automated, improving accuracy and saving on resource expenditure.
Implementing these solutions will take investment, which in time is recuperated through lower running costs. Lower costs mean better margins, and better margins benefit both insurers and customers.