A new report by IBM says that until recently insurers didn’t need to be overly concerned about how they were perceived by their customers – claiming the industry focused more on selling than providing good customer service.
In its report Elevating the Insurance Customer Experience, the technology firm says “times have changed”.
“Due to the proliferation of the internet and social media, customers can easily exchange information about the brands they do business with, their products, and the quality of customer service those brands provide after the deal has closed,” says the report’s authors.
“Market power has shifted to the consumer. Insurance has moved away from being a product that is sold to one that is bought, and the right customer experience drives that purchasing decision.”
IBM set out to understand how today’s insurers fare in the minds of consumers by interviewing 1,100 insurance executives in 34 countries along with 10,000 insurance consumers.
Among its findings are that 60% of insurance executives agree their organisation lacks a customer experience strategy, and 64% of consumers want their insurer to understand them better.
There is also an apparent missmatch when it comes to the channels insurers adopt to communicate with clients.
For example, the survey found that 49% of consumers prefer to use an insurer’s website, but only 5% of insurers place any value on their site for customer communication. Also, while 17% of insurers place importance on personal customer contact, 50% of all consumers value this.
Market power has shifted to the consumer…
Consumer trust in the insurance industry was also gauged in IBM’s survey, placing overall trust levels across the sector at 42% in 2020 – up from 2008’s 39% (the height of the GFC), but lower than 2012’s 45% (its peak since 2007).
“It seems customers don’t stay with a provider because of the great improvement in the customer experience, but rather because they trust everybody else even less,” says IBM. “As protection against attrition, and as the basis of a business model, that seems shaky ground to stand on.”
The report says that if reducing costs is the goal of insurers, then retaining existing customers has to be better than finding new ones.
Customer retention is at least four times as cost-efficient as pursuing new business…
“Customer retention is at least four times as cost-efficient as pursuing new business,” it says. “And consumers would reward a strong service focus.
“Asked where they wanted their insurer to provide good customer experience, respondents rated customer service and claim processing highest, whereas onboarding was in the bottom half, and shopping for insurance dead last.”
The report’s suggestions to the insurance sector include:
1. Explore beyond the four walls of your organization. To better understand growing customer expectations, look to peer insurers to benchmark yourself and learn from them. Don’t hesitate to copy what works in adjacent industries such as retail, banking, and travel.
2. Evolve from traditional coverage provider to trusted adviser. Become relevant in your customer’s daily lives to create more frequent interactions, whether by offering general liability policies “by the job” for contractors, on-the-spot travel insurance, or creating a health and wellness daily experience.
3. Leverage platforms and partnerships. Put a specific need in touch with a specific coverage, and create new on-demand products and services. Look to insurtechs to discover and integrate relevant technologies into the existing organization and accelerate innovation.
Download the full PDF report here.