Recent insurance industry trends show that customer experience is now among the top three new bases of competition — across all lines of businesses — revealing a sweeping cultural shift from policy- to a customer-focused approach. While that may elicit eye-rolls and caustic comments, it’s true: customer experience is what’s going to make or break your business.
As an insurance leader, do you know if you’re providing the customer experience that your policyholders and agents expect? And are you investing in the right initiatives to meet those expectations?
To find out, we collaborated with Deloitte, Vlocity, and Newsweek Vantage, to conduct a global survey of 300 C-level insurance executives for our report, “Empowering Consumers and Agents: The New Basis of Insurance Competition.”
Below you’ll find three takeaways from the report that surprised me and are likely to surprise you as well.
1. A “superior claims process” is now essential
Research finding: I was surprised to see that a “superior claims process” appeared among the bottom three bases of competition. This is a clear indication that executives believe a streamlined claims process is a must-have, not a customer delighter. In other words, claims capabilities are a baseline need that drives customer retention, not a differentiator that drives customer acquisition.
What this means for you: The claims experience will remain a key moment of truth even if it’s table stakes. Your renewal rates depend on it. In a separate property claims satisfaction study by JD Power, 90% of “highly satisfied” claimants said they would definitely renew their policies. In contrast, 60% of claimants who were “indifferent” or “displeased” with the claims experience said they would shop for a new carrier within the year.
2. A “customer expectation gap” exists between insurers and customers
Research finding: There is misalignment in priorities between insurance buyers and insurers — what I call the “customer expectation gap.” Some salient points of difference:
“Knowledgeable salespeople” is the #1 requirement of customer experience that policyholders want, yet it appears relatively low on the insurer’s priority list.
“Mobile Apps” is the #1 requirement cited by insurance execs, yet it appears relatively low on the insurance buyer’s priority list.
“Product Recommendations (that match my buying habits)” is low on the insurance buyer’s priority list, while it is relatively higher on that of the insurance exec’s.
The good news is there’s agreement in priority for “quick and easy checkout” (convenience) and “product comparison tools” (transparency).
What this means for you: I’m always surprised by insurance execs who define their budgets and priorities without having spoken to any end users. Have you stepped “out of the building” to interview your policyholders and agents? Have you bothered to shadow your service reps in the contact center? Adopt the Lean Startup method of “getting out of the building” to validate customer needs and test your hypotheses.
3. Insurers’ confidence in customer experience belies their actual level of digital maturity
Research finding: 76% of insurance execs felt that their service reps and/or agents were ready to deliver the expected level of customer service.
This was a bit of a head-scratcher for me. Why are insurers so confident about readiness when the majority of insurance organizations are still in the early phases of digital transformation? For example, our study reveals that over half of insurers have only partially automated their quote-to-issue processes (recall that “quick and easy checkout” was #2 on the insurance buyer’s priority list).
What’s more, in a separate report titled Digitization, Automation, and Value Creation in the Insurance Industry,” that we co-authored with ACORD, we looked at the top 100 global insurers to assess each company’s digital maturity. Surprisingly, we found that 61% are still in the early stages of digital transformation.
No doubt, the lack of digital maturity is having a profound impact on agents and policyholders. In a separate 2018 survey of 1,970 insurance agencies, the Independent Insurance Agents & Brokers of America (IIABA) found that:
76% of agencies do not provide any mobile applications for clients
Only 18% operate 24/7
89% of agents do not have live chat capabilities
Our Newsweek study takes the IIABA results further by prioritizing the specific capabilities that are sought by service reps and agents.
What this means for you: Agent and service rep readiness are driven by two things: 1) the extent to which technology is deployed and 2) level of user adoption. The former is easy. The latter is hard.
In the IIABA study, 55% of agencies found “educating the team on new technology” to be a roadblock in the use of digital tools and 43% cited lack of “staff commitment to use the new workflow.”
To overcome these challenges, involve your users early, co-create the future state workflow, and, for goodness’ sake, get out of the building.