A lot has changed in the past decade for large insurers, and even more will change in the decade to come. Customer feedback, technology developments, and a maturing insurtech marketplace means there are more opportunities for insurers to take advantage of than ever before - all for the benefit of the customer.
In an ideal world, insurance would always be a customer centric product and experience, and to some degree it has been in the past. But heading into 2020, the gap between most existing insurance products and customer experiences and modern consumer expectations is glaring in a way it hasn’t been before.
Luckily for insurers, today’s customers are more than willing to share their experiences with the products and services they consume. Customer feedback is now immediate and relentless, and insurers know that they need to become better listeners. In fact, a recent survey by KPMG of 132 insurance CEOs found that 64 percent of them believed they need to significantly improve their understanding of customers.
While it’s a daunting task, particularly for insurers that have been slow to adopt new technologies and shift to cloud-based computing, it’s also the perfect time to zero in on the customer. Today, there are endless products, services, and potential partnerships capable of transforming the way insurers communicate with their customers.
Engaging with customers in a whole new way
That’s what it all starts with - communication. There needs to be more of it, it needs to be more intentional, and it needs to engage customers in the way they want to be engaged.
Channels of communication are changing. Customers want to be able to connect with the companies, products, and services they purchase in one consistent and seamless omnichannel way. This time last year, EY research found that 44 percent of customers had no interactions with their insurers over the previous 18 months. For an industry currently struggling with a significant insurance gap, particularly in life insurance, this lack of communication could very well lead to customers losing sight of the product’s relevance.
How much has changed in the last year? It’s true that insurers are certainly beginning to catch on. The AI-powered chatbots and integrated apps now afford insurance customers a seamless communication process between them and their insurers in everything from purchasing to onboarding to claims. Insurers are also partnering with insurtechs in order to integrate existing systems and solutions into their offerings directly. When these partnerships succeed, they can be of massive benefit to the insurer, insurtech, and the end customer.
As a bonus for insurers, the amount of data collected in this process allows them to further improve and personalize the customer experience, creating the ultimate win-win situation.
Moving to the cloud to secure data accessible and increase flexibility
The biggest issues insurers need to solve heading into this decade is their ability to adjust, develop, implement, or adopt with ease. Essentially, their lack of agility, of the lack of agility in their legacy systems, is the number one barrier between insurers and meaningful change - and they know it. According to McKinsey, nine out of ten insurers identified legacy software and infrastructure as barriers to digitization.
The reason this is so important is because without the ability to adjust frequently, insurers can miss out on valuable opportunities to deliver a better customer experience and respond to feedback.
One of the ways insurers can become more agile is to shift their computing capabilities to a third party, cloud-based platform, like AWS. Moving away from legacy systems and relying on a partner like AWS to handle their computing capabilities allows insurers to worry less about their tech and focus more intensely on creating a better customer experience with their increased flexibility.
This move to cloud-based tech is a massive undertaking for large insurers, but it comes with a hefty reward. The ability to scale, innovate, develop, and distribute quickly, and adjust these models with ease, allows insurers to better keep up with competition in the market and customer expectations.
Harnessing tech while keeping a tight rein on potential negative side effects is vital
With all of the technologies now available to insurers, and the general lack of regulation surrounding them, all insurers must be extremely careful when implementing new technologies like AI and facial recognition. This is particularly true in life insurance, which has experienced increased regulations in numerous global markets in the past few years.
Technologies like AI and facial recognition have been known to demonstrate alarming bias, meaning insurers and their teams must do their due diligence before adopting them. When it comes to implementing new technologies, it’s important to ensure they’re to the benefit of the consumer. While AI and facial recognition software may improve some aspects of the customer experience, its fallbacks and potential for harm to certain consumer demographics make it a risky investment that insurers should be wary of until they’re regulated and properly developed.
Personalization is now everything, from price to product to distribution
It’s not only the age of the customer, but it’s the age of the individual. Big tech has given people the tools to completely personalize their digital experience, and increased their expectations for the products and services they consume accordingly.
For insurance customers, this means insurance products personalized to their unique situation and needs, products that are flexible, transparent, and easy to understand. For insurers, this means tailoring the product development, pricing, and product distribution process in order to respond to customers’ demand for increasingly personalized and accessible products. This situation can certainly be win-win, and it should be, particularly when it requires an insurer to ask customers for more data in order to make these adjustments.
The human side of insurance is more important now than ever
Technology is the name of the game right now in insurance, but despite this, or perhaps because of it, it’s never been more important for insurers to fully internalize the sensitive nature of their product and offer a more human approach to the customer journey. Replacing a phone is one thing, but when insurers are dealing with families who’ve lost a loved one or a home, delivering a genuine and empathetic experience at this difficult time is so important.
Ani Matson of Digital Marketing Strategies defined this approach as insurance companies needing to "transform transactional relationships into emotional ones." Insurers that manage to deliver seamless digital experiences for their customers while simultaneously training their staff to respond efficiently and sensitively to claims can ideally position themselves heading into this next decade.