At the core of the customer experience is understanding the needs and wants of customers and the ability to consistently delight them at the right time – regardless of channel. Like many industries, consumers’ expectations of brands are ever-changing targets in insurance. They are influenced by everyday digitisation and easy-to-use devices brought to us by tech giants such as Apple and Amazon, as well as their own unique consumer lifecycles. One pivotal aspect of customer experience and influencing a consumer lifecycle is engagement, and here lies a significant hurdle for insurers. Insurance is typically a low-touchpoint industry and a tremendous barrier to the crucial engagement that’s required to create an ideal customer experience. Getting over this hurdle requires innovation, creativity and the right technology.
Life-insurance products and general-insurance products are distinctively different, and health insurance is a beast in its own right. From a provider’s perspective, that means very different challenges and ways to engage with consumers. However, one thing they all have in common is the low touchpoint. In most cases, there is only contact with the insured at buying time, claims, renewals and occasionally when changes need to made to an existing policy. This means that there are very few opportunities for the insurance companies to get to know their policyholders and engage with them.
The low-touchpoint nature of insurance means that there is a significant reliance on data collected from claims and other big-data sources to understand consumers’ needs, map their lifecycles, create new products and provide a better customer experience. Selling insurance is selling a promise, and in the case of life insurance for example, one that might have to be fulfiled decades down the road. Therefore, trust is also a big factor. For example, Total and Permanent Disability (TPD) insurance, maintained over a couple of decades, can amount to approximately $60,000 in paid premiums. Consumers need to trust that the insurer will still be around to pay a claim should the need arise.
The term omni-channel originated in the context of a seamlessly integrated retail experience across multiple channels, such as online stores, apps, telephone and brick-and-mortar shops. Clearly, there is a close relationship between the sales channels and the technological platform. The seamless aspect is essential to a flawless customer experience, despite the significant interoperability challenges. The ability to engage with customers across multiple platforms increases friction and opportunities to capture further relevant data.
The consumer buying process is also very different. To many people, insurance is boring, and buying policies is often dictated by affordability. Health insurers are very much at the mercy of comparison sites, which essentially are brokers in their own rights, and only compare and sell the products from participating health insurers. Gradually, we are seeing similar comparison sites for general insurance such as for vehicles. This effectively creates a race to the bottom, where premium cost is the key measure of comparison. This is actually quite dangerous, because it often results in under-insurance (either by choice or unknowingly), while customers should be comparing products based on benefits and coverage in the event of having to make a claim. It is clear that with both health and general insurance there is no consumer loyalty – switching is as easy as swiping the screen on an app.
Health and general insurance have essentially become commodities, where ill-informed consumers can fall into the trap of purchasing the wrong policy or underinsuring themselves. An omni-channel engagement that simplifies the process of comparing similar products and their benefits (not just cost) would not only help consumers to better inform themselves but also make educated choices and decisions beyond simple price comparisons. Being a “trusted advisor” and reliable source of information, such as advice in risk reduction or incident prevention, could also facilitate building up brand loyalty.
Life-insurance products, including TPD and income protection, have further complications. For many people, these are bundled into their superannuation, and in most cases, they have no idea as to whether or not they are the best-suited products for their individual circumstances. Plus, it’s better than having no insurance at all. However, this might change soon since regulators are wanting such insurance products to be decoupled from superannuation. This will mean that customers will need to become more knowledgeable about the products and more conscious in the decision-making process.
In fact, the regulatory change may create a great opportunity for providers of TPD and income protection to engage with their prospects and create meaningful customer relationships.
Life-insurance products are complex, and they elude most people. Clearly, consumers need to be “educated” on the nuances and given the tools to make the best selections. While some will still rely on the sound advice of a financial adviser on this matter, many do not have access to that advice. Leveraging their different sales channels as well as communication platforms, insurers have the opportunity to proactively drive that “education” aspect and build a bridge with consumers. For example, using web-based presentation tools, an insurer could host a live presentation with Q&A on regulatory changes and implications. While an app might not be as useful to a life insurer as it is for a general insurer, an authentication app could streamline lost-password resolution, call-centre authentication and justify downloading the app.
In regards to insurance policies that are sold via financial advisers, the churn here might not be as intense as it is in general and health insurance. However, some insurers noted that brokers’ upfront commissions have been used as an incentive to frequently switch clients to different policies, despite the risks and effort associated with this.
Here again, the regulator-imposed changes on commissions are having an impact. One of those consequences is that for many financial advisers, some clients have become too costly to manage, and insurers now need to have a suitable channel to look after those policyholders. This is further compounded by the fact that quite often people are still unclear about the policy they have bought and don’t fully understand all of its aspects. If this isn’t addressed in a timely manner, it is likely that the policyholder’s perceived value may not be strong enough, resulting in a buyer’s regret and a cancellation.
Channel challenges don’t stop there. As discussed earlier, consumers’ expectations are influenced by the likes of Amazon, Apple, Uber and Airbnb. We are connected 24×7 thanks to our smartphones and increasing number of IoT devices. However, buying insurance, especially life-insurance products, is a lot more complex. Product Disclosure Statements (PDSs) are lengthy and hard to understand, which is why a number of providers have ongoing initiatives regarding the simplification of that buying process. Automated underwriting is gradually making its way in, and the use of big data also provides further insight into consumer lifecycles and their changing needs.
Insurers rapidly have to come up with innovative ways to engage with their customers more frequently, educate them and sell the value of their policies no matter the life stage. Consumers are a moving target and a fast-moving one too. Insurers should be working hard at keeping customers well within their sight while implementing innovative and agile ways to engage across all of their relevant channels.
However, here’s a word of caution. While leveraging an omni-channel engagement approach is clearly beneficial, each individual channel needs to make sense and be relevant. Jumping on the “me too” bandwagon and offering a multitude of channels to customers to match or be ahead of the competition can have disastrous consequences. The chosen technology-driven channels need to add value to the consumer as well as to the relationship. Furthermore, the correct technology needs to be in place to support the channel-hopping nature of the consumers’ behaviour.
Insurers are at a turning point. External influences and regulatory changes have opened opportunities to engage more closely to consumers, and great customer experience can lead to brand loyalty and advocacy. However, achieving this requires consistency in the delivery. Leveraging omni-channel sales models as well as omni-engagement platforms has significant benefits in delivering outstanding customer experience; however, caution must be exercised since a channel or platform must remain relevant to the customers.