Tag Archives: customer experience

Why CX Must Trump Efficiency

There isn’t an insurance business in the land that isn’t talking about digital transformation. Whether talking about AI, robotics or platforms, the majority of the industry is confident it’s heading toward a brightly lit, digital future.

The motivation for transformation? We are told customers are demanding a better experience: an interaction that is quick, clean and gets the job done with minimal fuss.

But, for all the effort made, the customer experience in insurance is fundamentally the same as it was 10 or 15 years ago – it’s still based on call centers. I think that is because, while the stated driver for digital change may be the customer, its primary purpose has been to reduce costs.

That efficiency-first approach has resulted in many organizations looking to webforms to digitize their customer-facing processes.

Webforms do a decent job leveraging digitalization to automate the beginning of processes normally done manually. Yet any claim coming from a webform still requires the capable hands of an operations employee, who will perform the rest of the process and communicate the outcome to the customer. In addition, webforms can’t converse — reducing them, essentially, to digital monologue. While customers want a quick, hassle-free experience, many want that done through conversation of some kind. Conversations are comforting, familiar and create a sense of engagement that a static form can never replicate. 

A true digital experience is one that takes all the benefits of a one-to-one conversation and automates it using conversational process automation (CPA). That is the world that webforms were trying to create but failed to produce because of the focus on efficiency.

Source

CPA leverages a chatbot conversational interface to deliver an efficient customer experience, thinking about the customer first while saving cost. It allows for the execution of high-value, customer-facing processes, integrated into insurance platforms and systems and complying with security and audit requirements.

CPA will, I believe, bring the digital change that so many seek. They can replicate the conversational style and effectiveness of a human call handler for the vast majority of recurrent insurance interactions – from quote and buy through to claim notification. 

CPA has the capacity to handle call volumes that only a very large, very expensive call center could match. Of course, there are limits to what CPA can currently do, but it is improving all the time — getting smarter at predicting queries, reacting to something that doesn’t fit into the box and leading the customer through complex processes. Webforms, for all their value, can never do that. 

As we collect more and more data through CPA, performance becomes more accurate and, according to a report from IT advisory firm Gartner, by 2022 70% of white-collar workers will interact with conversational platforms on a daily basis. 

See also: Insurtechs’ Role in Transformation

The combination of process automation and superior customer experience will drive efficiencies. A recent report by McKinsey estimates that, in the claims process alone, automation could reduce the cost of that journey by as much as 30%.

For insurance to be part of that digital future and to reap its rewards, the industry has to have customer experience as its main motivator, replicating all the value that a one-to-one conversation brings and putting the customer in control of the experience while keeping costs to a minimum.

If we persist in letting costs saving alone drive transformation, we are going to end up with fancier, more expensive tools than webforms that will deliver marginal efficiency while continuing to leave customers frustrated. And that would be a failure of purpose and progress.

3 Trends That Defined 2020

As the New Year begins, the time for reflection has arrived. After a year that nobody could have predicted, I look to summarize three defining trends that developed last year and give my own prediction about the future of insurance as we begin the journey of 2021.

1. COVID-19 compelling the need for agility

Falling equity markets. Historically low interest rates. Shrinking new-business volumes. Reductions in consumer spending. The impact of COVID-19 within the insurance industry has been pronounced.

Insurers face a cacophony of challenges: new rivals, increased customer expectations, stalling transformation projects – the likes of which have been detailed extensively by market analysts.

However, the impact of COVID-19 was not in bringing these challenges into being but to cast them into the light: accelerating their impact and forcing insurers to re-prioritize their goals in unfavorable market conditions.

And, while many have articulated how we got here and why the challenges happened, few are commenting on what happens next, and the road back to pre-COVID rates of growth for the industry as a whole.

New Priorities

Insurers face a transformation crisis. Many long-term digital projects are stalling. While it is impractical to undertake a capital-expense-heavy program in the era of COVID-19, the demand for digital services continues to grow.

Insurers, therefore, are faced with a contradictory impasse. The solution? Reframing digital transformation as an iterative process as opposed to a one-off wholesale solution.

By undertaking small and agile projects, with a quick time-to-value and low cost, insurers can obtain the short-term benefits that drive growth and deliver agility with low risk.

Using this methodology, insurers can continue to innovate, digitize and build capabilities in applications, cloud or low-code solutions, while not over-committing to any specific long-term objective that could carry high risk due to the volatility of the market. 

2. The Continued Rise of Customer Experience

Customer experience is not a new concern. The adage, “the customer is always right,” has been a ubiquitous element of the business lexicon since the times of Harold Selfridge back in the early 1900s.

But, today, customers demand services that are personalized to their every need and prioritize simplicity and performance, so the importance of customer experience has grown. The realization that policy admin systems are not the most valuable systems insurers possess is starting to come to the fore.

In years past, the industry was built around policy. If you were traveling on holiday, you chose a policy that best satisfied your needs. If you bought a home, you chose a policy that provided the level of cover you wanted. If you drove a car, you chose a policy that matched your driving experience. And so on and so forth. The policy was at the center of the equation, and policy admin systems were created to maintain this status quo.

See also: Designing a Digital Insurance Ecosystem

Fast-forward to the modern day. Now the customer is king, and customers want their individual needs satisfied immediately, clearly, just in time, with a personalized service, and they want to only pay for the cover they need. That is a world away from selling a standard policy a million times over to people who might (or might not) need it, either in its entirety or all of the time.

In response to this shift, insurers are attempting to change the focus of the industry and gear it toward customers, but attempting to do this with a policy admin system is the equivalent of trying to fit square pegs in round holes: It simply does not work.

Round Pegs. Round Holes.

Insurers, today, must equip themselves with the right tools to provide an exemplary service. Policy admin systems that are focused on the creation of policy remain invaluable tools but only when used appropriately.

Instead of using a back-end system to provide a front-end service, insurers are realizing that they must focus on implementing two-speed architecture; the back end focused on policy, the front end focused on the customer and each designed to communicate with the other in an open-looped system.

Through this design, policy admin systems are put to use doing what they do best, while a more strategic, adaptable, omnichannel and personalized customer relationship management system can run in the foreground, delivering customers the content and experiences they want and driving up insurers’ satisfaction rates as a result.

3. The Unrelenting Pressure of Digital Disruption

“Disruption” and “innovation” are terms often used interchangeably, but the truth is that they have very different meanings.

Innovation, makes an existing approach better, whereas disruption transforms an existing approach into something new.

For the insurance industry, digital has rapidly moved to the disruption category.  

Digital disruption – or digitization – is having such a pronounced impact on the insurance industry that it is radically changing the very essence of what it means to be insured.

Traditionally, in the event the worst happened, insurance would reimburse you to the value of the wrong you experienced, at a cost to the insurer. It was a cause-and-effect relationship.   

However, via the process of embedding new technologies into their everyday operations, insurers are moving the needle away from reactionary tactics.

Using AI-driven technology and big data in real time to more closely monitor insurance products and predict and manage claims events before they even happen, insurers are no longer merely responding to when something goes wrong; they’re helping their customers avoid it.

From Reactive to Proactive

This disruption is having a pronounced impact on the industry as a whole – as a growing number of consumers demand this protection and insurance package.

Today, insurers understand that technology holds the key to delivering this differentiated value to their customers. But acknowledging new technologies and implementing new technologies are very different propositions.

While digitization is a foregone conclusion for insurers wishing to compete in the world of tomorrow, understanding how to deploy the right technology for the right purpose is no small feat. And those really willing to compete in this new dynamic must be prepared for significant change to the systems, processes and people within their business.

See also: How Will Strategies Change in 2021?

A Complex Equation

It is, perhaps, underwhelming to describe 2020 as memorable. The term era-defining might yet serve a more accurate purpose. For insurers, the year was unpredictable at best and unmanageable at worst; a string of disruptive and unforeseen events combining to create a pressure cooker of complexity.

Today, insurance stands on the precipice of profound change, and this piece has articulated a handful of the defining trends that brought us here. But as we look to the future of the industry, my prediction is that customer experience will become the single greatest definer of success, and those insurers that best find the balance between policy and customer will reap the rewards.

To learn more, check out these insurance success stories.

COVID and Power of Personal Connections

We are at a moment in history when businesses in all sectors are rapidly reworking how they interact with customers, to see how they can remain a valuable part of people’s lives as so much is changing. The pandemic has accelerated these changes, of course. In its massive disruption of daily life, shaking people and societies out of familiar routines and forcing new ways of pursuing their professional and personal interests, COVID-19 has created a new space for changes in behavior.

The insurance industry — long known for offering peace of mind, stability and trust — is adapting. In fact, the insurance industry is expected to spend nearly $28 billion annually on customer experience solutions. But many people still lack trust in insurers. Fewer than half of those surveyed in EIS Group’s Customer Compass Report say they trust insurers to respond to their basic needs. That is troubling and should be a wake-up call.

Now is the time for insurers to check their headings and set new courses to gain the trust and satisfaction of customers. To start, insurance companies must focus on adjusting two major components found throughout the customer journey — customer experience and personalization.

Customer experience and personalization — which have been predominant concerns in retail for some years — are now only second and third to price when it comes to main reasons why people might switch insurers, according to the Customer Compass Report. A full 28% of policyholders stated that poor customer experience is a “main reason” for leaving a provider, and 20% cited lack of personalization. Getting experience and personalization right is no longer a “nice to have” for insurance providers; it is quickly becoming a crucial element of what insurers offer to customers.

As the world becomes increasingly digitized, opportunities abound. Fitness trackers, for instance, help their users with real-time insight into their health and activity — but the same data can be fed into a health or life insurance product to provide personal rewards and discounts. A few insurers, including John Hancock with its Vitality program, have been successful with this model. Similar approaches are relevant for automotive insurance, rewarding users when they avoid risky activities or drive responsibly, while giving them options for more extensive insurance if that’s what is appropriate for their lifestyle and behavior. 54% of consumers indicated they would consider car insurance they would pay for only when they drive. 60% would consider car insurance that costs less if they drive at low-risk times of the day.

See also: How Insurers Are Making Connections

Customers can be offered multiple ways of communicating, including email, self-serve interfaces and automated chatbots as well as phone and instant messaging. However, consumers have astonishingly low expectations of insurers — only 23% expect insurers to integrate their experience across mobile, web and in-person channels.

For a truly satisfying customer experience, insurers need to ensure that customers can move seamlessly between those channels as they wish. As an example, a buyer might receive some initial information about an insurance offer via email, then use a messaging app to get further details in a conversation facilitated by a chatbot. A web form would then be pre-populated with the information from that chatbot conversation, and a quote sent. At the same time, a call center would be available where a representative can see an overview of progress, if the buyer has any final questions before completing the purchase. While this example may seem commonplace for many consumer buying cycles, it is not for insurance buyers.

One truth of the digital economy is that people are willing to research and assess which products are right for them. But they are also interested in simplicity and want a “one-stop shop” for products that meet their specific needs. With data and tech accelerating faster every day due to the pandemic, insurers must embrace the challenge and seek all the potential opportunities that can improve customers’ lives.

Using Payments to Improve the CX

In an industry with infrequent customer touchpoints, like insurance, every policyholder interaction holds a lot of weight. Your organization only has so many opportunities to connect with insureds, which means one negative experience could result in policy cancellations or customer churn.

It’s imperative for insurance organizations to evaluate the one, universal touchpoint every policyholder must engage with: making premium payments. This is one of the few moments your organization has a policyholder’s attention, so evaluating and optimizing your insurance payment experience could be monumental to organizational success.

Because the policyholder payment experience is critical to the success of insurance organizations everywhere, we decided to uncover what this experience is truly like. We conducted an online survey in June 2020, through which we asked policyholders about their recent payment experiences, payment preferences and what contributes to a good user experience.

We discovered a few key points that are affecting the insurance payment experience. Here are a few of the biggest takeaways:

Policyholder retention is key

Combating customer churn and policy cancellations are well-known challenges in the insurance space – and those pain points were represented in our survey results.

To gauge overall satisfaction with their current insurance provider, we asked survey respondents how likely they were to look for a new provider in the next 12 months. In total, 45% of respondents said they are “likely” or “very likely” to search for a new insurance provider in the coming year.

The results was consistent across generations: 50% of respondents under the age of 30 and 52% of respondents ages 30-44 said they are also “likely” or “very likely” to look for a new provider.

The key takeaway: Retention and satisfaction should be major focus areas among insurance organizations.

See also: COVID-19: What Buyers Want Now

Convenience drives online payments

We dug into how respondents felt about their insurance provider’s payment experience. When asked how they chose to make their most recent insurance payment, 77% of respondents said they made an online payment, either through a one-time checkout route or automatic payments (like AutoPay). This response was consistent across all age groups; 87% of respondents under the age of 45 made their most recent insurance payment online.

payment methods

Next, we asked why this majority chose to make a payment online, rather than mailing in a check or calling their insurance provider. Overall, convenience was king.

38% of respondents chose the online option because they felt it was convenient, and a further 39% of respondents were already enrolled in AutoPay. This proclivity toward online payments is a fantastic trend for insurance providers; more insureds opting to make payments through self-service options ultimately means less work for your organization and, likely, a decrease in print and mail costs.

But, before you get too excited about those results, there is another side to that coin we must consider.

While online or AutoPay options appealed to many policyholders, we also found that payment platforms that aren’t user-friendly actually deterred online payments: 28% said they chose not to pay online because their provider’s system was too difficult to use.

So, while many insureds would prefer to make payments online, they may opt for a manual method if the online payment experience offered to them is subpar.

The key takeaway: Optimizing the online payment experience is critical; simply having an online payment option does not mean your organization is automatically providing a positive user experience.

Policyholders expect omni-channel offerings

We also wanted to get a sense of how satisfied insureds are with the omni-channel payment options (i.e. omni-channel capabilities, where you can pay a bill on your phone just as easily as you can on your laptop) their insurance provider offers. Overall, policyholders are satisfied with their options, with 46% responding “very satisfied” and 28% responding “satisfied.”

While it’s encouraging to see satisfied insureds, this feedback means a lack of omni-channel options could be a dealbreaker for your policyholders. If your organization is unable or unwilling to provide the flexibility of omni-channel offerings (which many of your competitors likely are), you could face customer turnover.

The key takeaway: Omni-channel offerings aren’t an option any more; they’re expected for insurance payments.

See also: 3 Tips for Increasing Customer Engagement

Insurance organizations can no longer afford to ignore their online payment channels – the results of our survey made that extremely clear. As one of the most frequent policyholder touchpoints, your organization’s payment experience could be the factor that determines churn rates and overall organizational success.

Simply put, optimizing your online payment channels is the best way to provide a positive policyholder experience and retain your customers.

Technology and the Agent of the Future

Many agents see technology as a threat. Several years ago, when hundreds of millions of dollars began to flow into insurtech companies, the promise these startups made was that they would disrupt the insurance industry. The rise of online insurance distribution firms, with steadily increasing capabilities, has added to the anxiety of insurance agents. 

But as the years go by, what we’ve seen is technology that, while it may be disruptive, holds the promise of reducing the drudgery of agents’ lives. It can do this by eliminating the need for manual data gathering, creation of applications, coverage analysis, policy marketing and proposal preparation. The technology promises to free agents to spend more time with clients and prospects, allowing them to broaden and deepen their relationships, which is the most important and highest-value activity of the professional agent of the future. 

The AI Promise

If one steps back from all of the tasks performed by agents today, data gathering, manipulation and presentation take up a large percentage of the time. All of these tasks can and will be performed more efficiently by artificial intelligence (AI). 

Peter Diamandis, the author of “Abundance: The Future Is Better Than You Think,” says that not only will everything will be knowable in the very near future, but artificial intelligence will be able to retrieve it and organize it for us instantaneously. While this seems fantastic to some, it’s already taking place. Many insurance companies, for example, are already purchasing third party data for all or most of the underwriting information they need to make coverage and pricing decisions and then using this data to make those decisions in real time. 

One of the largest commercial carriers has been demonstrating the capabilities of AI to eliminate agent’s work by quoting business owner policies (BOPs) with nothing more than an address. While this capability is nascent, it will be expanding dramatically in the next few years. In personal lines, Plymouth Rock Insurance has demonstrated its ability to underwrite, price, sell and deliver homeowners insurance with a lower-than-average loss ratio with nothing more than an address. These kinds of capabilities are being developed now and will rapidly reduce the time agents must spend on these and similar activities in the near future. And they won’t be limited to simple accounts; they’ll also extend to the most complex middle market and large accounts, as well. 

See also: The Future of Blockchain Series

AI for agents will be able to collaborate with these smart underwriting systems and do much of the now laborious analysis required on differing policy options. When clients need service, or claims assistance, agency automated technology will handle the details. While some capabilities in these areas are already available. we will look back in the coming decade and think today’s technology is like the Model T when compared with the Dreamliner in speed and ease of use. 

With these capabilities coming soon, what will the role of the agent of the future be? I believe it will be to develop real relationships with clients that go beyond the superficial to a true understanding of the needs, wants, aspirations and fears that an individual organization or person experiences. With that knowledge, agents will be able to tailor coverage solutions in a way that is much more intimate than is possible today. 

No More Free Pass

Until now, clients have largely given insurance agencies and agents a pass on the customer experience they are now demanding from other businesses. This isn’t going to continue. The average person’s routine experience offers customized recommendations based on detailed knowledge and an understanding of their other interests. While this has been fairly simple in the beginning, like suggesting additional products based on purchase history, it is evolving rapidly. 

What people experience in other areas of their lives necessarily informs their expectation in others. For example, Amazon and other online merchants are now able to automatically deliver things as mundane as toilet paper to a consumer before he or she knows she needs it. Soon enough, that toilet paper will not only be delivered before it’s needed, but changes in brand, quality, quantity and other factors will be done automatically on behalf of the consumer because the vendor’s AI will know before the customer does what they really want or need. 

When agents marry this type of technology to the unique human communication that will remain necessary for complex purchases like risk transfer, the future will be much different. 

Some are concerned that technology will enable businesses and consumers to bypass agents and make insurance purchase and placement decisions on the basis of their artificial intelligence alone. I don’t think this is likely. It’s true that properly programmed algorithms can sort and analyze data far faster than any human. But it is only the human who can look into the eyes of another human being, judge the voice tonality, body language and dozens of other nonfactual and nonverbal cues that create and power true communication. When the agent is freed from the drudgery of data analysis and manipulation, she can focus increasingly on the human aspect of serving clients. And she will be able to do so faster, better and more deeply. 

This marrying of technology and human capability will serve to increase opportunity at the same time that it lowers costs. While this future isn’t here yet, it is close, so agents need to begin to prepare now to remain competitive in the future. The first step is to maximize their existing data gathering and analysis capabilities and leverage existing technologies to the greatest extent possible. The beginning point for that is the commonplace agency management system. Automating every agency process possible with current technology will prepare the forward-thinking agent well for what is coming soon.

Beyond the Transaction

The other focus for agents is behavioral. Even in middle market and larger accounts, selling insurance has become largely transactional, particularly in new business situations. Agents all too often allow themselves to be placed in the trap of providing apples-to-apples replacement comparisons. These behaviors serve neither the agent nor the client well. One has only to look at the real, genuine confusion on the part of the business community regarding business interruption policies that did not provide coverage for coronavirus-related losses to demonstrate the result of quoting a standardized set of coverages, instead of focusing on communication about coverage needs and solutions. The agent who ends the process of allowing herself to be treated as a commodity is the agent who has begun to prepare for an effective and prosperous future. 

See also: The Future of Underwriting

As agents are freed up by technology, they will have the time required to delve deeply into their client’s greatest concerns. They will have virtually limitless ways to provide coverage powered by artificial intelligence. And they will have the well-earned trust of their clients because of the deepened relationships that time and technology have empowered.