It’s no secret that there is a newfound aggressive and competitive environment in insurance. A combination of outside competition focused on disrupting the distribution channel and an increase in tech-driven carriers is fostering this environment, and adapting to this change goes beyond just adopting technology. Everything hinges on a carrier’s ability to shed its conservative approach to business – both internally and when communicating to customers.
Although fairly new in the U.S., insurance price comparison sites are rising in both popularity and sophistication, enabling consumers to compare policies from insurers down to the last dollar in a matter of seconds. Carriers shouldn’t fear these sites but should be prepared with a strategy that allows them to stay successful amid this disruption.
Regardless of the changes happening, insurance still remains a complex purchase, and brand trust is a valuable way to differentiate your company. Nicholas Weng Kan, CEO of Google Compare, shares that there is a level of comfort that customers need before they make the commitment to buy a policy; that is why more than half of sales still happen after a conversation with an insurance expert.
So how do you gain trust for your brand? The catalyst for success in modern business is through transparency, which breeds trust – something insurance desperately needs. According to a recent Ernst & Young study, insurance suffers from lower levels of trust than any other industry, with 57% of consumers expressing dissatisfaction at the lack of interaction from their insurer.
Below are steps carriers can take to elevate trust in their brand:
First Step: Get to Know Your Customer
An important aspect of successful businesses today is the ability to create a relationship with the customer. Carriers don’t have the bandwidth to treat each customer with interpersonal attention but can still understand who they are and what they want. Through the use of analytics, carriers have quick access to valuable information about a customer. Brands that don’t begin adopting these technologies to match customer needs can’t keep up with those that do.
Netflix obliterated Blockbuster by using advanced analytics to know customers better. The same dynamic differentiates between the data-driven and traditional carrier: Once the customer acquisition approach is more segmented and targeted, carriers can also deliver the right price based on a more accurate risk profile.
While pricing may not be everything, competitive pricing is necessary. The E&Y survey found that 50% of consumers change their insurer because of price. Insurance is already a complex business that lacks linearity, and price is an important consideration for all customers. The most competitive carriers leverage predictive analytics as a useful tool to help distinguish the poor risks from the good risks so they can focus on the customer relationships that will benefit their business in the long term.
Second Step: Learn to Cater to the Millennial Generation
Millennials have overtaken the baby boomers as the largest consumer base in the country, at 75.3 million strong, and it is clear that they aren’t satisfied with the insurance buying process. According to the 2015 Capgemini World Insurance Report, less than 30% of insurance customers around the world enjoy a positive customer experience, with North America seeing the deepest decline in satisfaction.
Millennials crave transparency and a buying process that is painless and streamlined. Trust is bred when they know their insurers have their best interests at heart and care about their well-being, as well as the causes that are important to them. Above all, Millennials demand efficiency and personalization. Using innovative technologies to interest and retain Millennials is key to gaining their trust. Not only will this breed a positive experience, but it limits the amount of confusion from the consumer, thus creating fewer touch points for the insurer or agent.
Last Step: Be Transparent
The industry holds tightly to how products and services are priced. That’s just not going to work any more. Customers are sophisticated and expect insurance agents to connect them to information. Agents and insurers won’t garner consumer trust with a “black box” buying process.
Consumers have moved on from the notion that they are better off when an expert makes choices for them, but they do want to be guided by experts and understand what is happening in each step of the process. According to another E&Y study, nearly 70% of global customers feel they initiate the purchase of new policies because of the availability of digital channels. Based on results, it was inferred that difficulty in accessing information contributes to customers leaving their current carrier.
If insurers continues to be secretive about how they conduct business and price their policies, then many of the new insurance innovations run the risk of being perceived negatively by consumers. For example, Internet of Things has broken into homeowners, with partnerships between Nest and well-known insurers such as Liberty Mutual, but if the pricing structure and benefits aren’t clearly defined, there is a chance of a consumer backlash.
A Consumer Reports article earlier this year found that insurance is receiving criticism for using credit information to price personal auto policies. Of course, credit information is a strong indicator of loss and a smart predictive factor for any auto insurer, and it’s used by many different industries. However, there is perceptual damage, leaving the industry blindsided by critics who assume that secrecy must automatically mean untrustworthy.
Insurance needs to find the right balance between doing a good job managing risk and developing a more innovative and transparent culture. Creating a positive consumer experience involves being more transparent about price and clearly defining the benefits and service offered by the carrier. Almost 40% of consumers are either not confident or only somewhat confident that they have the appropriate coverage. This should be a wake-up call to the industry that all aspects of customer engagement need attention.