“Insurance **wins the Oscar for being the most complicated industry out there” states Isabelle M. Connor Chief Marketing & Customer Officer at Generali presenting at Insurtech Insights.
Connor bemoans the 10% to 25% annual churn rate that results from this complication.
Why do insurers lose customers?
Research by Generali with millions of customers and non-customers over 25 countries revealed worrying statistics
- Insurers have not been in touch with policyholders during the year (74%)
- Something went wrong in the user experience across buying, renewing, claims
- Product coverage poor- either don’t understand coverage, forgotten what they’ve been sold, or their lives/circumstances changed, and insurer had not kept up.
The resulting churn is not just a loss of current business and acquisition costs but a loss of future business. Customers with generally 5-8 policies covering their needs. A revolving door of lost lifetime premiums. Clearly needs significantly better customer engagement.
Connor says that insurers must rethink the value proposition. Move from being solely focussed on horrors that might happen to: -
“How we can have a beneficial impact on business, assets and lives even if they never make a claim”. And if they do make a claim, the time when policyholders really need an insurer, we had better make the claims experience as painless and fast as possible.
Oliver Wernyer CEO of Imburse Payments recently described at Instech London how his payments solutions allowed one insurer to help stranded passengers who were victims of the Thomas Cook collapse late last year. Hotels were threatening them with eviction unless they paid the fees owed by Thomas Cook. This insurer ensured policyholders received payments IMMEDIATELY to solve the issue.
Prevention rather than cure is generally on the strategy agenda for insurers, but it takes them away from their current core strengths to those of new competitors.
- the data management giants like Google, Amazon, Apple
- data and sensor/IoT integrators
- OEMs in growing ecosystems like mobility, health, life, embedded insurance
Insurers must compete and innovate with the same intensity and pace of change as these masters of disruption.
The move to prevention is gradual but like most trends will be gradual, gradual, gradual and then sudden. Early movers will reap the benefits and followers may well miss out. Insurers have their current strengths and customer base which must be leveraged and built upon.
Conner states that customers want a mix of online and advisor help; a mix to meet the human/ emotional and rational motivators that drive us. This is backed up in a report by LexisNexis: “2019 Future of Claims Study". Millennials require immediate access to human advisors when needed as much as Baby Boomers, not less. Human engagement is critical.
Over-reliance on Straight-thru-processing (STP) and automation will hurt customer relationships and loyalty. Automate repetitive and predictable processes and workflows but ensure you have trained advisors empowered by technology to deliver an optimal mix of: -
- Empathy and care
- Simplicity and innovation
Customers want more engagement both online and personal.
- Show me which insurance best suits my needs
- Help me achieve a better financial future
- Proactively inform and coach me
- Be there when I need you
Rob Markey of Bain & Co asks enterprises "Are you undervaluing your customers"in Harvard Business Review.
Insurers must decide how best to deliver these needs with relationships whether direct, indirect or a mix of both. Technology platforms must manage, communicate and orchestrate all these parties including brokers, agents, MGAs and the supply chain that puts policy holders making claims back on their feet. One single digital record securely available (redacted where necessary) so that, whether direct or indirect, the policyholder gets a uniformly pleasing experience.
This will not be achieved unless the insurer has all relevant Chief Officers and Managers involved to plan, implement and manage an overarching strategy that transforms the whole business. Typically, a mix of Chief Officers: -
- Marketing and Customer Experience Officer
- Information/Data/Technology Officer
- People Officer
- Claims Officer
- Transformation/Innovation Officer
With, of course, champions from the customer facing departments to bring practical common sense to bear on creative thinking.
The rewards of doing this right, and the penalties of doing it wrong are immense. McKinsey offers the insights from years of research that show the top quintile of insurers will be the ones to share practically the whole industry economic profit. The remaining 80% will feed on a thin gruel of marginal profits or loss. A frightening picture of this is seen in “Why your next transformation should be ‘all in’” from McKinsey; especially Exhibit 1 The Power Curve.
Which technology partners are best placed to help insurers?
On the one hand are the large on-premise platforms like Guidewire and Duck Creek. Then there are the process optimisers like Audatex, Tractable, BACKBASE and SLICE adding missing capabilities to these platforms. The downside to these comprehensive solutions is the time and money it takes to plan, implement and deploy and the hard coding that makes major upgrades expensive and time consuming.
Having scaled up to achieve considerable market penetration are end-to-end platforms like Origami Risk (Risk Management) and 360Globalnet (Claims Management).
These no-code/low code platforms offer agile, fast to deploy and less expensive solutions that insurers themselves can customise for competitive advantage. They also integrate well with best of breed optimisers such as Audatex, Enservio. Better still they easily extend the capabilities of core systems of record without the burden of adding costly and complex technology stacks.
Combining optimal mixes of technology partners such as these offers compelling solutions to the challenges that Connor discusses. Whilst increasing customer satisfaction costs can be significantly reduced in parallel e.g. over eighteen years to two years claims contact centre FTE resources can be cut by 75%. Leaving a well skilled core of claims handlers and adjusters to deliver the empathy and care, simplicity and innovation that customers demand today.
Improved margins and cash flow will also help fund the innovation that Connor shows Generali is pursuing. And which is essential if you plan to be or stay in the top quintile.
In this talk, Isabelle Conner (Chief Marketing & Customer Officer at Generali) shared why customer engagement is important. The insurance industry is undergoing a lot of change and increasing its customers' touchpoint is on top of that list.
