Enhancing Insurer Success with Superior Insurance Customer Experience

Last updated: 07 Mar, 2024 By | 6 Minutes Read

Insurance Customer Experience

Insurance customer experience (CX) is the sum total of every interaction, online and offline, that an insurance company has with its policyholder throughout the customer lifecycle. Positive customer experiences build trust, satisfaction, and loyalty. This in turn drives the organization’s strategic goals, profitability, and growth. It is therefore imperative for every insurance organization to ensure that customers have seamless end-to-end journeys at every phase.

According to a McKinsey survey of more than 8,500 insurance customers of the 40 largest North American insurance carriers across the life and property and casualty (P&C) segments, CX drives material financial impact and unlocks step-change improvements in financial and organizational performance for insurers. Notably, CX leaders outperformed their peers in TSR by 20 percentage points for life insurers and 65 percentage points for P&C insurers in the five-year period from 2017 to 2022. Compared with others, CX leaders also demonstrated stronger revenue growth (by four percentage points), stronger EBIT growth (by four percentage points), lower expense ratios (by two percentage points), and higher employee satisfaction scores. Our experience shows that improving CX can also lead to higher retention, new business, and operational efficiencies for both life and P&C insurance carriers.

The positive (or negative) impact of CX creates ripple effects beyond the four walls of an insurance carrier. Poor CX is often a primary barrier to purchasing insurance, and life insurance ownership already dropped to just 52 percent in 2021—the lowest rate in a decade.2 CX improvements could enable insurance carriers to bridge protection gaps and advance their broader social purpose of protecting lives and livelihoods.

Top Challenges Related to Customer Experience in Insurance

Owing to the very nature of insurance business dynamics and evolving market scenarios, enhancing customer experience in insurance poses a formidable challenge. Insurers have to walk the tightrope of designing best-in-class policies adhering to requirements across regulatory, data security and new-age demands. A positive insurance customer experience hinges on the insurer’s ability to navigate and overcome various challenges across different realms. The following elaborates on some of these challenges:

1. Fragmented customer journey

Most often than not, an insurance customer’s journey is fragmented owing to frequent switching between channels. This results in abrupt online and offline interactions that makes the customer’s experience disjointed and stressful. When this fragmented journey turns too acute and lacking in continuity, policyholders migrate to the products of other insurers

2. Digital dissatisfaction

The world today is fast moving towards greater digital adoption. True for insurance customers too – there is a growing openness in them to engage with policy providers through digital platforms such as website bots, mobile applications etc. Yet, user interface complexities, slow processing times, limited functionalities continue to pose serious challenges to customer experience in insurance

3. Threat from new players:

Again, in this fast evolving world, traditional insurers have been facing considerable threat from new-age players, particularly insurtechs and financial institutions with advanced digital capabilities. These entities are reshaping the insurance industry with the help of technologies, and are significantly eroding the market share of established insurers

4. Ensuring the human touch

Despite it being the era of advancing technology, human touch in business relationships continue to command reliability and trust. In business’s endeavor to build tech and digital capabilities, a number of insurance organizations are foregoing this aspect of human touch. Thus, enduring relationships are harder to build; policy holders jump easily from one service provider to another on the basis of monetary gains alone

5. Diverse channel preferences:

Today, customers are spoilt for choices – they have a multitude of channels at their disposal and exhibit preferences accordingly when seeking insurance information. Be it through traditional methods like face-to-face meetings and phone calls or the modern convenience of online platforms and chat services, individuals expect flexibility in communication. Insurance companies, therefore, have to keep all these channels active at all times irrespective of the costs involved

6. Complex product landscape:

The insurance industry has always operated in a complex environment with myriad policies, terms, and coverage options. Helping customers navigate this intricate web is paramount to building excellent customer experiences and lasting relationships

How to Improve CX in Insurance – Strategies

How to overcome the afore-mentioned challenges, how  to improve insurance customer experience, remains every insurance company’s chief concern. Considering the complexities of the industry, a combination of steps are necessary to build good customer experience strategies. Given below are a number of these steps that will help improve customer experience in insurance:

1. Seamless omnichannel journeys

We have discussed how customers exhibit diverse channel preferences in the previous section. Insurance companies must prioritize customer preferences, ensuring smooth interactions across various channels, including online platforms, mobile apps, and in-person meetings. This approach enables customers to engage seamlessly and at their convenience. Thus, providing a consistent experience regardless of the chosen channel, the insurance company improves insurance customer experience

2. Developing digital capabilities

Building user-friendly online interfaces, mobile apps for policy management, advanced data analytics to personalizing offerings and services are new-age imperatives to meet evolving customer expectations, and to stay competitive in the insurance industry

3. Leveraging the human touch

Even as you build your digital competencies, never underestimate the need to have agents and advisers interact with your customers. It is their continuous involvement that will build and deepen customer relationships. Design customer experience journeys that include offering personalized advice, understanding individual needs, and providing on-call support to improve insurance customer experience

4. Efficiency and transparency in claims

As an insurance provider, it is your responsibility to regularly review and update policies and premiums. This ensures transparency in the claims process, minimizes delays in claim processing and enhances the overall customer experience

5. Simplifying products

Simplifying your product offerings and providing transparent product information helps customers to take informed decisions as per their needs. It is therefore imperative to clearly communicate policy terms, coverage options, and associated costs. This will make the insurance purchasing process transparent and easy, and will build customer experience in insurance

6. Outsource insurance services

Insurance BPO services are a cost-effective way to insurance customer experience. BPO services streamline processes, ensure accurate insurance loss run reports, improve efficiency, enhance customer services, thereby contributing to an improved overall customer experience in the long run

Strike the Balance for Best CX

In conclusion, to thrive in an ever-evolving landscape, build a customer experience strategy that has the right balance of technological innovation and human touch. Further, to provide this ‘great insurance customer experience’, design seamless omnichannel journeys. To do this, insurance companies require seamless, efficient processes in the backend. Achieve this by engaging insurance BPO services that will not only build seamless operating workflows, but will also build digital and data analytics capabilities that will help you with insights on customer preferences and requirements. By outsourcing both routine and analytics operations, insurance organizations can therefore design better product offerings, ease the claims process, bring in transparency, efficiency, and help you personalize customer-facing services.

Today, we are in a space where products are hard to differentiate. Every insurance company is offering products that seem same. In such a scenario, it is customer experience that enable insurance companies build differentiated brand positioning. A judicious mix of the afore-mentioned strategies in combination with a good amount of direct, personal touch will help insurers to not only meet but exceed rising customer expectations.

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