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Winning Hearts And Minds... With AI and Data-Driven Technologies

How insurers are elevating the ‘customer experience’

A breakthrough report from IBM exposes new challenges for insurers to better engage their prospects and clients with meaningful experiences. Access the report here.

Traditionally, insurers didn’t need to be overly concerned about how they were perceived by their customers. Whether insurance was mandatory, such as auto or health insurance in many countries, or a basic necessity to secure financial health in case of personal catastrophes, the industry focused more on selling the coverage than providing great customer service afterward.

But times have changed. Due to the proliferation of the internet and social media, customers can easily exchange information about the brands they do business with, their products, and the quality of customer service those brands provide after the deal has closed. Market power has shifted to the consumer. In essence, insurance has moved away from being a product that is sold to one that is bought, and the right CX drives that purchasing decision.

CX Initiatives

85% of insurers are deploying CX initiatives throughout the customer journey.

Today, customers compare and contrast all manner of service providers, and insurers are increasingly seen through the lens of an informed consumer whose last great experience may have been with an online retailer. Insurers are now being compared against the best CX from other industries—not just other insurers.

Under such heightened scrutiny, how do today’s insurers fare in the minds of consumers? And how do insurers see themselves and their progress in customer experience matters?

To better understand the answers to these questions, the IBM Institute for Business Value (IBV) interviewed 1,100 insurance executives in 34 countries regarding their CX initiatives and corresponding key performance indicators (KPIs). We augmented this data with a survey of more than 10,000 consumers across nine countries to hear the customer side of the story. Both surveys were conducted during the COVID-19 pandemic and reflect the specific experiences in these times.

The Future of The Insurance Customer Experience

If insurers wish to improve on the CX front, realistic assessments of their capabilities are necessary, and they need to meet customers at their preferred contact points. In their engagement with insurers, consumers highly value contact by phone, in person, or digitally via the web. These channels provide quick interactions and responses, and seamless connections.

Yet, instead of pursuing an omni-channel approach, many insurers continue to engage primarily by phone and traditional mail. The latter is relatively expensive and makes seamless integration difficult, requiring several steps to digitize, analyze, and integrate communications. Investment in digital front office transformation would better align insurers with their customers’ engagement needs and improve cost efficiency.

Insurers still rely on old-school communication channels to engage customers:

 

 

Excerpts from the Elevating The Insurance Customer Experience study:

Insurers Play CX Catch-Up

Traditionally, insurers didn’t need to be overly concerned about how they were perceived by their customers. Whether insurance was mandatory, such as auto or health insurance in many countries, or a basic necessity to secure financial health in case of personal catastrophes, the industry focused more on selling the coverage than providing great customer service afterward. Insurers thrived on the fact that they had vastly more knowledge about risks, its causes, and effects than their customers. As a basis for their business models, this worked well for centuries.

But times have changed. In the digital age, information asymmetry is harder to come by. Due to the proliferation of the internet and social media, customers can easily exchange information about the brands they do business with, their products, and the quality of customer service those brands provide after the deal has closed. Market power has shifted to the consumer; in essence, insurance has moved away from being a product that is sold to one that is bought, and the right CX drives that purchasing decision.

The COVID-19 outbreak cast an even brighter light on CX. Consumers, worried about their health and financial futures, are looking for help from whomever will give it. This provides organizations across all industries with an immense opportunity to show sincerity in their commitment to their customers, whether it’s through extending loyalty programs, rebates, or being good corporate citizens.

Reaching For a Higher Bar Is Mandatory

This is especially important since the perception of CX is independent of the industry. Today, customers compare and contrast all manner of service providers, and insurers are increasingly seen through the lens of an informed consumer whose last great experience may have been with an online retailer. In addition to the loss of information asymmetry, insurers are now being compared against the best CX from other industries—not just other insurers.

Under such heightened scrutiny, how do today’s insurers fare in the minds of consumers? And how do insurers see themselves and their progress in customer experience matters?

Shadows of The Past

As much as we can appreciate the progress insurers have made regarding CX, a closer look reveals a few gaps and blind spots.

When nearly half of your customers don’t fully trust your organization, that should make you worried. Fortunately for insurers, for satisfaction and advocacy, we tend to measure perceptions against expectations, and for the insurance industry, expectations have typically been very low.

Additionally, customer inertia in insurance tends to be high, and customers might feel they have nowhere else to go. Beginning with the 2008 study mentioned earlier, we had periodically measured to what degree insurers trust the insurance industry. After more than a decade, this number has hardly budged: a majority of consumers still do not trust the industry.

Insurers Need To Capture Hearts First Before They Capture Minds And Market Share

There are other applications of AI that can help insurers improve CX. For example, while having a 360-degree view of each customer is important, customers want to be engaged emotionally, and insurers need to capture hearts first before they capture minds and market share. To do this effectively, insurers need to understand how their customers feel, yet only about a third in our sample make a significant technical effort to do so using customer sentiment analysis (CSA) tools (see sidebar, “Japanese insurer: Getting emotionally closer to the customer”).

Insurers are underestimating the importance of emotional understanding for their customer. Our data shows that those that make the effort are seeing clear and positive effects on customer satisfaction. Insurers who’ve just started using CSA report an average NPS of 33.5, rising more as sentiment analysis is used, up to an average NPS of 41.6 for the insurers in the strongest use bracket.

Read the full report here.

 

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