July 25, 2022

Customer-Centric Tech Solutions: 4 Ways to Transform Your Insurance Company

By 2030, McKinsey and Company predict that insurance underwriting as we know it will be a thing of the past. Influenced by the convenience economy, digital platforms using automation tools, and other deep learning models, will take over the majority of traditional underwriting duties.

During the same timeframe, McKinsey and Company point out that 95% of all insurance customer interactions will be conducted through chatbots.

While this may seem more sci-fi than reality, current customer service data support these predictions. In fact, between 2018 and 2021, the research found that customer expectations for round-the-clock online support capabilities from insurance carriers had gone up by 45%. During that same timeframe, customer preferences for submitting all insurance claim data via mobile skyrocketed by 77%.

Insurance customer expectations are changing faster than the industry, and insurance carriers are racing to keep up. Sadly, customer research from McKinsey and Company highlights that fewer than 30% of all insurance customers are fully satisfied with their providers. 

Currently, more than 40% of consumers are willing to go through the hassle of switching providers if their current carrier cannot deliver on the digital capabilities expected within an e-commerce marketplace.

If you want to safeguard your insurance company to withstand the insurance industry's digital transformation, becoming customer-centric is step one. Step two involves strategically choosing technology solutions that deliver the capabilities necessary to attract and retain insurance customers.

As you start reviewing technology options, consider the following must-haves that customers want and expect from their insurance carriers:

  • Personalization
  • Faster service
  • Products for unmet needs
  • Security

Tech Strategies that Add Personalization to Insurance Products

Today’s insurance customer wants to be treated like an individual, not a statistic. Gone are the days when insurance carriers could group people by demographic to predict risk categories. Now is the time to leverage data, specifically telematics from the Internet of Things (IoT).

While IoT devices for insurance may once have been thought of as gimmicky — we all remember Flo from Progressive talking about that little device you put in your car to prove you were a safer driver — telematics has become the go-to strategy for personalization in insurance. Through wearable devices, cell phones, GPS, or other data transmitting items, insurers can get real-time data that can measure a multitude of risk factors to provide tailor-made policies.

In this “pay-as-you-go” or “pay-as-you-live” pricing insurance model, your customers become incentivized to improve their behaviors if they want better insurance rates. For some customers, this creates gamification as they become competitive with themselves to do better and pay less.

Insurance Technologies That Deliver Faster Customer Service

In today’s market, customers expect and want seamless, digital-first experiences that offer mobile-friendly capabilities and solutions.

With insurance, people want to compare quotes quickly, purchase insurance products with the click of a button, and make hassle-free on-demand claims. All of these processes can be easily automated to provide customers and prospects with swift service that never involves making a call. 

For faster service delivery, prospects expect an experience that involves an interactive web application that delivers answers by connecting with integrated databases of real-time numbers for insurance quotes. Likewise, customers expect either a customer portal or a mobile-friendly app that empowers them to make on-demand claims quickly, update their insurance policies as needed, and provide the ability to purchase new products all from within the app.

Besides comparing quotes, purchasing products, and filing claims, customers do have other questions that they need to be answered, and they don’t want to wait on the phone for a service rep. They need a way within the app or the portal to ask questions and get answers.

AI-powered chatbots have become one of the main tools insurance companies are investing in to meet this need in their digital transformation process. Such bots can easily answer commonly asked questions and provide customers with links or downloadable documents to provide the necessary information. Additionally, bots can work 24/7/365 without any interruption in service.

That said, chatbots do require programming to both understand what customers are asking and to provide the right information in return. Bots that are not scripted with the customer’s needs in mind may fail to deliver, and one bad experience can make a customer lose all trust in a carrier.

Innovating Disruptive Insurance Products for Unmet Needs

Creating brand-new, never-tested products comes with a significant amount of risk, and, as a general rule, insurance companies are risk-averse.

In the changing marketplace of insurance, though, there are far too many opportunities for new insurance products. The world as we know it has changed dramatically throughout the pandemic. Those changes have created and will continue to create opportunities your organization cannot pass by. Playing it safe will make your company look out of touch and unable to fulfill the needs of your customers. 

Luckily, creating new products for unmet needs can be done strategically to de-risk innovation and increase the potential for success.

One recommended successful strategy includes implementing product-development processes that allow for investments in riskier ventures, but also allow for investments in proven-successful products.

This strategy includes creating a minimum of three product-development process tracks:

  1. Adjusting Current Products: Through leveraging customer usage data and feedback, identify ways to make minor to medium adjustments to your current products that can make them more valuable to existing customers.
  2. Rebuilding Existing Products: Some products may not have gone to plan, but still hold a great deal of potential. Once again, by leveraging your data, you can verify which of these products are worth rebuilding and rebranding for a new release.
  3. Net New Product Development: By following market trends, current world issues, and your customer data and feedback, you can start to create minimum viable product (MVP) versions of products that could interest current customers and attract newer segments of the market.

To lower your investment risk factor with this three-track method, you would provide more funding and assets to products in tracks #1 and #2 than you would to products in track #3. Tracks #1 and #2 have proven worth and reliability, whereas track #3 is experimental. It needs room to grow and you should still take risks, but those risks can be taken in smaller increments.

How you allocate funds to each of these tracks will depend on budget, management capabilities, and marketing assets. Nevertheless, if you choose this methodology for introducing new products to the market, you will need actionable customer data and the ability to start gathering and cross-referencing market research. 

Maintaining Security Standards That Insurance Customers Expect

While customers expect top-of-the-line security, many of them don’t know how security works and often don’t care about the details. They just want to know that their information is safe. This puts the onus of security on the insurance carriers.

Many insurance and technology companies are implementing Zero Trust security policies as a way to develop resilient data networks to protect against cyber intrusions and ransomware attacks that threaten customer data.

If you’re not familiar with the Zero Trust methodology, the main motto here is, “never trust, always verify.” In our modern world, people are all too trusting in the security of the technology around them. Zero Trust security policies try to avoid this implicit level of trust and implement security validation steps at every stage of the digital interaction.

Zero Trust practices are generally used for networks, but more often Internet security professionals are recommending to leverage these practices when dealing with users. After all, users are often the weakest link in the cybersecurity chain and are most targeted by phishing and other email scams.

Providing customers with extended security is only part of the solution. More security means more steps for customers, and many customers may not understand this process and find it cumbersome. 

Therefore, security education must be treated as a value-added proposition to your business. If customers know why they have to go through these extra validation steps and how it’s keeping their information safe from fraud and hackers, they become much more understanding and appreciative of the entire process. As a bonus, you develop a deeper partnership with your customer, and you can continue to offer security education as a resource.

AltSource Guides Insurance Carriers through Digital Transformation

There are additional benefits to investing in updating your technology. McKinsey and Company reported that when insurance companies leverage customer-centric technologies that automate the majority of their services, they can reduce repetitive agent work by 80%. In addition, the time it takes for claims processing can be reduced by 50% through automation.

Not only will customer-centric technology investments improve customer retention rates, but doing so can also make your business more efficient and productive. 

For more information on how investing in insurance technologies (insurtech) can create happier customers, we recommend this article.

If you still have questions about how you can start implementing these insurance technology solutions into your digital transformation plan, please reach out to our experts here at AltSource: sales@altsourcesoftware.com