According to a JD Power survey, the majority of insurance organizations worldwide fail to improve their customers’ digital experiences. Additionally, per CMSWire, when it comes to communicating directly with customers, more than 90% of insurance organizations don’t even send a single email to their customers unless it’s about payment or an insurance claim.
In a competitive industry, how are insurance companies supposed to gain brand loyalty and claim a larger share of the market if they hardly communicate with customers?
The answer is twofold:
- Focus on improving the customer experience.
- Make meaningful and deliberate choices to improve that experience.
Insurance organizations and startups have been flooding the market with digital tools — also known as insurtech — designed to streamline the customer experience and make both purchasing and using insurance easier than ever. Despite having these tools, research shows that less than 30% of insurance customers are satisfied with their provider.
One of the main reasons that some of these digital tools are not winning over customers is the lack of focus on the customers’ actual needs and pain points.
Insurance organizations are choosing insurtech options that save them money and make it easier on the backend. Nevertheless, such tools don’t always focus directly on making it easier for the customer.
More now than ever, and in part thanks to the pandemic, customers crave convenient shopping experiences. Experts even comment how the convenience economy will continue to dominate, as it puts everything consumers want literally at their fingertips through app and website ordering platforms. Insurtech, as the digital revolution of the insurance industry, is perfectly positioned to take advantage of the convenience economy.
If you want your insurance organization to grow at a scalable level, gain a larger percentage of the market, and keep customers happy, you have to rethink how you leverage insurtech. This includes how you implement convenience shopping strategies and become more customer-focused with your tech decisions.
How Does Insurtech Work to Improve the Customer Experience?
Let’s start by getting on the same page with defining insurtech.
Insurtech: Technological innovations and digital tools designed and used to increase efficiency levels within the insurance industry.
By this basic definition, it may sound like insurtech is designed for internal use, as it makes insurance organizations more efficient. However, if insurance companies can streamline their internal processes, this in turn will speed up customer service.
Not only will customer service processes become more efficient, but insurtech changes the way that insurance companies communicate with customers and prospects. Insurance professionals still have phone and in-person conversations, but insurtech creates multiple avenues of communication to promote self-service options that can speed up the entire process and provide more convenient shopping experiences.
When discussing such technology, it’s not uncommon for insurance companies to boast about how their digital tools offer a state-of-the-art experience. They may even point out items like chatbots powered by artificial intelligence, improved data modeling practices that leverage machine learning, mobile-friendly apps that make it easier to choose and compare policies, and upgraded data security standards achieved through blockchain technology.
While next-generation technology may impress potential customers, will these tools truly improve the customer experience?
For example, a chatbot on a website is a great text-based tool to offer 24/7 support to customers and prospects in need of answers to insurance questions. Despite being powered by artificial intelligence, the chatbot must still be programmed and given access to a script of critical questions it recognizes and answers it can offer. If someone asks a common question, but the chatbot cannot provide an answer, that creates an inconvenience and immediate distrust in the brand.
Therefore, while insurtech can offer the latest and greatest technology to your customers, if not implemented well and with a customer-focused approach, it can become a poor investment that will not help your business grow.
What Specific Customer Pain Points Can Insurtech Solve?
Pain Point #1: No Time to Fill out Insurance Forms or Wait for Quotes
When people are comparing insurance products, they want all the facts and they want them now. They don’t have a lot of time to shop around, and nor do they want to wait for emailed quotes. In the convenience economy, offering a one-stop-shop service sets you apart from competitors.
Using insurtech tools that provide up-to-the-minute data for cross-carrier quoting, configuring, and pricing all in one place is crucial. You’ll also need to provide a user interface that’s intuitive and makes sense to the customer. To deliver this premium customer experience, you’ll want responsive tools that work correctly for both laptop and mobile users.
As an added point to consider, note that while you may eat, breathe, and sleep everything to do with insurance, most customers and prospects don’t understand industry terminology. Therefore, when choosing digital tools and reviewing interfaces designed to streamline the quoting and comparison processes, try to de-jargon the page as much as possible. At the very least, provide glossary pop-ups that explain complex terms in simple language for curious customers.
Pain Point #2: Can’t Be Burdened with Old-Fashioned Payment Processes
While many people and insurance companies take advantage of direct payments from banks (also known as ACH payments), you’re still talking about a technology that is 20+ years old. Furthermore, companies still relying on making payments via paper checks are only burdening their customers with taking an extra step to deposit the money.
Today’s insurance customers and prospects expect omnichannel payment options, including payments via:
- Digital wallets
- Mobile, web, and in-app payment portals
- Pay-by-text options
- IVR payment systems (automated payments made over the phone)
Just as customers prefer insurtech solutions with omnichannel payment options, they’re also expecting those same options for receiving claim payments. It's no longer acceptable to take 8-12+ weeks to process paper check payments. Customers crave convenience and they expect payment with the same speed at which they pay you.
Pain Point #3: Tired of Traditional Risk Models Making Insurance Premiums More Expensive
Before big data, insurance companies would determine insurance premiums by making group-based risk assessments. Since they couldn’t do individualized risk assessments, they grouped people into risk categories based on demographic and lifestyle factors. Such efforts provided generalized premiums, but were potentially overpriced for many customers.
For example, let's say you're an amazingly safe driver, but because you fall in the 20-29 age group, your insurance premiums go up since the majority of drivers in this age group have more accidents. Clearly, the insurance company setting this rate doesn't take your ability into account, yet you're stuck paying the bigger price tag simply for falling within an age bracket.
Nowadays there are far more accurate ways to get data and customize premiums for each specific person. Whether using GPS software, wearable technology, or other IoT data capturing tools, insurance companies can obtain personalized data concerning multiple risk factors, such as a person’s ability to drive safely, exercise, or handle stress.
Insurtech tools with risk assessment data analysis allow insurance companies to work and collaborate with their customers like never before. Insurers can leverage live data to show how customer premiums will change over time or what other insurance products they should consider purchasing. Likewise, customers can view data dashboards to go over how their lifestyle choices and risk factors impact insurance premiums, which can change behaviors.
Investing in data-driven insurtech and the team members who can support such customer-focused initiatives will put you in a far better position for delivering an optimal customer experience. Furthermore, real-time data gives you more competitive pricing options over competitors who are still stuck using the traditional risk model.
Pain Point #4: Can’t Get Easy Access to Insurance Products and Information
Insurance providers for health, property and casualty, and life insurance often provide products that offer ongoing protection, but today’s customers are also looking for short-term insurance products that they can conveniently buy and implement with the click of a button. Short-term products have proven essential for such things as travel insurance, rentals, events, and other life situations that occur within a defined set of dates.
Your insurance company may offer many of these short-term products to your customers, but are your regular customers buying those products? Do they even know about them?
Thanks to the convenience economy mindset, customers often don't want to think about all the extra things they have to do. They want what they need when they need it. That's why people often buy short-term insurance policies from unknown carriers. For instance, people who schedule trips or rental cars are usually offered short-term insurance products right on the spot. They don't have to fill out any extra forms, as the travel or rental site already has the information. All they have to do is click once to buy.
Insurtech tools and mobile apps can make it easier for your insurance company to compete with these carriers.
First, you can leverage the tech to set up regular nurturing campaigns that educate customers about the products they can get from a company they already trust. Second, not only can you deliver the same value as buying a short-term product with one click, but you can provide the added convenience of having all the customer's short and long-term insurance policies available from one site. As an added bonus, your insurtech-powered site or app can offer customers access to all the resources, claims reporting, documents, FAQs, and other tools they need right when they need them.
How Will Improving Customer Experience Grow Market Share?
According to research from Digiday Media, at least 65% of your customers will cut ties with your brand after only one negative experience. Poor customer service decreases brand loyalty and increases customer churn.
If your company is not focused on improving customer experience, then your customers will move on to one of your competitors, giving them your share of the market.
While investing in insurtech is one way of improving the customer experience, don’t forget that technology is only useful if used correctly. If your company’s processes are outdated, or if your legacy systems cannot support a modern-day insurtech framework, you will continue to struggle with delivering top-notch customer service.
A good example of a company focusing both on better business processes and their customers’ needs includes Electronic Claims Services (ECS). This insurance company that offers digital solutions wanted to improve its processes and reduce costs for receiving claims data. They also wanted to make it easier for their customers to use their claims data mobile app without restricting those customers to a specific mobile platform. Read on to find out how ECS partnered with AltSource to create a customized mobile-friendly solution that addressed all their issues.
AltSource Helps Insurance Organizations Make Business-Critical Insurtech Choices
If you’re thinking it’s time for your insurance organization to upgrade to insurtech solutions and improve your business processes, AltSource is happy to answer your questions and help you develop a plan that’s right for your business. Reach out today to set up a meeting: firstname.lastname@example.org