How to address new FCA pricing practices

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How to address insurance’s decreasing customer satisfaction

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Customer experience and service has mostly remained a nebulous parameter in business. 

While NPS is the most common metric for measuring it, it can also be misleading or easily manipulated through adjustments. Moreover, large insurance groups struggle to harmonise the data from various business units and various functions. On the contrary, looking at TNPS and its evolution with time provides more valuable insights.

The insurance industry in the US enjoys a high average NPS score compared to other industries, but it is crucial to acknowledge the rapid decline in the last decades that saw a fall from an average of 70 to 57 which is a 19% decrease. Contrarily, the most noticeable boost in NPS is registered by the Financial Services companies with an increase of 65 % from 34 to 56.

Why? One of the main factors is the “fintech” technological revolution as a means to increase business performance and ultimately customer experience. Within insurance, we can observe a similar pattern in the rise of insurtech in 2016. This week’s blog explores how insurtech, similarly to fintech, can reap the fruits of new technological possibilities to transform its business, meet its customer’s demands, and consequently improve its NPS consistently.

Customer expectation is rising. But why?

The primary reason is the influence each industry has on others without realizing. 

By getting used to high performing services in other industries they interact with, customers have both increased their expectations of customer service while reducing their tolerance.

Everyday experiences such as a quick takeaway coffee on the way to work or watching any TV series whenever, wherever are provided by brands with very high NPS scores (Starbucks 77, Netflix 68). Exceptional experiences cause customers to expect more and in a consistent manner, independent from the overarching industry.

Major customer experience problems in insurance

Today, customers expect a service on top of a product - right from the policy cover discovery with clear explanations of terms, to the claiming experience. While insurance is putting great emphasis on products, it’s not optimizing how they are serviced leading to the following problems:

 

Underperforming customer service

Handling all customer service through call centres, although common, results in long average wait times for the customer, especially during surges.

In fact a recent survey conducted by PHMG, an audio branding specialist found that making on hold customers listen to generic music is one of the most off-putting things that a company can subject a customer to. Factors such as how long a customer is put on hold for, and whether or not they have an out of hours auto attendant can affect how valued the customer feels by the company. (Source)

Resolution times through this channel are also long as agents have to navigate through different systems (e.g. policy, billing and claims) in order to solve the customer’s query.

 

Impersonal online experiences

Most of the online transactions between a customer and an insurance business are still managed through webforms. As discussed in a previous blog post, webforms provide a one-size-fits-all experience with low performance on small devices.

The approach of webforms, despite being digital, is very transactional in nature, lacking a conversational aspect given by analogue methods such call centres or emails.

 

Loose feedback loops

Although multiple data points are collected, the main challenge is in making sense out of them. Insurers are struggling to keep track as customer expectations shift. We observed on multiple occasions that large insurance companies possess reporting dashboard but the data is updated every other week at best through a tedious analogue process.

This is also a big reason for low customer retention: with poor knowledge of the customer profiles, insurers challenge to keep them happy and ultimately lose them with low retention rate.

How to meet today’s insurance customer expectations

How to meet customer expectations

Meeting modern insurance customer needs is impossible without the right technology and strategic partnerships. The two solutions that will make the most difference are: 

 

Leveraging conversational technology

The 365/24/7 availability of chatbots is just the tip of the iceberg. There is so much more they are capable of bringing to a business.

For instance, thanks to the conversational approach, chatbots have a much higher feedback collection rate compared to transactional webforms. More feedback, including direct verbatim feedback means more knowledge of current processes or service weaknesses.

Also, Conversational Process Automation (CPA) platforms enable insurers to easily diagnose customer experience by adding behavioral analytics to the equation. This is the base ground for improvement that ultimately enables a better connection with customers and policyholders.

To top it off, conversational technology offers contextual experiences. The ideal customer experience should be tailored around the customer and not vice versa. A single 30-year old man trying to buy home insurance for his first house via his smartphone will need a different experience than a 65-year old couple trying to buy travel insurance for their holiday house via a laptop. Therefore the experience offered by insurers should be different and adapt according to the customer, the device, the channel. Conversational technology optimises all experiences according to such factors.

 

Leveraging affinity partners

Today, thanks to the latest technologies, affinity partnerships have evolved into a tech-driven practice called embedded insurance whereby brands sell products to consumers by packaging insurance with it.

The idea is to leverage renowned brands - the brands that offer high customer experience - to sell insurance. Ceding commission to the affinity partner, the insurer creates specific insurance products matching the needs of the affinity partner’s customers. An example is RSA leveraging John Lewis, one of the most trusted brands in the UK with NPS 68, to sell different products such as home insurance.

Not only is insurance able to go where it needs to go, but companies are able to easily integrate it as an offering in their systems creating a win-win for all.

No business without customers

Excellent customer service is the number one job in any company. It is the personality of the company and the reason customers come back. Without customers, there is no company

- Connie Elder

As it is evident, superior customer experience is clearly becoming one of the main competitive advantages in insurance. Ideally, this should encourage insurers to create more customer-centric business models- something which CPA can accelerate since it enables 24/7/365 availability, contextuality (due to integration in insurance systems), and speed of configuration to enable new avenues of revenues (for eg. with affinity partners).

Excellence in the industry is achievable if a customer-centric approach is adopted. Take the first step today by investing in CPA.

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CPA allows end-to-end processing through chatbots and leverages advanced analytics to continuously improve both the underlying process and the conversation with the end-user.

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