How Can Insurers Improve Customer Experience?

It’s no secret that the term «insurance» evokes a range of negative emotions among consumers. At best, clients are content when experiences are limited to as few interactions as possible with insurers and coverage is delivered as promised. At worst, they feel frustrated, disappointed and even cheated by insurers. 

How did insurance become notorious for poor customer experience and does it have to be that way? Could insurance live up to its claim to «have your back» and perhaps even be… lovable? To answer that question, let’s first define what customer experience is.   

What is customer experience? 

Customer experience is the holistic experience of a customer that is built through a series of interactions with an organization’s business or brand. This ranges from exposure to the organization’s ads and website to experience interacting with sales, onboarding, product distribution, claims management and continued interactions with customer service agents. 

Though for insurers these may be seen as disparate departments and functions, the first step to improving customer experience is understanding that for the customer, these are all part of a single customer journey and yield an overarching experience associated with the brand.  

So why do clients often walk away dissatisfied with their insurance customer experience?

1. Insurance is a complex product- The range of policies is vast, and explanations are rife with acronyms and jargon that are foreign or unintelligible to the average consumer. Without a proper, patient and transparent explanation of existing options, the buyer is likely to leave confused or purchase a policy unsuitable to their needs. 

2. Misaligned expectations- When expectations are misaligned due to a lack of education on the scope of policy options and details of coverage, in the event of a loss, a policyholder may feel that the insurer failed to deliver on promises and feel cheated or misled.

3. Onboarding- Traditional onboarding processes require applicants to answer seemingly endless questionnaires, undergo time-consuming medical exams, and wait out lengthy underwriting procedures that can take months to complete. In a world where Amazon has set the bar for outstanding customer experience, which insurtechs are racing to exemplify by accelerating, digitalizing and simplifying insurance processes, insurers will need to improve the quote-to-buying process using real-time data to inform and accelerate underwriting and enable frictionless digital journeys. 

4. Claims processing- An analysis of the National Association of Insurance Commissioners’ Complaint Index conducted by ValuePenguin revealed that «consumers complain most frequently about how claims are handled. Across all insurers, 68% of all complaints were related to claims handling.» Issues with claims handling include low settlement offers, delays in the process and claims rejections. 

5. Unrealized Value- Generally, the only time a consumer obtains value from insurance is during times of loss or misfortune. Economist and Wharton School of the University of Pennsylvania Professor, Howard C. Kunreuther, explains that «People view insurance as an investment rather than as a protective activity…. As a result, if they haven’t collected on their policy, they will cancel it because they feel that, in some sense, it was not a good deal.»
   
   In other words, with most offerings, it’s difficult to achieve a positive outcome. Either the policyholder is disappointed with continued premium payments coupled with unrealized value or makes their only encounter with the insurer during a time of loss, which is often worsened with lengthy, exhausting claims procedures and the realization that coverage isn’t as comprehensive as expected. 

But what if insurers could provide policyholders with ongoing value, rather than limiting this exchange to times of loss? 

Today, companies like Lemonade and Vitality are paving the path to better, client-centric insurance customer experiences with seamless, digital services. Never before has purchasing insurance been so fast, easy and rewarding. What are they doing right and how else can insurers improve their services? 

1. Transition from a product-centric to customer-centric approach- Each element of the customer’s journey should be optimized to suit their needs. From personalized marketing, frictionless omnichannel experiences, and transparent policies, to simplified claims processing and personalized rewards and suggestions that increase customer loyalty. 

2. Complement digitalization with professional human support- The need to digitalize services is evident. The problem is that many insurers are failing to do so in a way that enhances the experience of customers. While many buyers prefer digital options, a recent McKinsey survey reports that «one in two customers seeks advice offline before purchasing an insurance product.» People want the ability to move seamlessly between digital and offline options. Having knowledgeable, professional and responsive agents at call centers that are integrated into the user journey is imperative. 

3. Build trust- This is, perhaps, one of the most substantial steps insurers can take to improve customer experience. Building trust with clients occurs both online and over the phone. Agents ought to take the time to listen to clients, uncover their pain points and use data to understand their needs. Provide both digital and manual resources through which clients can educate themselves, break down the convoluted terms and conditions, and enable them to make a decision that will not leave their expectations misaligned with what the product can deliver. 

4. Bridge organizational silos- Create connectivity between departments, including marketing, sales, underwriting, claims processing, and policy renewal to allow for data to be shared across platforms. All data about a customer paints a clear picture of their journey. In other words, when a customer calls for assistance, they shouldn’t be asked to provide a policy number because all policies and all data collected on the customer ought to be aggregated in one place to enable a smooth, personalized experience across channels. 

5. Make insurance rewarding- Turn insurance into a rewarding experience that helps clients avoid losses and achieve goals. Use data to make predictions and provide users with suggestions. Enable clients to receive more value from insurers and feel consistent support from insurers, helping them avoid claims rather than partially pay them out. 

So does the insurance customer experience have to be frustrating or disappointing? Certainly not. Today, insurers have the capabilities to rebrand themselves. Once limited to products and securities that could only provide reactive support, they can become partners that help their clients live healthier, safer lives and provide both preventive and reactive support. Digital platforms are enabling insurers to educate clients through a range of platforms and making insurance services more accessible than ever before. 

If insurers use data to create value, innovate and embrace a customer-centric approach, they may produce the same loyalty generated by airlines. By providing clients with ongoing, positive experiences, insurers can prove to truly support clients at each step of their journeys. 

Join our upcoming live webinar to see a demo of our technology and learn more about how Binah.ai advances insurance customer experience.