Despite collecting a wealth of personal data from customers over the years, insurance firms have struggled with harnessing it to enhance their customer experience (CX) efforts. Being data-rich and insight-poor can become a deterrent in the long run to attracting and retaining customers, impacting the bottom line as a result.
This has been a systemic issue for insurers. Information asymmetry, where customers offer their information for little in return, stems from the industry’s lack of speed in prioritising the right technology to power their CX engine.
As with most large-scale transformations, success can take a while to realise, but time is not a luxury in today’s fast-moving digital economy. While customer expectations from insurers have shifted and continue to do so, the insurance experience remains essentially unchanged.
As lifestyles change rapidly, customers seek coverage and protection that:
- It is easily customisable and caters to their needs as well as their loved ones
- It is meaningful to their daily lives
- It is available on devices they spend most of their time on
- Can evolve and grow or shrink as their needs change over time
With the right approach to the data they have accumulated over the years, insurers can deliver meaningful, compelling solutions. They need to understand how best to harness data.
Personalisation and great customer experiences drive greater customer retention and positively impact the bottom line.
Research from the Publicis Sapient Digital Life Index 2021 reveals that over a third of Singapore respondents want personalised offers based on their spending preferences, customisable alerts and notifications, as well as personalised content or advice from financial services.
Easier said than done, true. But the good news is that the chances of realising success grow exponentially if efforts to use data are rooted in answering customer needs by adopting modern technology to enable new product innovation.
There are four main areas that insurers should structure their data efforts around:
Product development
With the knowledge gained from previous interactions, both within an insurer and through partners, insurers can create policies tailored to the customer and improve the overall experience.
This helps an insurer differentiate itself from competitors by boosting engagement and building relationships based on relevance, convenience and ease of insuring oneself, instead of simply competing on price.
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For example, 170-year-old MassMutual’s in-house startup, Haven Life, created a new business processing platform driven by data science models to speed up life insurance underwriting.
It analyses health information from an application and multiple external data sources to approve or reject the coverage in a median time of 40 seconds. No medical exam is needed for these applicants, dramatically improving the customer experience of purchasing medically underwritten term life insurance.
Contextual offerings
Upselling or cross-selling may be among the most obvious improvements that data can enable. They are areas upon which an insurer needs to improve, notwithstanding handling sensitive customer information. Customers find data-driven optimisation to be more beneficial.
Contextual offerings take optimisation to the next level by not just targeting potential customers on sites and apps they frequent but by taking the extra step of ensuring the offering is relevant and optimised to their needs and the context of the app or site.
This can only be achieved by a deeper understanding of the customer and analysing a combination of attributes based on data collected. By better understanding the customer, insurers can improve and position themselves to be with a customer through their life journey, despite some insurance categories being typically low-touch offerings.
For example, Manulife retained existing plan members by offering an immersive experience through its outreach efforts. It helped them go beyond financial numbers and engage in a holistic conversation about life stages and related goals.
Using the right experience and content to help customers optimise what might be possible in retirement, Manulife’s teams could engage and retain customers better by working towards a future they looked forward to.
Product distribution
Insurers need to make use of data to understand customer preferences better and deliver products and services to improve satisfaction and efficiency at the same time.
In many countries, such as Thailand, agents account for a large part of sales. For example, 37 per cent of respondents in Publicis Sapient’s Voice of the Customer survey said they made payment for a policy on an insurer’s website, while 42 per cent did so through an agent.
What is the best way to distribute one’s product in each market, especially in a digital economy where people are comfortable buying things on e-commerce sites? Can a direct-to-customer (D2C) approach work?
There is certainly a space for this.
Insurers with an eye on the future have already started developing D2C models with products designed specifically for online fulfilment and support.
However, insurance is a relationship-driven industry. It would bear well for insurers to consider optimising data usage to improve omnichannel customer interactions and conversions through agents, bancassurance and retail channels.
In South Korea, the largest insurance company, Samsung Life Insurance, used an omnichannel approach to reduce IT costs by US$20.8 million over four years and triple its developer productivity. The company’s customer satisfaction innovations received an ever-increasing rating on the National Customer Satisfaction Index (NCSI), claiming a first-place among competitors for 11 consecutive years.
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Many insurers certainly think that partnerships and networks are a way forward to the future of distribution, and the numbers bear this out.
A Swiss Re study shows that more than 40 per cent of respondents in Indonesia would use OVO, a digital payment service, to buy insurance. In Malaysia, Touch n Go, Shopee and Boost, all digital channels, are popular for paying for insurance.
Insurers must be prepared to engage new digital players and other partners to meet customer requirements that may not be met currently. Using data to discover the gaps and fill them is critical.
Customer retention
Customers want insurance to be relevant, provide the right coverage when needed, and be rewarded when they use their coverage wisely. Though this sounds simple, fulfilling these requirements is a challenge for any insurer.
The key here is investing in the smart use of data to improve user experience and retain customers. After all, it’s always believed that it costs five times as much to attract a new customer as to keep an existing one.
In the insurance sector, leaders that have invested in customer experience improvements have also seen an uplift in conversions and retention. At the French insurance cooperative, MMA Group, the Nuance virtual assistant helps website visitors interact with sales agents to develop tailored quotes for health or auto insurance proactively or reactively.
Nuance analytics enables the agents to identify likely prospects based on their online behaviour and visitors likely to abandon the session before asking for a quote. At the same time, online chat sessions have increased MMA’s conversion rate from between 6 and 7 per cent to approximately 35 per cent and increased customer satisfaction.
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Beyond customer experience, the scalability and size of your loyalty offerings also matter. Some insurers may consider mergers, acquisitions or partnerships to open new doors and create a more attractive ecosystem. With this, a new system of rewards or new services can be made available to customers.
Moving on despite challenges
Some of the challenges insurers face today are deep-rooted and require a deeper transformation effort. Some may have longstanding legacy systems that require an overhaul. For instance, outdated underwriting and claims systems can hold back product development and poor customer experience.
Others may suffer from disparate data sets held in silos or may already have tried to create large data lakes but ended up with a technically sound project that has failed to solve any business problem.
The list of related problems goes on, including the lack of talent, manual processes, and varying regulations surrounding data privacy, which require expertise in the IT field and insurance to help solve.
In an industry with such a long history, change must be incremental. Insurers can start with small steps and take stock of and evaluate their transformation efforts.
They can first try to understand where they are on the map in terms of digital maturity. Once they know where they are on a transformation journey, they can turn to the technologies that use data to make a real difference.
There is a long list of action items that can be drawn up for insurers to improve their use of data. However, it is essential that they first acknowledge that having data alone is not enough. It is time to truly harness it to deliver the critical insights and analysis that create a genuine impact on consumers’ lives and, in return, on the bottom line.
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