Insurance is a highly complex business involving multiple processes such as administering new policies, renewing existing policies, addressing customer inquiries, processing claims, and many more.
Adding to this complexity is the pressing need for carriers to shed their age-old image and embrace the digital transformation.
But why? Well, it’s simple – with today’s consumers being well-informed, they will not only compare your services with your competitors but also against B2C industries that provide a customer-centric interaction.
Also, to add to the existing burden, it is of utmost importance that the insurance company maintain a good relationship with customers throughout their journey, and not just when they are in a crisis.
It is no surprise, therefore, that there are a wide-ranging series of challenges for insurers to maintain their operations seamlessly in this dynamic environment.
So what are the critical flashpoints?
1. Lack a customer-centric approach
Traditionally, insurers didn’t need to be overly concerned about how they were perceived by their customers. They were only driven by the number of coverages they sold, and as a basis for their model, this worked well for centuries.
But times have changed. In this digital age, there is a change in consumer behavior towards insurance. They don’t have an interest in buying blanket products as most have zero context to them and lack product innovation.
For example, instead of pushing accident insurance policy to a 25-year-old, insurance companies can offer contextual insurance. Consider the person taking a road trip – you can notify him about the availability of an insurance cover just for the number of days he takes the trip. But instead of this, insurance companies still work on the age-old practice.
Moreover, insurers who go online ask customers to fill lengthy forms, Q&A, etc. People will definitely shy away from it as they see it as a huge investment of time and effort. Therefore, it shouldn’t be surprising to know only 20% of Insurers & Reinsurers believe they are meeting today’s high customer expectations.
64% of consumers want their insurers to understand them well. – IBM study on Elevating the insurance customer experience.
Watch this video as it perfectly explains the current insurance landscape.
2. Difficulty in using data to improve experiences
For ages, insurance companies have been aggregating a great deal of data. However, they face challenges when it comes to making use of data to improve customer experience. The causes for these are the following:
a. Insurance companies have created different channels of communication
For instance, in order to meet the expectations of customers, insurance organizations have established call centers, lengthy forms (online and offline), employed agents, etc. But even though they have a large repository of useful data, information sharing and communication within departments is something that they lack.
This causes inefficient organizational processes while creating data silos and hindering healthy communication. This prevents insurance companies from gaining from the gamut of potential that data and analytics bring.
Image source: naviant.com
b. Customers’ expect insurers’ products and services will work for them in a personalized, data-centric way
However, traditional insurance organizations fail to make use of the available data and continue to push their products based on generalized trend data. For example, auto insurtech companies these days are tracking the driving behavior of their customers to determine the premium they have to pay. Contrary to this, traditional insurance companies do not connect with their customers using data, thus creating an unsatisfactory customer experience.
3. Lack of trust
Most people feel insurance companies do not provide full information about the policies. Others are not comfortable sharing personal information with their insurance agencies. A recent report from the IBM Institute of Business Value (IBV) revealed, 42% of customers don’t fully trust their insurer. The world is changing for everyone, and trust matters more now than ever.
4. Legacy technology challenges
Most insurers’ legacy systems have been in place for decades with many in use since as early as the 1960s. As a result, most of them use aging development standards with limited functionality and usability. This poses the following challenges:
- Guaranteed business silos
- High Maintenance and staffing costs
- Limited innovation and growth
According to McKinsey’s report on Digital Disruption In Insurance, it was found that legacy systems spend a lot of their money on IT and operating costs when compared to an Insurtech company. The reason? Legacy systems heavily rely on IT to analyze the data, price, and underwrite their policies. However, customers now expect simple, fast, transparent, and customized services.
Sadly, if IT is to remain the center of an insurance company they will have to invest heavily to build IT capabilities and modernize core platforms. However, that level of spending might be hard for some to contemplate because premiums are destined to fall as a result of digital technology.
Image source: mckinsey.com
Also, a study done by Reuter’s events insurance found that the top challenges in Europe have been ‘Lack of innovation capabilities’ and ‘Legacy systems.’
So in spite of the obvious benefits of legacy modernization, why are they still holding back? The number one inhibitor is the fear of business disruption, followed by the cost of data migration.
Now that we’ve looked into challenges faced by the insurance industry to keep up with modern times, let’s address the elephant in the room – How can insurance companies think like a customer?
How to tackle the above challenges
Insurance has always had a greater purpose than just revenues, profit, or shareholder value. Its role in providing peace of mind to consumers and businesses is more important now than before. This is a time to renew and refresh your purpose. In this brief, we’ll outline which actions you should take and which potential benefits you should target.
Let’s look at how we can get some digital help to these ongoing problems:
1. Realign your cost structure and sharpen productivity
Are your agents wasting a lot of effort and money on repeatedly answering the same questions to all your customers? As much as it is mentally draining and demotivating, insurance companies need to discontinue overdependence on manual workflows and overstaffing. This will eat up a large chunk of your finances. Today consumers want things to be simple, streamlined, and easy. To improve productivity you can adopt the following strategies:
a. Eliminate redundancy
Record videos with FAQs that consist of all the policies you sell and include them on your website. This way if they have any questions about the current policy, they can refer to the website and get the answers without reaching out to you.
For example, Allstate insurance company has videos for all types of policies they provide so it is easier for customers to understand each policy and what it includes.
b. Derive instant data
With regard to the above pointer, it is also important to get insights into who watched your videos and how much. This is where video analytics will be of immense help. Using this data, businesses can extract a wealth of valuable data. One can get details into the demographics, the viewer profile, timeline report, etc. This will help in personalizing your outreach. Apart from this, it helps increase your business productivity as you know who and why people have an interest in your policies.
2. Supercharge digital transformation to create a digital enterprise
Legacy systems need to think beyond the traditional way of doing insurance processes. There it is important to re-engineer claims, customer service, and, underwriting for better policy processing and retaining of customers. It is the need of the hour for legacy systems to go digital.
41% of the policyholders in a survey by PWC stated they had difficulties with their insurers and they’re likely or more likely to switch providers due to a lack of digital capabilities. Here are a few ideas on how legacy systems can take the digital route:
a. Customer onboarding
Small ticket insurance purchases can now be completed in a matter of clicks thanks to innovative platforms such as Lemonade. This has inevitably led customers to expect the same smooth sign-up process from the commercial insurance market, or indeed when applying for any policy. While the verification process is more stringent, the onboarding process doesn’t have to be slowed down with paperwork thanks to new technology and applications.
Image and information source: reallygoodux.io
Lemonade has entered the insurance market as a disruptor to legacy systems. In 90 seconds or less, you can get an insurance quote.
Underwriting is arguably the most important insurance process. However, it heavily relies on customer information and historical data. In the case of most legacy systems, these are stored in a disparate manner. Traditionally, this data needs to be checked by users when establishing whether they should issue the customer a policy.
With a digital approach to underwriting, users don’t have to manually log into and search through different systems. This improves efficiency and speeds up the issuing of policies. Underwriters can also automate tasks within the process, such as passing information between departments and analyzing third-party documents.
For example, Future Generali, an insurance solution, restructured its system’s architecture and replaced paper-based systems with automated and efficient workflows.
This was the result:
- 38 automated processes were fully operational within just two months
- 50% reduction in time spent underwriting their most complex offers.
- The organization saw a 60% cost saving thanks to increased productivity and reduced processing time.
Image source: life.futuregenerali.in
Instead of face-to-face meetings or spending long hours on the phone explaining policies and their complexities, insurance companies can adopt interactive videos. This leaves the power in the hands of the customer to select the policies best suited for them.
- The customer can be presented with questionnaires in order to achieve a personalised solution at the end of the video.
- Customers can also submit questions, or leave comments for the customer service agents to respond to.
3. Prepare your workforce for the new world
Invest in the “digital” insurance sales rep. As sales processes change, you’ll want to prepare your employees to embrace the digital world than ever before. Look for ways in which the processes can be made quicker and easier so it’s easy on your workforce. Investing in videos can not only make them ready to face the demanding customers but also share a wealth of knowledge at a fingertip.
Selling Insurance – What has changed
It is true that the pandemic shook up an industry slow to embrace change to figure out new ways of working in a matter of weeks, implementing major shifts in technology deployment and usage. The pandemic also reshaped consumer expectations, bringing virtual interactions into almost every aspect of life.
Policyholders and insurance aspirants are now expecting a digital approach to insurance. According to a Global Consumer Insurance Survey conducted by EY, it was found that 80% of customers are willing to use digital and remote channel options for different tasks and transactions. This shows that insurance leaders need to be equipped to evaluate and revamp their existing infrastructure.
As an industry that’s traditionally been dependent on in-person interactions, it’s challenging to transition to an all-digital customer engagement process overnight. Hence, the ideal approach is to start by digitizing the most critical parts of the journey – namely claims and underwriting.
With that in mind, let’s look at how the insurance industry can use videos for specific purposes.
Specific video use cases for insurance – where videos can make a difference
Optimize speed and accuracy of claim processing
Handling insurance claims is a costly affair. The longer it takes to settle a claim with your customer, the higher the costs for you. In fact, claims management amounted to 28.5% of total operating costs for European property and casualty insurers.
There is, in other words, a lot to be gained from digitizing your claims management process.
When your customers become the victim of personal injuries or suffer losses to their home and other property, asking your customer to record and send you a video so you can get a first-hand view of the damage will make things faster and quicker.
Watch this video to learn how companies are adopting videos for claim processing:
Worried you may lose track of the video once you’ve viewed it? All evidence can be stored in the cloud’s infinitely scalable library from where it can be reviewed and assessed by the respective adjusters.
Improve and streamline the training process
Insurance companies need to consider the most effective tools for improving the onboarding process for newcomers. This is why leading insurance companies now facilitate newly hired agents with self-paced training videos that can help them learn and absorb knowledge about various information-intensive insurance products or selling how-tos.
Disseminate product education videos to sellers, partners or independent agents
Insurance products are complicated and require a great deal of orientation and understanding before insurance sellers, partners, or independent agents can start promoting them to customers. This issue can be addressed by sending them recorded videos as they get a clear understanding of all your policies.
Remember the time when you required customers to come to your office so you could take them through the nuances of your policies? Well, save yourself all that extra effort and just walk them through the claims using a screen recording. All you have to do is switch on your video and screen record the steps and send it across – it’s that simple.
Technology will only continue to evolve at a fast pace and to keep up with it, insurance companies need to protect themselves against the threat of being pushed under its wheels. To remain competitive, adopting virtual channels of communication such as videos is necessary to keep up with customer expectations. In the coming days, the ability to tailor experiences and messaging gives insurance companies a competitive advantage over their peers.