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Are insurers ready to change perceptions and deliver a ‘wow’ experience to their customers?

Nearly three-quarters of the leaders we talked to for our research into organisational agility said changing customer needs and expectations would be their biggest challenge by 2023.

Consumers today are subject to ‘expectation transfer’ more than ever. Meaning, if they have a great experience in one area of their lives, the bar of expectation increases across all facets of life. For example, if they can speak to a device in their home to find out the weather report for the weekend, they’ll expect similar when it comes to interacting with their insurance services.

Insurance, more than many other industry, needs to focus on the experiences it creates for customers. That’s because today, auto-renewal, a lack of clear information about inclusions and exclusions, and poor deals for loyal customers are raising concerns for many insurance customers. 

Insurers need to reinvigorate their engagement with customers to address these concerns and look ahead to think about how they can offer a ‘wow’ customer experience through an insurance-as-a-service model.

If doing the best for customers wasn’t enough motivation, the recent EU Insurance Distribution Directive (IDD) makes addressing many of these concerns a priority. The Financial Conduct Authority’s (FCA) 2019/20 business plan is also keeping the treatment of customers at the forefront of their agenda.

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We see three core areas where insurers could deliver 'wow' experience for their customers:

Policy renewal - pricing and auto-renewal

Today, insurers need to include last year’s premium cost on renewal documentation. But to take it to the next level, insurers could provide customers with a view of the average cost of their current policy across the market, or what they could expect to pay if they switched providers.

This would help customers make informed decisions and show an impressive level of transparency to boost an insurer’s brand in their customers’ eyes. The insurer would also benefit by showing their customer when they may be paying less than the current market rate.

Another opportunity lies in auto-renewal. For some insurance products, auto-renewal is common and vital. It ensures drivers don’t unknowingly drive uninsured and that homeowners don’t breach any lending agreements. But there’s increasing press coverage about loyal customers paying higher prices than new customers, as well as issues around transparent communication of pricing and coverage changes.

One option to alleviate concerns would be to offer auto-renewal during the policy purchase as an opt-in. Insurers could issue earlier notifications when coverage is due to expire, accompanied by clear renewal options, giving customers enough time to review market rates and make alternative arrangements if they choose.

Clear exclusions and limitations of cover

Currently, insurers offer policy information at the point of purchase. After that, it’s more opaque and harder to find. Simply offering customers the opportunity to check their coverage across all their insurance policies through an app, and make adjustments if their circumstances change, would represent an improvement on today.

For example, a chatbot built into an app could quickly answer questions like “is my family member or friend covered while driving my car?” and offer supplemental cover instantly if needed. Answering the question of “am I covered for…” in real time and providing a solution if needed would add real value.

Enabling customers to quickly and easily identify the cover they need reduces the likelihood of them being over-insured or insured multiple times for the same risk. This easy access to key information would alleviate some of the concerns that the IDD aims to address through the requirement to have an Insurance Policy Information Document (IPID).

Vulnerable customers

Vulnerable customers are often the ones who suffer the most at the hands of poor practises, so having procedures that identify these people and provide additional support is vital.

The FCA continues to highlight concerns around the treatment of vulnerable customers and instances where they’re most likely to purchase inappropriate products, experience excessive pricing or receive poor customer service. All firms should pay attention to the indicators of potential vulnerability in their customers and exercise extra care when working with them.

For example, technology could identify patterns of navigation through an insurer’s website that indicates issues for vulnerable customer. With this information, insurers could make specific teams available to them, or offer different, more frequent and proactive forms of contact. Firms could even consider assigning a specific account manager to assist throughout the relationship with a vulnerable customer.

The future of insurance is full of opportunities to improve the lives of customers by using technology to deliver the type of customer experience we have all come to value and expect in other areas of our daily lives. Clarity on pricing and enhanced treatment of both loyal and vulnerable customers continue to be areas of focus for regulators. Those firms that can keep up with these conduct trends and incorporate ways to further enhance the customer experience will set themselves apart in the eyes of their customers.

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