Reimagining customer experience in general insurance

Will Davies

By Will Davies

In the face of sustained commercial underperformance, increased competition, changing customer needs and employee expectations, general insurers are seeking new ways to deliver profitable growth. A broader and deeper customer relationship is central to this aim.

At the same time, employees are seeking a more fulfilling role – particularly those in customer facing roles. Engaged employees feel although they’re adding value with every interaction, fulfilling requirements rather than being a cog in the customer experience system. A recent Gallup study found the ability to solve a customer’s problem increased the level of engagement among employees. It went further to uncover that customer-centric employees were 4.6 times more likely to be engaged in their work.

However, the typical insurance offering is still a commodity product that fails to meet customers’ needs. Insurers often are structured internally along their own lines of business and product offerings, thus their customer contact approach models this structure as opposed to some of the emerging competitors who are designing their customer experience around what will be easiest and make the most sense to the customer. This reality along with the poor, disjointed service that many policyholders experience and it’s no wonder insurance is often seen as a grudge purchase.

The irony is that insurers have invested millions in change initiatives that cited better customer service as an intended outcome but failed to deliver value. One common problem is that the focus has typically been ‘inside out’ – re-platforming and optimising siloed ways of working and then hoping the customer benefits.

Reimagining the customer experience
Reimagining the customer experience in insurance

So, how can insurance companies build deeper customer relationships based on brilliant service, and in doing so create an environment for profitable growth?

The answer is to approach change initiatives from the ‘outside in’, designing a brilliant customer experience (CX) to inform changes to technology, analytics, automation and ways of working. Getting this right will deliver competitive advantage, greater customer loyalty and advocacy, and reduce the cost to serve.

Reimagine the customer experience ‘outside in’ to fulfil needs

The required shift starts with reimagining the experience to anticipate and proactively meet customer needs seamlessly via their channel of choice. John Lewis are doing just that; you can spot something you want in a store, order it via an app, amend the purchase over the phone if you change your mind and then collect it from your local garage.

Delivering this experience calls for insights on different customer segments to predict needs and personalise the service. For one insurer we conducted psychographic customer segmentation analysis. Commonly understood as the process of grouping people based on lifestyles and personalities, we considered a person’s values, desires and goals and re-designed the channel and communication preferences for each segment of the customer journey. We conducted research into needs and issues through conversations with customers, actively observing and listening into real customer experiences and interviewing customer-facing employees. We then carried out interactive sessions with a wide range of experts to design a new target customer experience. Collectively, we reimagined a brilliant target customer experience outside in.

We often find that organisations struggle to think about their businesses differently and structure themselves in a way that enables rapid responsiveness to customer needs. The faster organisations can respond to customer expectations, the better financial performance will be. The most responsive organisations have adopted agile working practices.

Our research uncovered a consistent positive correlation between agile characteristics (such as focusing on your customer and liberating your people) and financial performance. The top 10 per cent of businesses by financial performance were found to be almost 30 per cent more likely to display these characteristics.

Embrace new digital capabilities, automation, analytics and ways of working that align to the customer experience

New digital capabilities enable a personalised, channel agnostic experience without the need for an expensive and time-consuming re-platform of existing systems. Analytics and automation are now broadly adopted in the industry, but insurers often become mired in data management. To realise the benefits quickly, organisations should embrace analytical tools that enable rapid experimentation on broad sets of internal and external data. For one insurer, we used customer data to automatically calculate indicators for churn probability and identify the key variables for targeting different customer segments, resulting in a reduction in customer churn of more than 20 per cent, and an 8-15 per cent uplift in gross premiums across all products.

Finally, ways of working should be re-designed so that resources and activities are unshackled. Imagine an environment designed around the customer experience where every human contact is optimised to accelerate time to value, every employee is empowered to delight and add value to the customer, silos eliminated and handoffs are removed. A win-win for improving customer service and employee satisfaction.

Improving financial performance and realising profitable growth

There’s a growing divide between incumbents and digitally native competitors who are able to deliver a better experience – for example, Lemonade’s Net Promoter Score is over 70 per cent and comes at a lower cost to serve than many traditional insurers. Try as they might, incumbents will not match this through the incremental enhancement of existing manual processes and journeys. The trick is to move beyond the limits of what exists today and imagine an entirely new target customer experience that embraces new digital capabilities.

Digitising the experience provides data and insights into the actions and preferences of different types of customers at different stages of a digital journey. This includes designing experiences tailored for different types of customers based on behaviour predictions and the most effective ‘next best action’. By adopting similar approaches we’ve helped insurance customers improve cross selling by up to 40 per cent and retention by up to 20 per cent.

So, the good news is that incumbent insurers can buck the existing trend and drive profitable growth through deeper relationships with their customers. All it takes is a little imagination to create an experience that will delight customers and to use this as the North Star to change ways of working.

About the authors

Will Davies
Will Davies PA insurance expert

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