Digital engagement has seen an upward trend over the last decade, and the pandemic has only steepened this slope with 86% of customers willing to pay more for a better customer experience. What do these two trends mean for insurers? The insurance industry has always suffered from proactive engagement because insurance has been construed as a transaction-based product rather than a service. Today’s digital-savvy customers think otherwise. They are willing to engage digitally, and expect proactive engagement from their insurers too. Still, only 22% of insurance companies have launched products with real-time mobile or internet-based services.
Call it value-added services or add-ons, these novel offerings are redefining what engagement means and are generating better ROI for their stakeholders as a result. Investing in customer experience does pay, but this is also a question of retention – how do you engage with a customer who has already purchased property insurance from you, and has never filed a claim?
To expect loyalty, learn to gauge expectations
Customer loyalty is a two-way street. Retaining the customer means keeping them delighted with your product so that they don’t look elsewhere. In the insurance industry, high lapse and customer attrition rates are not the only evidence of dissatisfaction. What about the customers who stay on your insurance policy due to auto-renewal, lack of time to review their policies, or simply from inertia?
Customer loyalty is a metric, but retention doesn’t sum it up adequately. Customer loyalty is personified by those customers who have stayed with you through the lifetime of the underlying product, despite being approached by competitors with a better value proposition. Consider an example from outside the industry: Apple customers hooked to the Macintosh ecosystem because of the value it adds to their work/personal life.
So how do you understand what the customer wants? Enterprises today fail to gauge the needs of a customer because they fail to see the customer themselves. Imagine if an insurance agent could leverage the fact that your health insurance customer has been recording irregular heart rhythms on their smart watch for the past few days. But when the agent calls your customer, wouldn’t it be nice if they knew about the policyholder’s age, medical history, and other interactions with your company? The customer gets a more empathetic interaction, while your company scores five more stars on retention. Almost half the customers report dissatisfactory interactions with insurance companies, indicating that the positive scenario described above is only half-probable to the customer.
Use case: property insurance
The root of the problem lies in the fact that most enterprises treat the customer as various data points through different steps of the customer journey. To the risk manager, your auto insurance customer is an aggregate of their vehicle’s data points, while in the claims settlement process, they become legal checkboxes. Today’s customers expect more, and the key to delivering it lies in leveraging data and seeing the customer as a person.
Consider a customer who has insured their property with your company—let’s call her Alice. In a traditional model, the fact that Alice’s property is in a bushfire region of New South Wales is relevant only from a risk and pricing perspective. However, today’s customers expect companies to proactively notify them for any causes of concern.
In the bushfire example, Alice expects the insurance company to notify her if the property currently falls under a bushfire alert region. If an agent had this information, they could simply reach out to Alice and notify her of the threat. Smart CRM solutions like Microsoft PowerInsurance bring strong integration capabilities that can help insurance players engage more proactively with their customers through automated notifications. Such services are now possible using programmable APIs that can source critical information as the bushfire alert monitoring feeds directly into the PowerInsurance CRM environment with suitable processing rules.
Roadmaps for innovation with Microsoft PowerInsurance
In the insurance industry, innovations are taking place at light-speed. Alice’s scenario is just one example. Top players in the industry are already innovating with countless other possibilities. Here are a few examples of services that can be offered by sourcing IoT and AI-driven information capabilities, and created using suitable rules atop the PowerInsurance environment:
- Consider an auto-insurance buyer who has never filed for a claim and finds premiums on your policy expensive. If their driving patterns and behavior could be analyzed through data from a smart-car ecosystem, they could be offered an additional discount for their clean history on the road.
- Take an example from the commercial line. Imagine a customer who has insured their factory machinery – data from IoT sensors can be analyzed to predict the risk of failure. If this information can be sourced into the CRM environment, your agent can simply notify the policyholder for maintenance cycles.
- If equipment from smart houses can detect a fire, theft, or a break-in attempt, the agent can notify the customer immediately – resulting in claims avoided for the company, and disaster averted for the customer.
Such novel use cases of disruptive technologies and strong CRM capabilities by insurance providers make a clear argument for customer engagement-driven growth and value-based pricing models, redefining traditional transactional products as services that add value to customers’ lives. With an integrated CRM ecosystem, insurers can enliven their pre- and post-sales engagement strategies and bring an upward trend to their retention rates. In the Insurance 4.0 paradigm, insurance companies’ products and smartphone apps will not simply be sales and service vehicles, but engaging platforms that keep loyal customers coming back for more.