Insurance penetration rates in the US across both life and non-life segments have weakened in the last decade, dipping from a moderate 3.9% in 2008 to 2.9% by 2018. The number of policies sold has fallen, products that were once attractive to consumers no longer meet their needs. In fact, in the commoditized world of Insurance today, the product is rarely a significant enough differentiator, whereas Customer Experience is what makes all the difference.
Insurance consumers expect highly intuitive and personalized customer experiences, seamlessly integrated sales, and service channels. Better customer experience has been at the top of the insurance agenda for several years, indicating that many insurers are still playing catch-up in this area and remain vulnerable to non-traditional players like insurtechs, especially those offering sophisticated customer interactions.
In the pandemic-ridden world we see today, never before has ‘empathy’ in customer experience been more critical, and is more likely to stay that way in the post-pandemic world of tomorrow. Recent research reveals a rather intuitive finding of 90% consumers who receive an empathetic customer experience will continue using that brand over others.
Early signs of empathy in business
In the last few weeks, we have seen the insurance industry in the US rise to the occasion and steer business decisions with the heart, instead of just the mind – showing early signs of real and palpable business empathy.
Some of the country’s largest property-casualty Insurers returned over 15% - 20% of monthly premiums to customers after their data indicated that customers are driving less due to stay-at-home guidance across the country. This timely assistance to customers will facilitate their financial security, more so when most homes that usually run on two incomes now face the brunt of furloughed jobs.
After kicking in a robust business continuity plan, one of the country’s biggest life and health insurance carriers implemented a grace period extension of 90 days on due premiums. If customers are unable to complete their payments even after this period, they intend to provide one-on-one assistance in reforming their financial stability and continued health coverage.
While these are some insurance industry-specific examples of empathy being delivered through strategic business decisions in the unprecedented pandemic situation of today, the major challenge that lies ahead is the need to sustain empathy at every touch point of the customer lifecycle to ensure loyalty in an uncertain post-pandemic future. This is where technology comes in.
Using technology to touch lives
In an inherently emotional industry like insurance, a greater understanding of customer behavior and sentiment will lead to more accurate risk assessments, empathetic customer experiences, and brand loyalty. To achieve this, it’s important for insurers to create insight-driven offerings by relying more on data and technology and less on traditional policies and procedures.
With improved IoT tech, it is now possible for insurers to mine data from smart home devices, smartphones, and smart wearable, and curate personalized offerings that suit the lifestyle of the consumer. Telematics is enabling insurers to be able to collect data from various sources right from the dashboard camera to reward good ‘driving behavior’ via premium discounts or checks. Not only does this help reduce insurance premiums, but it also digitizes the risk assessment of customers.
Smart and intelligent sensors, if placed in multiple locations around the house, could monitor broken pipes, faulty appliances, thermostats, and much more in real-time, thus helping customers prevent damage and helping insurers from expensive claims. Some carriers have already shown a great deal of flexibility by using electronic medical records and smart devices to regularly capture data on blood pressure, blood sugar, and heart rates to assess healthiness and suggest medical interventions. Some carriers have even started substituting physical medical exams with prescription drug history data and real-time health data to accelerate underwriting premiums.
Insurers need to listen to the data of their customer’s habits and lifestyle to step into their shoes and customize insurance offerings that go hand-in-glove with the kind of lifestyle of the customers and their family. Just like this, technology offers a realm of opportunities for insurers to percolate empathy across the lifecycle of a customer to care for their wellbeing.
Nevertheless, the human touch must also be ready when needed, even if customers continue to flock to digital channels for most interactions. At the same time, the required digital investments on the front-end should be prioritized to generate better and more measurable returns when compared to other transformation investments. Studies have shown that the right mix of human and digital sales channels is a delicate balance that insurers have been trying to strike for years. However, this human-digital distribution is not an either/or proposition, but rather a matter of combining the best of digital capabilities with the unique benefits of human touch.
After all, customer experience makes all the difference and the linchpin of superior customer experience is empathy.