Insurance Challenges Creating the Frictionless Customer Experience in the Real World
What is the difference between insurance and assurance? These terms are often used interchangeably in risk, usually related to life insurance. But they are a useful illustration about insurance and peace of mind in today’s digital world. How to define that peace of mind in the context of the digital customer experience?
Assurance is something which is ‘assured’ (or guaranteed) to happen, often related to a whole life insurance plan. An assurance plan therefore pays out a guaranteed amount ‘when’ you die, rather than ‘if’ you die, and the amount is not dependent on the loss as determined by the insurer later. Insurance on the other hand is based on something which might happen, during a specific time period (or term) based on the terms and conditions.
When we look at what’s happened with Covid and business interruption cover, defining precisely what is and what isn’t a Covid-derived loss – and similarly complexities of defining cyber protection and cyber loss – we start to see the challenges for delivering peace of mind, or assurances, in the face of new types of risks.
Whilst expectations are rising for a faster, frictionless customer experience in insurance, there’s a tendency to think of this as being just about selling products or settling claims. But by looking back into the origins of insurance, it’s good to keep sight of the peace of mind aspect, delivering an emotion beyond a neatly-packaged product. In future insurance can be something that bundles protection around the insured (based on expert knowledge and in ways the customer hadn’t anticipated or ‘been sold’).
Customers are on the move
There’s no doubt the customer is on the move. No single insurance provider owns the customer, and our LexisNexis Risk Solutions consumer research* shows that this trend is not confined to simple age groups or customer segments. Over-50 consumers are amongst the most savvy shoppers and they regularly price check for a good insurance deal. 90% of consumers are happy with insurance providers using data to auto-fill the insurance application. Another 77% of consumers are happy for insurers to use a lifetime of information if it means they can get a better deal, and 56% are happy to receive unsolicited quotes, so long as they are based on accurate information about them.
Consumers have expectations, such as automated form filling that can be delivered over platforms like our LexisNexis Data Prefill. They want their insurance providers to know their needs, to contact them more regularly at the right times, and they’re prepared to share their data, so long as they get something back in return.
But anyone thinking they ‘own’ the customer today, for example by achieving some cross-selling, is already missing the point. The customer in the digital world is very fungible and they’re going to move around. The digital consumer decides for themselves and digital is going to enable them to be even more moveable. This is happening alongside the FCA’s regulatory obligations that are in place now to improve the renewals and pricing experience, to protect vulnerable customers, and to ensure policies being sold are appropriate.
The Open Banking initiative from the government in the UK, has started to show what open insurance might look like in terms of being more seamless between providers, where customer data is more openly available.
Creating a better customer journey in this world becomes a question of, how to help the customer without just selling to them? Let’s say you’re a motor insurance specialist but you know the client has a home insurance need or some other lifestyle trigger just happened: how can you help meet that need by aggregation, working across a shared platform?
It is those kinds of digital experiences, recommendations or special ‘moments’ that the buyer has come to expect. In the connected world, the insurance provider is just a small part of life, and there’s an opportunity for insurance to be more strategically aggregated.
As mentioned above, the insurance customer is going to want to move on, and shop for price, if they don’t really have a good value anchor. In the consumer’s mind, they don’t know whether those pieces of paper, the terms and conditions, the PDFs are actually worth it. It’s only when they claim that the aspect of service and the real value of the insurance promise gets experienced.
But with digital there are more opportunities for insurance in all kinds of contextual situations like car buying, in the header unit of the car itself, house renting or buying, registering a new business. In this way shopping for insurance becomes something more like Netflix, an aggregation and a carefully curated experience.
Industry discussion at the Insurtech Insights meeting
A recent seminar by Insurtech Insights looked into this aspect of how to convey the insurance promise to the all-digital customer, whilst at the same time delivering a ‘Netflix-style’ experience.
How far is insurance from achieving a more seamless customer experience? What are the current pain points in customer experience? In what ways should insurance be made to feel like a product? To what extent are the policy terms and conditions satisfactory in delivering what the customer wants or needs? How can we use identity data and data linking to create a better experience?
“We are moving, not quite to the Netflix position. But insurance is adding more elements and more frequent topics that people really have in their daily lives. We are moving closer to this positioning,” said Steffen Krotsch, Head of Sales at Allianz Solutions, speaking in the Insurtech Insights meeting.
One of the things the tech companies like Netflix, Amazon or Spotify do, which is not comparable to insurance, is the freemium element, the ability to try and feel the experience before opting for the premium element. This is an aspect of a digital product where it’s very difficult for insurance to show the actual experience.
It’s not yet arrived in Europe, but Ping An in China has built up a freemium model, a way to experience basic insurance for free. The company, which is one of the largest financial conglomerates in China, then gives the customer the other elements to upgrade to a prime or premium insurance model.
Insurance has some entrenched customer behaviours
One other element the digital giants don’t have to contend with is the behavioural science behind insurance, and the pre-conceived perceptions about loyalty and price.
There is a prevailing view that if we get all our cover from one place, the bill’s going to be higher than if we spread it into six or seven different payments from three or four other companies. The other aspect is that we are hardwired as humans to spread our own risk, to think about the solvency risk of the provider, and not to keep all our eggs in one basket. That’s inherently how humans feel about insurance generally.
“For me, the aggregation is understanding that you might not always be the best solution for every single product and you’ve got to pick your winners,” commented James York, CEO at Worry+Peace.
With Worry + Peace users can search and review insurance providers and stash quotes or purchases with a free mailbox and wallet. The company helps consumers keep all their policies in one place. It offers results which featured managed and unmanaged listings. Managed listings are controlled and created by the insurance provider features, while unmanaged listings are created by the company’s own curation team, both manually and automatically from choices around the Internet.
With Worry + Peace users can search and review insurance providers and stash quotes or purchases with a free mailbox and wallet. The company helps consumers keep all their policies in one place. It offers results which featured managed and unmanaged listings. Managed listings are controlled and created by the insurance provider features, while unmanaged listings are created by the company’s own curation team, both manually and automatically from choices around the Internet.
For a proposition like Worry + Peace it’s all about being open and enabling the buyer to be more transparent and movable. The company doesn’t take commission from anything bought through the service. Its main revenue stream is earned by allowing providers to boost a listing’s visibility for the top search spots.
Data gives an opportunity for a better customer experience
So with insurance it’s not usually about buying and subscribing to something in the way we think of Netflix. But there is the element of the lifestyle experience, the relationship, and creating what is more of a one-to-one proposition.
As Pierangelo Campopiano, CEO at Smile, commented: “There’s a lot of data management, data crunching behind the Netflix. So one big opportunity for insurance is also having meaningful interactions, not only when a claim happens but between the sales and the claim. What do we do between those years when a customer doesn’t have a claim? The data gives us the opportunity to have meaningful interactions with the customer naturally and there’s a lot that can be got from that.”
With the Internet of Things, the connected car and the connected home, these are going to be bring new opportunities for a better customer experience of insurance and protection. For the smart home setting – with opportunities like escape-of-water sensors, movement sensors for anti-intruder or elderly care or window sensors – new business models for insurance will evolve.
There will be a tipping point as soon as the cost of the sensors comes down (and they could be given away as part of a policy).
In conclusion, the insurance companies that can be brave and seek out these new interactions are going to be the winners. It will take data aggregation and the help of data platforms like ours at LexisNexis Risk Solutions to make the data available in what is going to become a network of networks for insurance. It might mean completely re-engineering what is the ‘product’, as Netflix or Uber did.
Insurance digitisation is a work in progress, from the perspective of making the customer data available, the customer experience aspect, the sales aspect, the value proposition aspect, and considering the enjoyment that the insurance product brings or doesn’t bring.
It’s easy to make the Netflix comparison, but in some ways that is a step too far away from the reassuring, stable roots of insurance. However, using a customer’s digital identity data there are some ways to create new recommendations and new protection solutions that are 100% digital in origin.
*LexisNexis Risk Solutions Insurance Consumer Study. This research was conducted for us by Consumer Intelligence through a consumer panel of 1,314 adults aged 18 and over, who were identified as currently insured drivers and policy decision makers. Lynx Research Consulting provided the data analysis and reporting.
Follow the link to the LexisNexis Risk Solutions website to find out more about how we support insurance providers.
