Digital disruption in insurance – why it is all about service
Over the past few years we’ve seen whole industries transformed thanks to digital technology. From publishing to retail to transportation, new entrants have shaken up mature markets, and unseated existing leaders through innovative business models.
Recent research from Fujitsu points to insurance being next in line for digital disruption. A fifth of European consumers said they’d be happy to buy insurance from brands such as Google, Apple, Facebook or Amazon, particularly if they used their customer knowledge and access to big data to bring down premiums.
In many markets insurers are already under pressure due to rising costs and more demanding consumers. Adding in new, digitally innovative competition to the mix, how can existing insurers survive in this changing world?
The key factor for insurers to recognize is that buying a policy is a grudge purchase. Insurance is often mandatory and most consumers never need to make a claim, making them feel that they get nothing for their premiums. You can’t see or touch your policy, making it hard to differentiate between providers, except on price.
Make it easy to have a conversation
What customers want is a seamless, pleasant customer experience when interacting with insurers – whether that is a conversation at renewal time or if they need to make a claim. This is something that online companies such as Amazon specialize in, building strong customer loyalty by offering a seamless digital experience. So existing insurers need to benchmark themselves against these new competitors if they want to thrive. How can they compete? There are three areas to focus on:
1. Be truly multichannel
Traditionally, insurance was a paper and telephone based industry, but the pervasiveness of digital technology in daily life, has dramatically changed consumer expectations. They want to be able to make contact online, through email and social media, and receive fast, helpful responses to their queries. So insurers need to be on all of these channels, and deliver the same high standards of service across all of them. Digital channels can be more cost effective and have an immediate, positive impact on your bottom line.
2. Think like a consumer
Today, people spend their time jugging work, family and social commitments, meaning that customers have less and less time, and nobody wants to spend it searching through insurance company websites for information or waiting on the phone in a queue. Make sure that all your channels are easy to use, consistent and allow people to move smoothly along the journey to purchase. Use self-service to enable consumers to find answers to routine questions on your website and implement chat to provide fast, personal service online. Above all, continually test and benchmark your service against your peers and potential new competitors that are already known for the excellent experience they provide.
3. Build a reputation for service and innovation
Digital technology offers opportunities for insurers to improve their processes, increase efficiency and engage more deeply with customers. Not only can digital channels bring down costs, but they can offer a platform for innovation. Using mobile phone photos as part of the claims process or simply allowing consumers to take snaps of signatures on policy documents and email them directly to you, eliminates the need for mail or fax. With new competitors expected in the market, insurers need to focus on innovation in the customer experience, if they want to stand out in a demanding market.
No-one knows when (or even if) the likes of Google and Apple will enter insurance, but the threat should be a wake-up call for all insurers to put customer experience and service first. To find out how they are currently performing, Eptica is currently studying the multichannel service offered by 100 leading US insurers. The report will be published at the end of September, so watch this space to find out more.