How traditional companies can disrupt insurance industry disruptors
Forward-thinking insurers must grow their product ecosystem while building customer loyalty.
“Disruption” has become one of the most commonly seen terms in the insurance industry. With market “disruptors” such as InsurTech startups looking to get their share of insurance profits, traditional insurers are looking for ways to “disrupt” back by reducing their customer churn, as it costs five times as much to attract a new customer than to retain one.
One popular way insurance companies are doing this is by adding new products and services to their more traditional offerings, in an effort to build out their product ecosystem. A recent study by Bain confirms this can be an effective approach, revealing that across all insurance company types, offering more services leads to higher customer loyalty — regardless of whether the customers actually use them or not.
Related: To be InsurTech or not to be InsurTech – is no longer the question
But there’s a catch
In an era when customers expect high-touch, personalized service, insurance companies should be selective about which products they add to their product ecosystem and the companies they partner with to offer them. According to the same Bain study, 45% of consumers shared they would switch insurance providers to one that offers all the services they are looking for. As a result, adding the right products and services that best meet customers’ needs is of great importance.
In addition to the product ecosystem, how insurers interact with their customers also had an impact on customer loyalty. The Bain study notes that insurance companies that had more frequent, multi-channel interactions with their customers had higher net promoter scores (NPS) than their counterparts who did not. The positivity of an interaction is also critical. There is a huge disparity in average NPS across customers who were delighted by their interactions versus annoyed by them. Not all engagements are created equal. Customers don’t want to receive repeated, multi-channel reminders to renew their policies; however, they do want to receive communications that provide value.
Related: Insurers embracing disruption to reinvent themselves
Where and how to grow
So what services can insurance companies add into their ecosystem that check the following boxes? Ones that:
- Are likely to be utilized by consumers;
- provide multi-channel engagements;
- provide those engagements frequently;
- are actually perceived as a value-add by customers.
An increasingly popular one is identity protection. Identity protection has never been more urgent and important for businesses and consumers, as U.S. data breaches hit all-time high in 2017 and continue to increase at a record pace. This increase seems to have contributed to a growth in consumer concerns, as research by Generali Global Assistance revealed that consumers’ worries about identity theft and cybercrime are now on par with other common concerns such as illnesses and car accidents. Over 50% of consumers reported they planned to purchase identity protection in the next two years, and almost half of them were looking to their trusted insurance institutions to buy it. Given the fast-growing customer needs, identity protection is no doubt one of the “right” services that can provide insurance companies with greater customer loyalty and increased retention.
But not all identity protection providers are created equal either. Companies with comprehensive and flexible offerings, which can be customized to fit each insurance company’s unique customer base, will make for happier customers with an identity protection plan better suited for them. Additionally, because offering a third-party product or service often involves white-labeling or co-branding, this means the identity protection provider’s customer service also becomes an extension of the insurance company’s brand. As such, finding a provider that is committed to outstanding customer service will ensure that customers’ interactions will always produce a positive extension of the insurers brand.
Lastly, despite the increasing regularity of identity theft and the evident need for identity protection, consumer (and client) education is still crucial. Identity protection providers that are committed to providing education and consultation in all aspects of their partnership will make for a better addition to an insurance company’s product ecosystem. Customers who are educated and knowledgeable about the identity theft threat, and the components of their identity protection service, will be more engaged and empowered. Likewise, insurance companies who have an identity protection account management team dedicated to keeping them informed and connected with the product will no doubt lend to a better and more successful addition to their product portfolio.
Paige Schaffer (Paige.Schaffer@US.GeneraliGlobalAssistance.com) is president and COO of Generali Global Assistance’s Identity and Digital Protection Services Global Unit.
The opinions here are the writer’s own.
See also: