Experience is key to customer retention for insurers

Competition in personal and commercial auto insurance is intensifying. Claims frequency is up, and direct premium growth is slowing after hitting a 15-year high in 2017, according to S&P Global Market Intelligence. That means claims satisfaction — read: customer experience — will be even more crucial for insurers’ success.

It’s always been true that customers who experience poor service are simply more likely to switch carriers. Now, however, their service expectations are much more sophisticated, thanks to increasingly personalized interactions with technology and the quality of service they experience elsewhere.

The need to satisfy insureds’ expectations for an excellent customer experience is so urgent, and the opportunity so gigantic, that a third of InsurTech startups are focused on improving customer experiences, according to research by PWC.

Customer experience goes beyond the point of sale

Digital technology is having an enormous and positive impact on the insurance sales experience — but now it is critical for carriers to cast a critical eye across all customer touchpoints, and to appreciate the need for well-integrated customer experiences.

“Insurers are doing a great job at the critical customer touch point of claims reporting, but the end-to-end claim process is still costly and not as fully integrated as it needs to be,” said David Pieffer, Property & Casualty Insurance Practice Lead at J.D. Power. “The challenge for insurers is to seamlessly transition the claims reporting function to more cost-effective digital customer care solutions.”

A claim offers perhaps the most important opportunity for direct customer interaction, and the most successful customer experiences comprise multiple interactions through a variety of methods. Not surprisingly, a reassuring voice is simply more comforting than a new digital FNOL app; just 11% of claimants are opting for digital FNOL, according to J.D. Power.

However, 65% of claimants have received a digital status update, and most are done in combination with offline communications. More than 40% of claimants now are using mobile apps to submit photos or videos of damaged vehicles, and overall satisfaction surges when they do. When customers do not use these tools, and insurers still need to send an adjuster, overall satisfaction plummets.

While there are many differences from one line of business to another, this is clearly instructive.  Insurers that recognize the need to adapt continuously and to enhance their customers’ experiences — and that have core systems that support that kind of agility — will be best positioned for profitable business now and in the years to come.

What do customers really want?

Insurance customers expect options based on their communication preferences, and to have the ability to engage anywhere, and in any way, that is convenient for them. After all, they have similar experiences elsewhere. The cost of not offering an excellent customer experience will be measured in declining customer retention.

To solve this urgent problem, insurers need to step up. A good first move is to consider a customer’s journey when determining whether you’re offering the right services and whether they can be accessed through the most desirable channels. This is particularly true during a claim. Understandably, these situations can be stressful for customers, and they feel more comfortable and worry less when they experience fast service, connectivity and transparency throughout the claims process.

Chris McMahon is the analyst relations manager for Duck Creek Technologies. Contact him at chris.mcmahon@duckcreek.com.