All companies are focussing on digital transformation as they endeavour to meet the changing needs and expectation of customers. With customers wanting fast, intuitive and personalized experiences across touchpoints, they’re often comparing the brands they have been loyal to with companies that consistently deliver on those needs. As part of Leeds Digital Festival, we spoke to Andrew Jackson, Sales Manager at Blink Innovation, part of festival sponsors CPP Group, to discuss why CX is becoming increasingly important for the insurance industry and how parametric insurance could be a key component of an insurers CX approach.
Why is CX so important to the insurance industry right now?
Customer experience has always been important but perhaps it’s been slightly overshadowed in the past within some organisations in favour of objectives that have a more immediate, tangible impact on commercial results.
In the past, many insurers have tended to equate a strong customer experience with a successful, paid claim for a policyholder or a decent score somewhere like TrustPilot. That’s great for the 10% or 15% of policyholders who make a claim, but what about the 85% of customers who never interact with their insurer after the policy is in force?
Insurers are rapidly developing their understanding that every customer needs an experience. Policyholders rate their insurance by the value it provides them and not the cost – a cheap policy counts for nothing if the service it offers falls short whenever they need to interact.
Covid-19 has actually been something of a leveller for insurance brands – in the absence of business-as-usual, it’s highlighted to consumers that the way in which they’re interacting with their insurance brands and how they’re treated is actually much more than just about a positive claims experience.
How have consumer expectations been transformed by digital technology and how can businesses respond to this?
Digital has made us all savvier shoppers – we expect more from the brands we engage with because there’s never been more choice and variety.
But it’s also made us increasingly impatient. Amazon Prime order not delivered the next day? A first world problem but it’s not so long ago that mail order took weeks to turn up. We’re in a world where users expect instant gratification – an immediate answer, a solution to a question and a route out of a problem.
The good news is that the technology is there to enable it all. Data is available at breath-taking rates and speeds to deliver that instant hit. All businesses need to do is embrace it and meet those consumer expectations.
What are the priority consumer demands to focus on?
It’s all about immediacy of response. The actual fix doesn’t need to be instant (although it helps hugely if it can be) but consumers are looking for certainty and reassurance when they make a request.
That’s something we’ve been able to prioritise at Blink where our parametric travel insurance and lost luggage insurance products will provide instant payouts rather than expecting people to ring a call centre and wait for a cheque to come through the post weeks later.
How is the insurance industry being impacted by digital transformation?
The insurance sector has taken something of a fits-and-starts approach to digital transformation. In European markets, it embraced quote-and-buy quite early on and that hugely disrupted the distribution of products like motor and home, even if that didn’t filter immediately into claims and service functions.
Then general insurance went into a period of transformational hibernation, where there wasn’t much outward innovation for a while but good things were happening behind the scenes to make service and claims more efficient – document portals emerged and online reporting for some business lines made an appearance.
As technology has moved on, motor and home insurance have made use of black-boxes and sensors to either validate underwriting decisions or to mitigate clams losses and for some brands, smart devices have been able to take the baton to move the game forward.
So far, that transformation has focused mainly on digitising existing processes – buying online instead of by telephone; documents on a portal instead of in an envelope. It hasn’t really concentrated on how insurance performs or what it does for consumers.
Now, insurers are looking at how the data they have at their disposal can be used more practically to mean something for policyholders. That’s going to have a massive positive impact on customer experiences because it means that insurers can be proactive around risk and can help customers manage their insurance journey.
How can businesses measure the efficacy of digital transformation process?
When it’s properly scoped, planned and delivered a digital transformation project should be immediately measurable and the best measurements are made when the process has clearly defined targets.
An improved customer experience should impact across the board – improved quote-to-sale performances, increased new and renewing business volumes, raised average risk premiums, stronger customer satisfaction scores, claims cost improvements and increased marketability of products.
A brand needs to have a clear goal in mind when it sets about a digital transformation project; it’s not enough to try to improve profitability – that can be the by-product of further-reaching improvements across the business.
How does parametric insurance play a role in customer experience?
When it’s done well, parametric becomes an intrinsic part of the customer journey; when it’s done superbly, parametric elevates the whole customer experience and is able to delight policyholders by making the process frictionless.
Data can support experiences when it’s used effectively. Lost your bags on a trip? Anyone can pay for a suitcase after two weeks but parametric allows insurers to get emergency cash to a customer when their bag is delayed so they can buy toothpaste and undies.
Installed solar panels on your house? Insurance can cover customers if the panels don’t produce energy but parametric allows insurers to compensate customers if the sun doesn’t shine on a particular day.
Parametric isn’t about automating existing process. It’s about being able to deliver policy benefits to customers in new and exciting ways that are quicker, smoother and seamless – the more heavy-lifting the technology can do to remove the burden from the customer, the better.
How will parametric insurance evolve?
Parametric is evolving at a really exciting pace because the data sources that drive it are becoming wider and available more quickly.
In the travel insurance sector, for example, parametric can remove the claims process from the customer almost entirely – the first they know about benefiting from cover is when they receive a resolution to a problem.
As we emerge into a post-Covid world, parametric insurance is going to become the most important tool for insurers who want to rebuild customer confidence and reassure their policyholders as they start to build their new normal.
Are insurers and consumers ready to adopt parametric insurance? Where are the challenges?
For policyholders, parametric should be the secret sauce that’s added to their insurance to make it amazing – not quite certain how it’s done, but they know they won’t go anywhere else for their cover after they’ve experienced it. Customers are ready now.
Insurers are ready too, but because they know they need to do something to improve the experiences they deliver. We’re delighted to see innovation and customer experience professionals coming into the sector and starting to gain a voice within insurers.
The challenge for insurance brands is to listen to those voices and to act upon their recommendations. Customers will thank them for it.
What can traditional insurers do now to adapt to the new normal of digitized customer experience?
Embrace it – change isn’t coming, it’s already here.
More importantly, insurers shouldn’t feel that they need to solve the challenge alone. There’s the most incredible community of insurtechs and fintechs out there who have done the hard work so that insurers don’t need to.
Why reinvent the wheel? Plug into what’s already out there and what’s being developed – if you don’t, you’ll be left behind.
What do you think is the future of CX?
Customer experience will become the core differentiator for brands over time.
It’s comparatively easy to be the cheapest in the market (you just cut your prices!) but it’s a dangerous strategy that usually results in a race to the bottom. It’s far better to invest in CX and deliver genuine value to policyholders so they don’t want to go anywhere else.
Someone far wiser than me once put it very succinctly – quality is remembered long after price is forgotten.
For more information about Blink visit blinkparametric.com