In today’s insurance market, it’s not enough to only provide high-quality products and services. Now, insurance companies need to deliver positive digital customer experiences that compete with those offered by companies like Amazon, Facebook, and Instagram.
Successful insurance companies are constantly looking for new ways to enhance how they interact with clients, provide services, share information and respond to queries. This is only becoming more important as insurers embrace digital transformation and adopt an omnichannel strategy that includes mobile, desktop, call centers, and even social media. But with more digital channels, there are more opportunities for customers to experience friction.
Here are five strategies that insurers can embrace to cut friction from the customer journey as they work towards digitally transforming their business.
1. Embrace an omnichannel approach to the customer journey
Customers expect digital interactions across all devices to be seamless and intuitive, but more complex activities such as getting a quote or filing a claim can lead to cumbersome user experiences that introduce unnecessary friction. These are critical, and sometimes quite stressful, moments in the customer journey that too often result in customer frustration, online abandonment, and unnecessary increases in call center volume.
To remain competitive, insurers need to pay attention to the full customer journey and understand what friction points happen at every crossover, especially for policyholders that are moving between multiple devices.
Native mobile apps are well-positioned to address these challenges. While customers might perform their initial research for finding the right insurance policy on their desktops, they are more likely to make claims from their phones.
For younger clients, such as millennials and Gen Z, social media is also becoming an important channel. They prefer videos to text and get most of their information from social media. This means that agents and advisors will need to leverage videos to establish their credibility with younger policyholders.
2. Focus on driving conversions and reducing churn, not just sales
When insurance companies focus too much on revenue, and not enough on metrics like churn and conversions, they begin to lose sight of the user experience.
COVID-19 resulted in an increased interest in insurance, which meant that people were buying new policies and canceling old ones. Life insurance sales alone
Many insurance companies were not prepared for the increase in traffic that occurred as a result of the pandemic. Large, established companies suffer from legacy systems that are difficult to update without disrupting business operations. For some, this has resulted in poor conversion and high churn rates, which can damage an insurer’s reputation with policyholders.
There’s a relatively low cost associated with switching insurance carriers. This means many customers won’t think twice about leaving one insurer for another if it means getting an improved digital experience.
To enhance that experience, insurers need to think about conversions on a smaller scale as well, such as how to improve simple workflows. Insurtech companies like Lemonade have made it possible to seamlessly file a claim or sign up for a policy with just a few taps and swipes; incumbents and established insurers need to follow suit.
The best insurance companies recognize that when people are contacting their insurance company, it’s usually because of tragic or unfortunate events, like car accidents, unexpected deaths, and natural disasters. These are emotional moments, and if your digital channels offer a seamless customer experience, customers will feel especially thankful that they didn’t struggle to accomplish the task at hand.
3. Personalize the experience
Another approach to reducing friction is personalizing the customer experience.
Think about how Netflix recommends TV shows and movies based on your previous streaming experiences, or how Amazon offers customized shopping recommendations when you open the app.
Customers expect this level of personalization from all of their digital experiences. For insurance companies, personalization means being able to pre-populate application fields and claims forms with information that the company should already know. It's also about being able to recommend insurance solutions that align with the customer's lifestyle, which might require additional data gathering.
To reach this high level of personalization, insurance companies need to learn how to best collect and analyze first-party customer data, so that they know how users are navigating through their products. With the help of advanced technologies like artificial intelligence and machine learning, insurers can start offering experiences that are tailored to an individual’s unique circumstances. Lemonade, for instance, relies on artificial intelligence to instantly calculate how much renters insurance will cost based on location, building size, amount of coverage, security measures, and other factors.
4. Enable smoother client-agent interactions with internal digital tools
Despite the digital transformation, agents and advisors will continue to remain the face of insurance providers. Many customers base their purchase decisions on how much they trust their advisor, so insurance providers need to support the digital channels that facilitate conversations between policyholders and agents/advisors.
Many agents are independent of their firms, which means they are technically growing their own business. Firms should provide agents with the necessary tools to seamlessly manage their client relationships. This includes investing in tools like CRM systems, lead generation/management solutions, calculators, simulations, and customer profiling tools for appointment prep.
The more information the agent has before the first meeting with a prospect, the more focused that conversation can be and the easier it is for the agent to get to the sale. Once a sale is made, the agents need to have an easy-to-use CRM platform so that they can seamlessly manage their books. The better the tools and sales opportunities an insurance carrier provides to agents, the more likely the agent will be loyal and eager to sell that carrier's products.
5. Reinvent the process for obtaining insurance policies.
It’s safe to say the old way of creating insurance policies is over.
Life insurance companies need to be more creative about finding ways to seamlessly offer policies. The purchase process for life insurance can feel long and stressful, bogged down by the old way of doing things. Removing the medical screening, for instance, reduces a significant amount of friction in this process. In its place, they might offer a more rigorous underwriting process, which can be conducted completely online.
For P&C companies, the primary areas of friction that need to be addressed are in the quote and claims processes. They need to provide good quotes online with the minimum amount of data collection required so that a customer can make it through the quote process relatively quickly. For claims, they need to enable the ability to use their app to photograph evidence of the claim that can be used to determine the amount that will be awarded to the insured to address the issue.
As digital transformation continues to impact every industry, from retail to financial services, insurance companies will feel even more pressure to re-invent the customer experience. If executed correctly, digital transformation in the insurance sector will lead to happier customers, cheaper costs and higher revenues.
