Revolutionizing the policyholder journey: Where customer experience and digital transformation meet

It's one thing to say that digital technology has completely changed — and will continue to change — the insurance industry. However, it's another thing to look at just how true that statement is.

Look at auto insurance as an example: Research shows that over half (53%) of customers now begin their relationships with providers through digital means.

For a vast percentage of customers, a company's digital presence is how it will form a first impression about a potential provider. That fact means that when it comes to digital resources, the stakes are especially high for insurance providers.

Still, the opportunities are perhaps even greater. A 2023 survey by McKinsey & Company found that 30% of insurance customers were dissatisfied with their provider's digital presence. The takeaway? Offering a digitally optimized, user-friendly customer experience could mean the difference between losing customers and winning them over.

To ensure the latter, it's crucial that providers are aware of the digital trends shaping our industry's most customer-facing areas — as well as the potential risks this technology brings with it.

Enhancing the digital experience for customers
It will probably come as no surprise that AI is set to play a massive role in the future of customer experiences.

It's possible that no area stands to benefit more than the claims cycle, a process that AI has been proven to accelerate by detecting fraud, quickly triaging claims, predicting the likelihood of litigation and more.

All of these benefits save providers valuable time and effort, but they also give customers exactly what they're asking for. According to research from EY, 87% of policyholders consider claims processing speed when deciding whether to stick with their provider.

But an AI-powered claims process is nothing if it's not paired with a user-friendly interface. A survey from J.D. Power found that customer satisfaction was actually higher when the customer's first interaction with their provider was a digital one. When it comes to common services, like filing a claim or renewing a policy, customers prioritize the speed and convenience of a digital-first experience.

There's a strong chance that this desire for convenience may also aid the rise of embedded insurance, which is poised for potentially exponential growth in the coming years.

By allowing customers to purchase insurance at the point of sale — say, as they're simultaneously buying the home or car they need to insure — providers can both enhance their market share and signal that they understand the need for efficient, accessible service.

Using data to customize journeys
While most customers prefer digital solutions for simple needs, data shows that 70% of policyholders still prefer talking to a real person when it comes to more complex problems, like resolving a specific issue or purchasing a new policy.

Complex customer needs are a challenge, but for providers, data is the solution. Digital technology has made it easier than ever before for companies to gather, analyze and compare all kinds of customer data, which they can then use to optimize experiences based on customer preferences.

That certainly includes using data to determine which issues your policyholders consider too important for a simple digital interaction.

The key is to first build a user-friendly interface. When done poorly, this is a factor that would motivate 80% of customers to consider switching providers. The next step is to develop a system for efficiently elevating issues that require customers to speak with a representative instead.

Even there, providers can use data to optimize around specific customer needs. A simple option is voice analysis software. These allow companies to evaluate a policyholder's tone and sentiment, and then use that information to prioritize or elevate issues.

The challenges of a digital-first approach

When it comes to challenges, privacy is the first, second and third concern for many policyholders.

A recent survey found that 82% of American adults were concerned about their data security online, a worry that only becomes more real as companies increasingly collect data through digital means.

Worst of all, these concerns are completely legitimate. Look no further than the Change Healthcare data breach to see why customers are freaked out. In one fell swoop, hackers were able to steal information from a company that reportedly housed data on roughly half of all Americans.

The first step for providers should be investing in top-of-the-line security, storage and encryption — and educating both employees and customers on best practices to protect this precious data. Transparency can also go a long way here, as companies can highlight these efforts in order to show policyholders how and why their information is secure.

Education also addresses one of the other biggest obstacles at hand. Although the percentage is shrinking, there is still a nonsignificant group of customers that prefers to do things over the phone or in person.

It's up to providers to decide whether those individuals are in their potential customer base and if so, how they plan to approach them. Is it worth investing more in education to teach these customers how to use digital-first tools? Or is it better to maintain an analog presence that can help the group that prefers it? The answer may be different for every provider, but thankfully, it's another situation where good data can help inform the decision.