Consumers have long seen insurers as difficult to deal with; they don’t interact with customers effectively or frequently enough, and they score low on trustworthiness. But what is the insurance customer experience really like today? Vinay Nagwekar, director of product development at insurance software provider,, looks at what insurers are doing right – and where there is room for improvement.

From a processing standpoint, the good news is that insurers are getting the fundamentals right. They are very good at delivering their basic business model: delivering policy documentation, taking payments, paying claims, remaining compliant, and so on.

As for what they are doing less well, there is substantial room for improvement around embracing the digital age; interacting with customers; improving marketing; and honing the overall claims experience. Tackling these issues will help insurers to build customer loyalty and trust.

Embracing the digital age

Insurers have a reputation for being somewhat slow and old-fashioned in the way they interact with their customers. For example, the overwhelming majority still rely on the post for policy documentation and the like.

In the context of the modern world – where consumers love using sites like eBay, Expedia and Amazon and doing their banking online – this is no longer good enough. Consumers are starting to wonder: I do everything else online, so why can’t I manage my insurance online?

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The obvious answer would be to allow consumers to manage their life insurance via a customer-friendly online interactive portal or mobile app. That would also eliminate the need for unnecessary administration fees, as customers could make changes themselves.

However, take up of electronic portals is low so far in the industry. Most insurers are keenly aware of the need to go fully digital, but are being held back by antiquated legacy systems that don’t allow it. (Interestingly, some of the smaller insurers are better placed as they are not being held back by the systems of the past).

That’s why insurers need to be more radical. They need to stop tinkering with their current systems which are unable to embrace the new digital age due to their antiquated technology.

If they are going to give the enhanced level of customer experience that consumers expect, then they will have to refresh their strategy and embrace approaches that have rethought the process from the ground up, and which are totally at home in this new era of consumer self-service.

While all of this might sound daunting in terms of the investments of time and money required, the potential prize is massive; the early movers in this space would pull a lot of the market with them and have a real competitive edge.

Added to that, not having a good digital interface is costing companies as much as £8 out of every £100 of premium as back office staff need to be employed to do work that could be carried out online by the customers themselves. Therefore, there are significant potential savings to be made.

Interacting with your customers

Another area where insurers need to make progress is ‘getting to know’ their customers – and using that knowledge to interact more effectively with them.

Like many large companies, insurers collect a lot of customer data, but they aren’t using it to maximum effect.

Companies like Amazon, eBay and Google are already doing this really well – they collect lots of information about their customers, which they use to provide closely targeted content and offers.

Imagine an insurer taking the same approach: the scope for interacting more positively with customers, understanding their habits, cross-selling products and targeting offers would be enormous.

For example, customer data could enable insurers to offer accurate binding quotes to customers – instead of the ‘indicative’ initial quotes that many customers still receive.

In the health sector, Vitality is a good example of an insurer using customer data effectively. The company has created a business ecosystem that provides benefits to its customers, while at the same time giving the company a real insight into their lifestyles and healthy habits.

Vitality’s business ecosystem consists of 20 partner companies which will help Vitality’s customers become or stay healthy, fit and to eat well. Vitality’s customers are rewarded for using the services of these partners in the hope that healthy customers will lead to fewer claims.

As well as making communications more personal and targeted, insurers need to engage with their customers more frequently. Most insurance companies only have contact with their customers once a year, at renewal, which does nothing to build strong, loyal relationships (and results in a multitude of missed opportunities).

Communicating with customers more regularly – whether you’re sharing useful insights or closely targeted offers – can only be positive.

Therefore, when creating a business ecosystem, insurers need to be mindful of the need to build more frequent, meaningful contacts with their customers into the process.

Increased communication also gives insurers the opportunity to be more transparent; for example, consumers irked by seemingly ever-rising prices may be interested to understand exactly how their premiums break down.

Approach to marketing

Marketing is an interesting area because – perhaps as insurance is seen as ‘dry’ – it has become increasingly popular for companies to look to gimmicks to attract customers, such as funny adverts or offering a cuddly toy.

However, while this has been a relatively successful approach, it only appeals to a limited group of consumers. Essentially, most people choose an insurer because they are comfortable that they will give them a good experience and pay out if they have a claim; they would rather have reduced prices and an improved service than any sort of gimmick.

Claims experience

Claims is an area that has let many insurers down in the past, with the industry gaining a reputation for taking a long time to process claims – and seemingly refusing to pay some claims on a technicality. And understandably enough, customers who have a bad claims experience will not go back to an insurer.

Therefore, this an area where insurers can improve their customer experience enormously: for example just as consumers are able to track their orders from Amazon and eBay, they would like to understand the exact status of their claim throughout the settlement process.


Looking ahead

Only those insurers that address all of these challenges will be well placed to compete in today’s ever-more challenging market. If they do, the rewards will be significant: increased consumer satisfaction and loyalty; the ability to understand customer behaviours and target marketing and cross-selling accordingly; and significantly reduced administration and processing costs, to name but a few.