The Evolution of Customer Engagement in Insurance Industry
In today’s fast-paced digital world, ‘customer engagement’ has obtained a very influential spot. We instinctively relate customer engagement to Amazon, the pioneer in bringing a unique and hassle-free e-commerce experience for consumers. They have set themselves exponentially above others and the services they provide are considered as a benchmark to assess any form of customer engagement.
Customer expectation is gradually changing, and they expect ‘Amazon’ experience in all their transactions, be it buying a car/home, planning a holiday or getting insurance.
How was Amazon able to achieve this?
Amazon leveraged the advancing digital technologies like social media, applied data science, and machine learning to maximize customer engagement.
The changing curve of customer engagement
A few years ago, customer engagement in the insurance sector was equivalent to prompt claim settlement, but now with the changing paradigm, customer relationship has reached new heights. The thought process of both consumers and insurers has changed, leading to new innovative customer engagement methodologies. Personal line insurers who are far ahead in the digital world than the commercial and specialty insurers are trying to find new ways of reaching and interacting with their existing and prospective customers.
With the aid of digital technologies like connected homes and social media, insurers are moving on from being conventional. They are investing time and effort to research and analyze their market position to build their brand. Digital customer engagement in the insurance industry has also increased the touch points between insurers and customers, leading to an increase in customers’ loyalty and affinity towards the brand.
FinTech startups and their contribution to customer engagement
The emergence of FinTech startups is the latest addition to bring about a considerable change in the customer engagement model. These startups are changing the basic insurance operation model with alternative business models (Lemonade and Metromile). If we look closely into these engagement models, we see one common underlying factor - ‘PERSONALIZATION’. These engagement models are reaping success because insurers are able to bring in more personally connect with their customers.
Where do insurers stand in terms of Personalization?
Our study shows that the level of personalization engagement is different in different parts of the world as you can see below:
US – 57%
Europe – 38%
APAC – 55%
Customer engagement in the insurance domain
In the insurance domain, customer engagement level had always been less than that of other consumer products as insurance was not tangible.
However, insurers are now leveraging connected homes to offer additional policy discounts and proactive risk management services. With social media, they understand their customers’ lifestyle and create customized coverage to suit their needs. Let us see a few examples of how insurers can bring in customer engagement:
Scenario 1 – Insurers learn about a customer’s forthcoming travel plans or purchase of new home furniture/fixtures through social media. They create a personalized travel coverage to take care of their travel insurance or automatically add the newly bought furniture/fixtures to the existing policy and send them the coverage letter.
Scenario 2 – Connected homes alert insurers of house damage caused by an accidental fire. Insurers create customized loss recommendations and actionable steps to prevent or reduce loss and arrange for alternative accommodation.
Scenario 3 – Insurers send automated messages in case of adverse weather conditions or major road repair work/mishap and also create proactive FNOL based on the social media updates.
Do these customer engagement models increase customer base? No. More than increased customer base, the major impact has been the increase in retention ratio. With satisfied customers, you are ahead of your competitors since the personal touch and relationship has already been built. Other benefits of these customer engagement models are improved operational efficiency, reduced claims cost, and increased profitability.
Nevertheless, there is a flip side to this.
A few customers feel that their personal space has been compromised when insurers follow them on social media. One unhappy customer could turn the tables of the brand and loyalty. Some Gen X and Y customers expect personal touch points and insurers giving more attention towards digital communication end up losing this pocket. Therefore, insurers must make sure that they carefully handle this delicate thread that tangles above these personalized customer engagement models.
What about the agents?
Agents, the traditional link between the customer and insurer are fading away in the new market environment. However, few insurers facilitate and make sure that their agents are also integrated into these digital channels.
The future of customer engagement in the insurance industry
Our study suggests that customers are expecting to reach their ideal balance of online versus offline commerce over the next three years. To maximize profits and drive new opportunities in the customer-driven landscape, insurance companies must develop strategies to deliver a truly personalized experience. Customers expect experiences and products personalized to the needs and preferences based on the implicit behavior and explicit permission and interactions with the insurer.
Every day brings in new challenges and changes to the customer engagement model and insurers have to think far beyond the current horizon to achieve success and mark themselves as a unique player. What is your idea about customer engagement in today’s time?