Traditionally, insurers don’t have the strongest track record when it comes to customer communication. Most people only interacted with their insurers when they were making a claim or looking to make adjustments to their policy.
By Brent Haumann, MD of Striata Africa
That’s not an exaggeration either. As recently as 2019, 90% of insurers worldwide did not communicate with their customers even once a year.
In some respects, this lack of communication is understandable. Insurance is a grudge purchase, something we know we need but don’t like having to fork out for (at least until something major happens and a claim saves us from financial ruin).
Many insurers feel that if they communicate too frequently with customers, they’ll be reminded of that grudge purchase and be tempted to scrap their cover or take their business elsewhere. Understandable as this logic is, however, it’s not sound.
Insurers should not be scared to engage with their consumers in case they are lost. What they need to understand is that selling a policy and only engaging when there is an annual price hike will result in a negative relationship and it’s that, rather than over-communicating, which will cause consumers to go elsewhere.
A far better approach is to engage in meaningful communication that builds an emotional bond between the insurer and customer and engenders trust and loyalty.
CX and the consumer environment
That loyalty is priceless at a time when switching insurers is easier than ever and a slew of technology-based insurance startups are aiming to disrupt the long-established business models of traditional insurers (according to one estimate, the insurtech space is poised to grow by$33,73-billion leading up to 2025).
Add in a broader economic environment in which ordinary consumers’ pockets are under more pressure than ever – thanks to Covid-19, followed by supply chain issues and rising fuel prices – and it’s easy to see why it’s imperative that insurers do everything they can to retain customers. If they don’t, their customers will either look elsewhere or forgo having insurance entirely.
But a customer is much less likely to abandon a company if they have a great experience every time they interact with it. Of course, within the broader consumer environment, insurers aren’t just competing against other insurers but entertainment, food delivery, and any number of other services. Insurers, therefore, have to work even harder when it comes to providing a great customer experience (CX).
Demonstrating value
Communication is key to providing great CX. After all, the sum of the interactions customers have with a product or service provider is a relationship and no relationship can handle protracted periods of silence. But it’s more complex than just communicating for the sake of communication. Insurers wanting to create great customer experiences should bear in mind that research from McKinsey shows 70% of the customer’s journey is based on how they feel they are being treated.
If a customer feels like their insurer is constantly trying to upsell them or is exposing them to products they don’t need, they’re not likely to feel that they’re being treated well.
So, what kind of communication should insurers use to build loyalty and trust instead? Well, as is the case with any relationship they need to show that they understand the customer’s individual needs, demonstrate value, and do so with every interaction.
Given the vast amounts of customer data insurers have at their disposal, the first of those is possible for almost all insurers. Combined with artificial intelligence (AI) and machine learning (ML), for example, insurers can use this data to ensure that customers receive communication that is relevant to them at an individual level.
Geographic and other forms of data, meanwhile, allow insurers to demonstrate value. They can, for example, send out weather warnings or advice to customers on keeping their homes and cars safe. It doesn’t matter how simple your claims process is, a customer is much more likely to stay loyal if your actions stop them from having to claim in the first place.
It’s crucial, however, that insurers take this personalisation and demonstration of value into every interaction they have with customers. While technology and data can go a long way to achieving this, it’s also important to ensure that every department within the organisation has adopted a mindset that allows for meaningful customer interactions.
A serious imperative
Over the past two years, insurers have found themselves stretched harder than ever before. As a 2021 report from Deloitte notes, they’ve muted new business volumes, increased claims, and short-term Covid-19 related provisions for poorer expected persistence and mortality. At the same time, their customers are facing unprecedented pressure on their wallets.
Now is not, in other words, the time for insurers to revert to minimal communication in the hopes that customers will keep paying their premiums in the background. Instead, they need to build trust and loyalty and that means engaging meaningfully to build lasting, emotional relationships with their customers.