Creating An Emotional Connection in Life Insurance

Consumers are lukewarm on the performance of life insurers in key areas. By focusing their skill and technology investments on the largely-ignored topic of emotional connectivity, insurers will dramatically improve their ability to stay relevant with their customers.

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(Editor’s note: Click here for the first essay in this series on the value of the emotional connection between life insurers and customers.)

Industry strategists have long known that consumers look to their life insurers for the right coverages at a competitive price, delivered in a convenient manner by a company on solid financial footing. Sounds simple, doesn’t it?

In fact, that strategy may be fine as a starting point. But it clearly has not produced legions of satisfied customers who enthusiastically recommend their life insurer to family and friends.

In a previous article we examined the industry’s poor Net Promoter results, which suggest a tepid carrier/consumer relationship overall. But our survey also looked at this issue from another angle, specifically asking about the level of emotional and personal connection. We think the results are vitally important to the future of the industry.

Forty-one percent of all respondents say they are “not connected at all,” and don’t think their primary insurer cares about them and their families. Another 40 percent are ambivalent about the relationship. This is a shocking disconnect, given the role that life insurance plays in creating financial security for families.

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To better understand the insurer connection dynamic, let’s take a quick detour to an unrelated customer service experience. Think for a moment about a recent restaurant experience, and ask yourself: What was it that made you feel connected and satisfied (or the opposite) with the restaurant? Almost immediately, you probably came up with several key attributes such as 1) the food quality, 2) the amount you paid, 3) the timeliness of food and drink delivery, 4) restaurant basics such as getting seated and getting the bill, 5) the ambience, 6) the attentiveness of the server during your meal, 7) the quality of any advice you received, and 8) the staff’s efforts to cater to your needs.

The first four items in that list are table stakes for insurers: product, price, cycle time, and convenience. The industry’s traditional approach has been to focus on these areas. As a result, most insurers can plausibly claim to check these boxes.

Items five through eight, however, are potential differentiators. They represent opportunities to connect emotionally with customers in a way that promotes a healthy, long-term relationship. Most insurers give these items surprisingly little thought, or cede the delivery of them to distribution partners. Or worse, they limit their emotional connection to their clients by interacting primarily through technology use cases that focus on speed, convenience, and cost.

As a carrier, if your agents—particularly independent agents—are responsible for customer relationships because you’re bad at it, doesn’t that put you in a tenuous position? We won’t tell them, but eventually your board might notice that your back office doesn’t consider itself a customer relationship player. Even more worrisome, your customers already know, and are probably telling their friends. Quite possibly at scale via social media.

Views on performance

For these differentiating items on our survey, respondents were split on the performance of their current insurer.  The good news: 25 to 30 percent rated their insurer’s performance as excellent. But a similar percent rated performance in these areas as poor.

We believe this dual result effectively nets out to rather flat levels of loyalty and connection. Which is a problem for the industry overall, but a tremendous opportunity for insurers that can outperform their peers by applying “smart digital” tools and technology to this very human problem.

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We believe the vast majority of insurers have strong, under-leveraged assets in the form of knowledge about their customers. They know how and where their customers live, sensitive information about families and finances, what they own, how they behave, and so on. This all supports a new, different kind of relationship. Every insurer can improve how it communicates with customers, generate more timely and truly customized offers, and create a more dynamic customer engagement model that generates emotional connectivity over a long period of time. We believe increased profits will result.

Some insurers may choose to anchor these services in their agent relationships, others may create “smart customer centers” that leverage all communication and automation tools that can deliver noticeably better customer experiences.

In either case, we believe the two essential design constructs are 1) Making emotional connectivity a guiding principle, and 2) Balancing between automation or self-service and high-powered (and high cost) person-to-person engagement. This will be heavy lifting, and it will require both smarts and technology.

The foundation for these efforts is strongly tied to investments that most insurers are making today. For example, many insurers are already betting that data and behavioral sciences will anchor the next generation of service. But it is clear that a new mindset also will be required for insurers to transform themselves into service providers that are deeply, emotionally connected to their clients. The industry has been tweaking products, pricing, and delivery for decades, to decent effect. But for the industry to regain its position as a trusted advisor and partner, a different approach is required.

Losing the Emotional Connection In Life Insurance

Craig Weber & Stephen Siegel // Craig Weber is a well-known thought leader and independent consultant, focused on financial services technology. Previously, he was CEO of industry analyst firm, Celent. During his 30-year career as a consultant and analyst, he has advised dozens of insurers, banks, and technology vendors on IT and business strategies. He is a passionate advocate for sensibly creating business value through technology. Weber is frequently featured as a speaker at industry events, addressing diverse topics such as innovation, IT strategies, and emotional connectivity. His comments on business and technology topics have appeared in USA Today, The Chicago Tribune, AP Newswire, Best’s Review, Business Insurance, and Technology Decisions, and he has appeared on CNBC’s On the Money. He has written numerous columns for publication and maintains an active research agenda focused on the transformation of financial services. Stephen Siegel  is an entrepreneur, board member, business executive, and independent consultant with a strong focus on financial services. He has founded and sold several firms and was a co-founder and Managing Partner for Building2 Investments, a private equity and consulting firm with operations in the US and Japan. In addition, he served as chairman of Andera, a startup focused on customer acquisition technology, which was later acquired by Bottomline Technologies. Siegel was a pioneer in the use of AI within insurance, as the director of knowledge engineering for Applied Intelligence Systems, which implemented an underwriting expert system in the late 1980s that underwrote $20 billion in risk annually. Currently, Siegel serves as a mentor for the Hartford InsurTech Hub and as an advisor for the Brown University Entrepreneurship program. He also advises several long-time clients in the insurance space on their technology and business strategies. He has a Master’s Degree and his PhD in Experimental Psychology from Brown University.

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