Digital Self-Service Platforms: Benefits and Risks for Insurance Companies

A wrong or incomplete self-service automation solution could alienate customers, but the right one can be a win-win for MGAs and their customers.

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Digital self-service platforms are finally taking root in the insurance industry. Although large carriers and MGAs have led that charge, smaller MGAs, independent brokers and agencies are now following suit. The reason? Customer convenience. A recent survey by Zendesk reveals that 75 percent of consumers view self-service as a more convenient way to solve customer service issues. Solutions like chatbots, user forums, and customer portals are rapidly changing how customers engage with insurance companies.

The right self-service automation solution can be a win-win for MGAs and their customers. However, the wrong or incomplete solution can irritate your customers and risk losing them to a competing agency. There are a number of benefits and considerations to keep in mind when deciding if and when to implement a self-service platform.

Digital Self-Service Platforms: The Pros

Before your organization goes through the process of digitizing certain aspects of insurance to accommodate self-service for customers, let’s take a look at why you’d want to do it in the first place.

  1. Elevated Customer Experiences: 

There’s no denying that effective digital self-service platforms give customers a faster and more convenient experience. Customers can access their policies, make changes and payments, and file claims any time and from anywhere. No need to visit physical offices or wait on the phone for customer service. In the age of Amazon, customers are attracted to that level of independence, and offering it to them can attract new customers and retain existing ones.

  1. Higher Efficiency and Lower Costs:

By empowering customers and automating some routine tasks, digital self-service platforms reduce the need for manual intervention. This improves operational efficiency, cuts labor costs, and reduces administrative overhead. All that means MGAs can allocate resources more effectively, letting employees focus on tasks that add value and still require human insight and expertise.

  1. Faster Claims Processing: 

Filing claims is the most frequent interaction between customers and their insurance carriers. As such, it’s a prime opportunity to deepen—or damage—that relationship. Digital self-service platforms allow customers to instantly file and track claims, accelerating processing and leading to faster settlements and higher customer satisfaction. And that, in turn, leads to a longer relationship and even upselling opportunities.

  1. Turning Data into Strategy:

Self-service platforms automatically gather data on customer preferences, behaviors, and needs. That data can be used to identify trends, assess risk profiles, and create personalized products and services. The results are more informed decision-making and more targeted, strategic, and appealing offerings for customers.

The Risks: Factors to Consider

The good news is, insurance customers are already used to self-service interfaces such as mobile banking, bill pay, and even making medical appointments. The bad news is, their expectations of a great user experience has skyrocketed as a result. That means there is little room for error when adding your self-service platform. Here are some pitfalls to think about as you begin the process.

  1. Initial Investment and Integration Challenges:

While the potential returns are considerable, implementing a digital self-service platform will require significant up-front investment. What’s more, integrating that platform with legacy systems may require additional time and resources.

  1. Security and Privacy Concerns:

Where sensitive digital information goes, cybercriminals inevitably follow. Digital self-service platforms necessarily store customer information, making them attractive hacking targets. A single breach can lead to reputational damage and fines. Independent agents and MGA will need to invest in robust security measures and protocols to protect themselves and their customers’ data and privacy.

  1. The Digital Divide: 

Not all customers will be on board with digital self-service platforms. Less tech-savvy customers might prefer traditional channels, creating a segmentation challenge. For best results, your organization will need to keep traditional customer service standards high, even as you  implement self-service options. Which brings us to:

  1. Keeping the Human Touch: 

While digital self-service offers convenience, some tasks will still call for the human touch. From complex policy inquiries and troubleshooting to emotionally charged issues, some situations are best handled with personalized customer support, which digital platforms simply cannot replace.

  1. User Experience:

Self-service is only a perk if it’s exceedingly user friendly. A poorly designed or confusing self-service platform can lead to frustration and customer disengagement. Independent agents and brokers must do their due diligence, making sure the platform they choose has a strong reputation for providing exceptional, low-friction customer experiences.

  1. Maintenance and Upgrades: 

To remain effective, a digital self-service platform will require regular maintenance and updates. This ongoing commitment may involve additional costs and resource allocation, which MGAs should consider in their planning.

Balancing Innovation with Tradition

To stay competitive, insurance organizations will need to offer digital self-service options sooner than later. But those innovations should be brought in alongside—rather than replacing—all the value great customer service teams can provide. That human touch is one of the key benefits you have to offer, and the increased efficiency of self-service platforms should be leveraged to make that human talent even more effective.

Build a New Insurance Core System or Modernize the Old One?

Eric Ayala // Eric Ayala is the senior vice president, Americas for Novidea, creator of a cloud-based, data-driven enterprise insurance management platform for brokers, agents, MGAs/MGUs, and wholesalers. Ayala has more than two decades of technology startup and venture capital experience. A Silicon Valley veteran, he has led multiple sales and marketing teams at startups funded by prestigious VCs such as NEA and Accel, and Corporate VCs such as Dell and Microsoft.

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