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Customer attrition is the bane of the insurance sector. Consumers defect for a variety of reasons—better prices offered by a competitor, better customer service, and better reputation. This problem is even more pronounced among the digital, social, and mobile generations. How can insurance companies upgrade their customer service capabilities simultaneously across all the channels over which they must serve today’s increasingly digital-first customers?
Why has customer experience (CX) fast become an imperative for insurers? An application of any strategic business model will make it obvious. For example, here are two elements of Porter’s Five Forces model as they apply to the P&C insurance sector:
- Bargaining power of buyers: Information asymmetry and bargaining power, traditionally an advantage for carriers, has shifted to consumers, accelerated by online sources such as price comparison and competitive review sites, forums, and social networks. There are virtually no barriers to switching, since alternatives are just a click or a swipe away.
- Threat of substitutes and new entrants: 75 percent of consumers think that there is no significant difference among products offered by insurers (Source: Accenture). Traditional carriers face threats from adjacent industries such as banking and financial services as well as digital upstarts. In the health insurance sector, insurers may face new competition from out-of-state carriers as regulations evolve.
One could also apply the other elements of the Porter model to P&C, life, and health insurance and come to the no-brainer conclusion that CX innovation is a business imperative, not a luxury for insurers.
DX is the new CX
With 80 percent of insurance shoppers touching a digital channel during their purchase journey, the CX imperative is now better stated as the digital experience (DX) imperative (Source: McKinsey). Yet only 14 percent of carriers think they provide differentiated DX (Source: Accenture). Moreover, today’s customers live, breathe, and stay digital, insisting that digital self-service get smarter and agent-assisted digital and omnichannel service be knowledgeable and consistent. However, the vast majority of them (79 percent) think that insurance companies are unable to deliver on these requirements, citing them as the biggest pain points in a survey conducted by Forrester Consulting:
- Different agents give different answers for the same question: 41%
- Agents are not knowledgeable: 25%
- Can’t find answers on company websites: 33%
- Other: 21%
While consumers are increasingly going digital, they also want to be seamlessly transitioned to non-digital channels for escalations and exceptions. So, a carrier’s DX strategy should also include such an omnichannel capability. However, there is a disconnect in context and content across digital, call center, and field touchpoints—2/3 of life, and 3/5 of P&C carriers do not offer omnichannel transactions where a customer can start a transaction in one channel and complete it in another without losing continuity. Moreover, 60 percent of life carriers and 40 percent of P&C carriers have not integrated their systems with those of distribution partners (Source: Bain).
Leaders that innovate in DX see excellent results
Here are some examples of innovative uses of DX technologies:
- Onboarding DX: Digital customers like to stay digital—they are content to be “contained” digitally. This is a win-win for the business since digital interactions help carriers control service DX costs while giving customers what they want. A US insurance giant that also offers diversified financial services products has implemented secure co-browse technology to help customers fill out forms while an agent talks to them at the same time. The carrier has set rules on what fields the agents and the customers can see, and what actions they can take, with fine-grained control capabilities built into the solution. For example, sensitive customer information such as social security or credit card numbers can be masked from the agent view, and agents might be prohibited from completing a customer transaction (e.g. submittal of a form or purchase of a product). This insurer increased onboarding by 200 percent by implementing co-browse!
- Shopping DX: A health insurance payer cobrowsed with consumers on complex health insurance exchanges, walking them through various plan options to select a plan and enroll in it.
- Knowledge-guided DX: A leading diversified insurance and financial services firm uses an AI-powered knowledge solution to make its contact center agents effective, efficient, and compliant when answering customer queries on products and services, claims, “how to help” for transactions, and advice on what products to buy. Here are the results:
- 60 percent reduction in escalations to subject-matter experts, 13 percent reduction in hold times
- Improved compliance, measured by:
- Immediate publication of regulatory changes
- Process compliance for workflows
- Easy-to-track version history for knowledge content
- Claims DX: P&C carriers are starting to use video chat to make it easy for customers to show property damage to assessors to speed up claims processing.
De-risking DX innovation
There are numerous barriers to DX innovation. The most common ones are:
- Can’t justify the business case for the technology
- Can’t justify the cost for the trial/pilot
- Vendors don’t provide guidance for success in trials
- Not sure if the technology will add business value upon deployment
- The technology may be too disruptive to existing systems and operations
To mitigate these concerns, carriers should ask vendors to de-risk DX innovation with truly zero-risk production pilots that include no-charge guidance on best practices and no obligation to buy. This approach allows the insurer to establish clear value from the pilot in their own business environment before they extend the deployment across their entire customer service organization.
DX is now one of the few ways, if not the only way, for insurers to retain and expand customer relationships. Savvy carriers are leveraging risk-free innovation consumption models in DX to win in their markets.