Insurers Struggle to Correct Admitted Customer Experience Deficit – Novarica Study

Insurers are investing in customer experience, but they are still hampered by legacy systems, fragmentary governance, poorly integrated programs and a traditional focus on the agent as primary customer.

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Insurers recognize that policyholders’ and prospects’ customer experiences are shaped by companies such as Apple, Google and Amazon and that their own capabilities still fall short, according to Insurer Plans for Customer Experience, a new Novarica report sponsored by GMC Software as part of the research and advisory firm’s Research Partner Program. While insurers generally see the need to improve the customer experience, they are still hampered by legacy systems, fragmentary governance, poorly integrated programs and a traditional focus on the agent as primary customer, according to the report.

“While insurers in general have plans to increase spending on customer experience, they have not fully considered who should own customer experience and how to measure improvements,” comments Tom Benton, Novarica’s lead analyst on the report. “The report shows insurance IT leaders that these areas should be prioritized, and that IT upgrade and replacement projects should consider multiple communication channels to improve overall customer experience.”

While 80 percent of respondents to the Novarica study considered both the agent and policy holder their customers, most identified the agent as the primary customer and acknowledged only a recent interest in customer satisfaction as a driver of retention. At the same time, 70 percent of insurers cited improved communication quality as a key driver for improving customers experience for both agents and end-customers.

Respondents saw reduced operating costs as a driver of improved customer experience and ranked self-service transactional capabilities 4.25 out of 5, in terms of importance. However, they ranked actual insurer capabilities among the weakest, at only 2.5/5. Similarly, respondents ranked consistency of user experience as the most important core capability, at 4.5/5, but actual insurer capabilities at only 3.4/5.

Lagging on Mobile, Digital Channels

When asked about their multichannel customer communications strategy, most insurers still regard the paper channel favorably but agree that improvements in other channels is desirable. Responses indicated that most insurers have begun mobile initiatives but few are addressing digital channels such as social media and online video. Furthermore, only 40 percent of respondents with a mobile strategy said it was integrated into internal customer communications systems.

The Novarica report also showed that most carriers have an ad hoc approach to customer experience, with shared ownership among multiple business functions and IT.

“While those surveyed considered new communication channels important, they did not consider adding them as key drivers of their customer experience strategy,” Novarica’s Benton elaborates. “This indicates that insurers are focused on improving current channels – such as paper mail, email and web portals – without an overall strategy for multiple channels.”

Balancing Efficiency and Expectations

Insurers face a multiple challenges related to customer experience, such as low net promoter scores, the costs of new channels and additional regulatory requirements, according to Steve Francis, president and general manager, GMC Software. “However, customers simply don’t care about internal obstacles,” Francis observes. “They demand information over the channel they prefer, seek clarity and want a consistent customer experience. Insurers need to adopt customer communication strategies that meet both internal requirements for cost-effectiveness and speed, while giving policyholders the top-notch customer experience they have come to expect from companies they touch.”

While the Novarica report stressed that all customers’ expectations are being set by the best cross-industry examples of customer experience, Millennials are setting a new standard. “As younger customers look to communicate on whatever channel they prefer, for whatever information they want at a time they want to know it, insurers need to consider systems that are flexible in providing a multi-channel experience,” Benton says.

 

Anthony R. O’Donnell // Anthony O'Donnell is Executive Editor of Insurance Innovation Reporter. For nearly two decades, he has been an observer and commentator on the use of information technology in the insurance industry, following industry trends and writing about the use of IT across all sectors of the insurance industry. He can be reached at [email protected] or (503) 936-2803.

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