Is Customer Intimacy the Key to Life Insurance Sales Growth?

An Allianz survey shows that people will pay for additional life insurance benefits if asked more directly. That’s more likely to happen once insurers develop a better user experience and begin acting more like risk mitigation advisors to their policyholders.

Americans would pay for additional life insurance benefits if only they were asked more directly about whether they wanted them, according to a survey conducted by Allianz Life. This raises questions about how customer experience strategies, including self-service interfaces, can increase the propensity of customers to make sure they are adequately insured – and not only with regard to life insurance and financial products.

On the surface, the announcement is a little like a more scientific affirmation of the old saw: life insurance is sold, not bought – customers won’t come looking; you need to make the pitch. But it also raises considerations about how investment in customer experience capabilities and other technologies can open up possibilities for having conversations that can drive sales and retention. There is the potential for these technologies to radically change the traditional relationship between insurers and policyholders. I’ll address that in a minute, but first let’s take a look at the survey’s findings.

When given a list of reasons to buy life insurance, an announcement about the Allianz survey says, only four percent identified within their top reasons “access to money for expenses like supplementing college funding, healthcare, emergencies, or supplemental retirement income.” However, when asked directly about those additional benefits, 64 percent indicated that they’d make sacrifices to include such benefits with their life insurance policies. In fact, respondents specified that they would forego pleasures ranging from “driving a more expensive car” (12%) to “my next planned vacation” to “my next cellphone upgrade” (8%) to “my morning cup of coffee.” Twenty-five percent said they’d “eat out less often.”

Allianz concludes from these responses that, “The results indicate more education or better explanation of these benefits would enhance Americans’ interest in life insurance.” Sounds reasonable enough, but why do insurers continue to fail in their efforts to provide that education?

Denial and Distrust

I would posit two major reasons: The first is an internal psychological reason that we could abbreviate as “denial.” Life insurance forces people to think about what many find unthinkable. It refers to a mere possibility (at least in the short run), a highly abstract and unpleasant counterfactual married to a conditional proposition: if you die, you’ll be covered if you buy a policy. The same psychological reason applies to insurance in general, if to a lesser degree: nobody wants to spend much time entertaining being involved in a car crash or having their house or business burn down.

The second reason is that people lack a sufficient level of trust in insurance companies. Some brands have a higher trust factor than others, but generally it would be an understatement to say that consumers have less trust in insurance companies than, say, their doctor (why this distrust persists is a topic for another day). And yet, in a better world, the relationship between insurer and policyholder would be a lot more like the doctor/patient relationship. Both should be aimed at identifying and mitigating risks that could cause outcomes that range from the inconvenient to the catastrophic.

Now, more realistic shorter-term customer experience goals for insurers would making the insurance purchasing and servicing experience less than awful. That’s especially true of life insurance, which still typically involves exchanging bodily fluids and going through months of repetitious phone calls and other nuisances. However, in the longer term, the insurance customer experience could evolve to a more consultative relationship, such as exists today between commercial insurers and their business clients.

Focus on UX

Shorter-term customer-experience goals should focus on the insurer/customer interface, or user experience (“UX”). An outstanding UX goes beyond a merely “nice,” website, though that’s certainly an important part of it. A great UX is an offering that provides capabilities that “work for the user,” advises Wendy Aarons-Corman, president of UX Game Changers, a services firm focused on helping insurers deliver state-of-the-art user experiences for the web and mobile devices.

“Users desire the ability to get through a task of find information that doesn’t require an excessive amount of time or intervention,” Aarons-Corman comments. “In addition, they require an experience that feels good to them.”

Meeting those needs includes attention to “look and feel,’ to colors, to and accessibility of information, Aarons-Corman adds. She cautions that, as successfully as an insurer might be at pleasing customers with its site, other capabilities, such as call center, have to be mastered to create an all-around excellent UX.

With regard to our current topic, a good UX can help to set the stage for presenting information about further offerings that customers may have a natural interest in. As other contributors to this site have noted, social media provides another channel for making producers more successful, and, at the very least, being where the customers are and interacting with them in preferred ways.

Partners in Loss Prevention

Over the longer term, insurers can leverage a variety of technologies, including those that can help consumer calculate their needs, inventory their belongings or even monitor their health. As the world moves further and further into the “Internet of Things,” where entities of all sorts can transmit relevant information to their users or amongst each other, there are huge possibilities for insurers to provide services that could enable them to become closer – and more trusted – partners in loss prevention, even for individual or personal lines customers.

Helping people to understand what life insurance products and features they could benefit from is something that insurers can provide simply through an improved UX. However, the effectiveness of such efforts will increase as a broader concept of insurer-as-consultant begins to be accepted. That in turn will come as insurers find more and more innovative ways to use technology to do what they do best – help the general public to protect themselves from life’s risks.

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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