Meeting customer demands: the insurance market needs to adapt to digital

While some industries seem to be making quantum leaps in tech development and adoption, some industries - like insurance - have fallen behind.

Insurance companies face many conflicting challenges. Customer expectations are rising, regulation is increasing and digital transformation is fundamentally changing how insurers operate.

While some industries seem to be making quantum leaps in tech development and adoption – take the retail industry as an example – the insurance industry is notable for having vastly fallen behind.

>See also: Insurance is falling behind when it comes to technology expectations

According to research by LexisNexis Risk Solutions, 79% of personal lines insurers consider themselves digitally confident, yet only 4% claim that their business offering is completely or nearly digitised.

Adapting to customer needs

For a long time, the traditional insurance business model has proved to be remarkably resilient. But it too is beginning to feel the digital effect. It is changing how products and services are delivered, but more importantly, it is changing social trends, which in turn is directly affecting consumer behaviour and expectations.

Today’s consumers expect more than just competitive prices and good quality products. Being task-rich and time-poor, today’s customers are putting more value in companies that are able to provide them with a quick and convenient service that fits perfectly into their busy day-to-day lives.

According to a report by McKinsey, when it comes to dealing with insurers, customers expect the following service: simplicity; 24 hour access across every channel; be able to quickly find relevant information, particularly in relation to policy details and premiums; and innovative services tailored to the digital age.

>See also: Is telematics the future of car insurance?

From this research, it’s clear to see that customer service is a competitive differentiator in the insurance industry, but how can providers adapt their services to meet customer needs?

Stuck in manual mode

‘Digital’ is a word that does not seem to have hit the insurance industry yet, resulting in a severely under-performing customer experience.

In its report, LexisNexis Risk Solutions found that in the home insurance market, a quarter (25%) of insurance providers are still using mostly manual processes, as opposed to a mix of manual and digital or all digital.

Right now there is no app or even a website in place to manage all your insurance packages available in the market, and little seems to have been done to connect databases on the back end, which means that even the simplest of tasks – i.e. taking out a different product with the same provider – requires a great deal of manual effort.

In fact, the greatest technical development in insurance since the dawn of the internet is price comparison websites which, while useful, actually do very little to improve the efficiency of the industry for either companies or consumer.

In order to find a true solution for efficiency, the industry must recognise that first and foremost, the consumer insurance market operates in a C2B model, and because it’s essentially a buyer’s market, business models need to adapt to deliver a more customer-centric service.

>See also: What’s stopping the insurance industry’s digitisation?

The reality is that insurance is normally a grudge purchase, bought either because it is mandatory or to deliver peace of mind. No one looks forward to buying or renewing their insurance policies, so why does the process have to be so long winded and difficult?

In this day and age where you can book holidays, change the heating settings at home, transfer large sums of money all on your phone, why is still not possible to have sight and to manage all your insurance policies in one place?

Incorporating technology

Insurance has been slower than other industries to adopt and incorporate beneficial technology systems and practices. The industry doesn’t even need to be fully disrupted by technology, it just needs the right digital tools to improve its service.

To do this, decision makers should look at customer needs and analyse the way consumers are transacting in this modern day and not solely rely on just price to drive renewals and customer acquisition – a tech savvy consumer will always be looking for much more than that.

>See also: The digital insurance landscape: insurers are falling behind

More importantly, insurers should analyse whether their business strategy or offering can span the entire customer journey – from making buying policies simple and straightforward, to managing the renewal process, all the way through to the claims process.

Customer service in this industry is at a turning point and those organisations that embrace this will be the ones to sustain growth.

It’s clear that the insurance industry is ripe for change, with some great opportunities to grasp. It just needs to focus on embracing technology to develop personalised consumer experiences and more importantly, make insurance simple.


Sourced by Peter Goodman, founder and CEO of Homelyfe

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Nick Ismail

Nick Ismail is a former editor for Information Age (from 2018 to 2022) before moving on to become Global Head of Brand Journalism at HCLTech. He has a particular interest in smart technologies, AI and...