Retaining insurance customers in a post-pandemic environment

Published On : 12/14/2020

By Monica Spigner, Executive Vice President of Business Transformation at Teleperformance.

The insurance industry has experienced a dramatic wave of change in recent years. Covid-19, however, is both the biggest crisis and most uncertain threat to all insurers to date. According to Lloyd’s of London, the pandemic is set to cost the entire industry a staggering $200bn in payouts alone. This will make 2020 one of the most expensive years in the history of the sector, on par with the huge payouts insurers faced following storms in the US and Caribbean in 2005 and 2017.

Many insurance companies are now having to confront an entirely new recessionary market; one of short-and long-term disruption, with businesses striving to ensure operational resiliency, solvency, and adherence to new regulations. This is no mean feat, considering insurers also need to juggle the constantly evolving behaviors of consumers.

How have consumer behaviors changed? Significant declines in the economy and rising levels of unemployment have made citizens more brand- and service-conscious before taking the plunge and committing to a provider. Insurance customers, for instance, have switched providers at a higher rate this year compared to last – with price cited as the main concern. According to a report by Bain and Co, the switching rate among respondents who requested premium relief was 19% for P&C products and 15% for life products—far higher than respondents who did not ask for relief. As a result, customer loyalty to individual brands is rapidly evaporating.

As businesses tackle the challenges of moving beyond the COVID era, many providers are on a mission to rethink strategies when it comes to optimizing the customer experience and rebuilding loyalty.

Digitize Customer Service Functions

With younger generations helping older relatives navigate the digital space, America has seen an accelerated uptick in digital adoption, across all sectors, with consumers looking to engage with their favorite brands solely via mobile apps, social media and websites. Insurance providers no longer need to compare their front-end customer service functions with other insurers, but instead with giants such as Amazon or Walmart, because that’s the level of service and experience their customers are now expecting.

Monica Spigner

Before the pandemic, around 60 percent of insurance customers preferred to engage with their chosen provider via voice, followed by email and other web and mobile forms. However, the reliance of voice is significantly decreasing year-on-year, (i.e. 78% in 2017, 70% in 2018, and 60% in 2019) – and is likely to downward spiral in 2020 and beyond, as consumers expect faster response times. In fact, in a recent survey over 30% of consumers said they expect a response from an organization within 15 minutes or less.

With a surge in customer queries and claims, insurers must look to integrate chatbots, messengers (e.g., Facebook Messenger, and LINE), and video in their customer service ecosystem, in order to speed up response times and meet customers, of all generations, at the right place and time. Reports have found businesses with omnichannel engagement strategies retain on average 89 percent of their customers, an increase of 56 percent compared to companies with weak engagement.

A live chat experience that integrates chatbot technology, for instance, has the capability to handle multiple queries at a very low error rate, without the need for a human agent to step in. It can eliminate customers being put on hold, reduce frustration in the customer journey, and positively impact productivity by enabling human agents to handle matters that require skill and empathy. Technology, combined with human connection, has the ability to identify and understand the needs and behaviors of customers, allowing businesses to provide a more valued and compassionate experience – which is critical in a time of great vulnerability.

Personalization is a Key Business Differentiator

Now is a great opportunity for insurers to analyse big data in real time and adapt operations and pricing policies accordingly – this will enable them to provide more personalized customer experiences. According to the Youbiquity Finance report, 80 percent of customers are already craving personalized offers, and 77 percent are eager to provide their behavioral data in exchange for quicker settlements and lower premiums.

Utilizing data analytics and having more insight into customer behaviour will allow companies to understand their customers’ online presence, how and where customers engage with them, and how they can adapt to diverse preferences. Data insights are also crucial in pricing risk more accurately – rather than basing it solely on postcode or age. As an example, telematics offers the ability to pay for insurance as a car is used, rather than through an annual policy.

Future-proofing the Insurance Industry

To thrive in a post-pandemic environment, insurers must optimize the customer experience by leveraging automation and data analytics, to better understand customers’ needs and preferences, and create personalized experiences. Case in point, a McKinsey report highlights that insurers that prioritize customer experience can generate 2-4x more growth in new business and 30 percent more profits than firms with an inconsistent customer focus over a five-year period. Most importantly, businesses should see their customer service agents work together with technology to provide a more personal and empathetic customer experience.

Wanda Rich

Wanda Rich has been the Editor-in-Chief of Global Banking & Finance Review since 2011, playing a pivotal role in shaping the publication’s content and direction. Under her leadership, the magazine has expanded its global reach and established itself as a trusted source of information and analysis across various financial sectors. She is known for conducting exclusive interviews with industry leaders and oversees the Global Banking & Finance Awards, which recognize innovation and leadership in finance. In addition to Global Banking & Finance Review, Wanda also serves as editor for numerous other platforms, including Asset Digest, Biz Dispatch, Blockchain Tribune, Business Express, Brands Journal, Companies Digest, Economy Standard, Entrepreneur Tribune, Finance Digest, Fintech Herald, Global Islamic Finance Magazine, International Releases, Online World News, Luxury Adviser, Palmbay Herald, Startup Observer, Technology Dispatch, Trading Herald, and Wealth Tribune.