Evolving customer dynamics and an uncertain risk landscape are driving up demand for insurance coverage. Covid-19 alone led to a 30-per-cent spike in insurance demand from consumers globally, according to a Capgemini survey. It’s no secret that non-traditional insurance players – big techs and product manufacturers – have been attracting prospects with the promise of a superior customer experience (CX).
Prolonged lockdowns and social distancing over the last 18 months have sparked the seemingly universal adoption of virtual engagement, and stakeholder expectations for digital and remote-interaction models have risen significantly. As global business practices change and competition stiffens, insurers are under pressure to rethink their distribution models to offer uninterrupted service, superior and personalised CX, and maximum service value. Policyholder acquisition and retention efforts are at stake.
Providing CARE through distribution channels
Pandemic fallout and a changing business environment have affected sales and retention key performance indicators considerably, and distribution has felt the impact. The World Insurance Report 2021 found that more than 60 per cent of insurance executives said Covid-19 touched their firm’s customer acquisition efforts, and around 40 per cent said retention was affected.
To mitigate the risks imposed by the pandemic and remain successful, many insurers began to improvise and modify their distribution strategy to more closely meet customer expectations. However, these modifications cannot be a one-time stop-gap. They need to be an ongoing process.
Customers’ top three distribution channel expectations are Convenience, personalised Advice, and Reach (or accessibility). We call it the CARE equation.
- Convenience is contingent upon information availability, 24/7 access, and quick response time to customer inquiries
- Depending on a policy’s perceived complexity, customers may seek varying levels of Advice about terms, conditions, and coverage to select the best-fit product confidently
- Accessibility or Reach is an essential channel capability to enable targeted customer segments to access necessary information from the research phase to decision-making and purchase.
Not all channels provide adequate customer CARE
It is critical to understand how each channel category delivers convenience, advice, and reach to build an effective multi-channel distribution strategy.
Convenience: Our 2021 Voice of Customer survey found that personal line policyholders highly value the convenience of digital channels (insurers’ websites and mobile apps). What’s more, over 60 per cent of commercial line customers said they appreciated digital channels’ ease of access. However, because digital channels lack the capacity for in-depth and personalised service, they weren’t a top choice for policy research and the purchase of more complicated personal line products. More than 60 per cent of customers (both personal and commercial lines) said direct channels (human staff, call centers) offer convenient access.
Advice: Customers trust agents and brokers more than other channels when it comes to personalised advice. Our 2021 Voice of Customer survey results challenge the general hypothesis that those shopping for simple products − such as auto insurance − don’t require in-depth, personalised advice.
Reach: Meaningful customer engagement can pay off for insurers – in a big way. We found that the quality and depth of communication lead to better reach. For personal and commercial products, agents and brokers are customers’ most trusted resources for general research and purchase needs.
Lead the insurance marketplace of the future
Like agents and brokers, insurance firms can leverage technology to unlock the true potential of each channel to target the right customers, engage effectively, and create competitive advantages. As multi-channel access is now the expectation, insurers must digitally equip all channels and augment their distribution ecosystem through partnerships. A sustainable approach will focus on an optimal channel mix and create or enhance an omnichannel strategy that makes a holistic customer experience possible.
As a significant percentage of policyholders engage with digital intermediaries, insurers of the future will boost digital and face-to-face channels to enhance CX and generate value and speed to compete with emerging platforms and players.
Today, inventive insurers foster distribution partnership networks with complementary industries to embed their products into these partners’ offerings. Such collaborations allow firms to cross-leverage each other’s strengths while giving all partners more avenues to expand product reach. Ecosystem partnerships help carriers create innovative products and set new business foundations with a range of unique offerings. Enabling an open API ecosystem and embracing an ‘open insurer’ mindset are the first steps.
What is an open insurer? It’s a firm that prioritises the shift from product-centric distribution to assembling insurance services that best serve policyholders. An open insurer enthusiastically builds win-win partnerships to cross-leverage offerings and customer bases.
Future frontrunners will become CARE superstars by adopting an open insurer mindset and shifting from product-centricity to embedding insurance services in customers’ everyday lives to serve policyholders best.