Insurance and Customer Experience: The Search for a New Equilibrium

Authors: Luis Martinez and Jeff Tumpowsky

Customers of insurance companies have been relying on the adage Uberrimae Fidei (Utmost good faith) since the first contract was written in 2100 B.C. within “The Code of Hammurabi” (ref.), meaning that when something goes wrong (accident, illness, death, etc.), the company they have been paying premiums to will take care of a customer’s claim, process a claim and pay the insured some form of reparation financially or otherwise to make the customer “whole.”

The equilibrium of the equation remains “stable” for the insurance company as long as the pool of premiums exceeds total losses and for the customer, claims are paid in a timely manner and service is sufficient. However, technological advancements have increased the average customer’s expectations. The Internet and mobile devices, as an extension, have granted consumers access to endless amounts of data about products, opinions of those products, and experiences with those products. The game has changed.

New Customer Expectations

Knowledge acquisition is now just a Google search, web interaction or SMS / text message away. This power shift, combined with drastic time-compression expectation changes, is fundamentally changing consumer demands across all industries. Customers expect transparency and constant knowledge of status. A great example is purchasing an item on Amazon. Once you order something, you know when the estimated arrival date is and you are able to track that shipment at your convenience.  Amazon is setting the bar high for its direct competitors and setting expectations around the experience of interacting with a business. Amazon has realized that the key to growth is not keeping that “equilibrium,” it’s finding a new one through analytics and proactive outreach.

Authors: Luis Martinez and Jeff Tumpowsky

This massive shift leaves the insurance industry out of “equilibrium” with its customers (and agents/brokers) expectations. Insurance companies must change the way they interact, but they must also learn how to make their back-end underwriting, risk analysis, notice of loss and claim processes drastically more transparent.

Most of us with families have gone through the process of applying for and getting life insurance but what do you remember about that experience? If this was not a recent event it might have been very time consuming – scheduling the medical review, filling out duplicates of the paper work, and taking more than several meetings to even get a cost. If you decided to get a competing quote just multiply the above by at least two. If your experience was more recent, the experience has changed when dealing with some insurance companies. Some companies have put together electronic forms and signature capabilities. In addition, nice digital alerts and updates were combined with the agent focusing on how the customer could save on premiums over the life of the contract and other options to reduce or role the term life product into a whole life product if needs change. The feedback is that the agent is now able to focus on building the relationship with customers and prospects versus tracking and managing the process. Technology within the insurance process has allowed the agent to focus on the needs of individual customers, allowing them to build trust and long term relationships.

Gaining Market and Mindshare by Tailoring to Customers’ Needs

So, what do we take away from all this?

The fundamental governing dynamics of the insurance customer experience must be re-evaluated in the new “age of the customer.”

Insurance companies must be proactive, transparent, and laser-focused on consistency across all interaction points with customers and agents.

New technology is necessary, but that’s not all. Organizational and cultural change is required and must begin, end and begin again with the customer. This means: having in-depth knowledge about the customer and their history with the insurance company, finding effective ways to communicate organizational change with the customer and making sure that they feel their opinion is being considered.

Ultimately, trust is what drives customer loyalty. Trust can be earned, reinforced or lost when something goes wrong, not when times are good and your customers are silent. Traditional insurance companies are already seeing competition from non-traditional players, but there is still tremendous opportunity. Insurance carriers that are able to evolve the quickest will gain tremendous mind share and position themselves for growth. It is time to give the insurance customer an outstanding experience and deliver on the promise.

Uberrimae Fidei