Go to any FinTech event and it is instantly clear that customer engagement is a major priority for most companies. Given its significance, are insurance firms doing enough or should they be doing more?
Digital transformation has reshaped how customers wish to interact with finance companies. Rather than walk into a branch and foster a long and loyal relationship, people are eager to visit a company’s website and complete everything online. Nowadays, customers can quickly compare various providers, empowering them to become more selective of where they put their money. They will happily change providers for a better deal. If anything, it feels like the power is now in their hands.
With this backdrop, customer experience has become a vital way to attract and retain customers. Notably, 46% of insurance customers say customer experience is a top factor when selecting a provider, according to a survey from Kubra.
But a great customer experience extends beyond just an easy-to-use app or quick onboarding process. Customer engagement is a vital pillar. Whether it is through personalisation, regular interactions or interactive features, these methods can help keep a customer loyal and explore more products.
Efrat Marmur, VP marketing at Air Doctor said, “Customer engagement is extremely important across the board, including the insurance sector. In fact, it may be even more important, as insurance is a product that people often don’t think about until they need it.
“In insurance, the landscape is evolving, and engagement is becoming critical. Most customers don’t understand the insurance jargon or what it covers and by engaging with customers regularly, insurance companies can build trust and loyalty, and make sure that customers are aware of their products and services.”
Echoing this sentiment, Sebastian Gruber, the CEO of hi.health, said, “It’s about building trust and a long-term relationship beyond just policy renewals. In an era where consumers demand seamless & convenient experiences, insurers can stand out by eliminating the pain points associated with touchpoints such as claiming expenses.”
In contrast to other financial sectors frequently launching new products, insurance does not always allow for regular engagement. Clients approach insurers with clear content, whether it is renewing auto insurance, buying travel coverage or protecting a new device, people go to an insurer with purpose. Once a policy is bought, interactions are often limited to claims or renewals. While this makes it tough to implement daily or even weekly interactions, it doesn’t mean engagement cannot be improved.
“While the dynamics might differ, the need for insurers to cultivate regular engagement with customers is undeniable. Whether it’s daily or weekly, insurers should make sure that they are easy to reach and that they provide excellent customer service. If a customer has a question or a problem, they should be able to get in touch with the insurance company quickly and easily.”
The previously mentioned survey from Kubra highlighted how crucial it is for a customer to feel like they can quickly speak to someone. It found that 42% of respondents said little or no communication was their top challenge when interacting with insurers.
Manuel Heuer, the COO of Dacadoo, explained that implementing the best customer engagement policy for customers depends on the business goals of the insurer. “If the business goal is ‘increase personalisation’ they need data to better understand the lifestyle of their policyholders, which then allows them to activate cross/up-selling to provide more personalised offerings, adapted to the context and lifestyle of the user.
“If the business goal is a general “increase retention/reduce lapse”, it is well established that active users of a digital health engagement platform are more loyal than non-active users or non-registered users, so motivating and nudging users to be and remain active on a daily, weekly & monthly basis will be enriching to allow the insurers to attain their business goals.”
Ignoring clients
Poor engagement can be dire and cost a company future business. As mentioned earlier, customers are happy to switch providers in pursuit of a better deal. This might not just mean better premiums but could mean better engagement during the policy period. As a result, ignoring a customer until it is time to renew could cause the insurer to lose customers to their competitors.
With limited engagement opportunities, firms need to ensure any interaction they have is exceptional “As a customer, your interactions outside the renewal process are primarily limited to filing a claim or seeking pre-approval for treatment,” Gruber said. “Our customer research has revealed that these moments significantly shape the customer’s perception, underscoring the importance of getting them right. However, there remains a vast reservoir of untapped potential in cultivating trust and fostering loyalty among clients. I am eagerly anticipating the unfolding of these possibilities in the years ahead.”
Heuer added that it is very difficult for insurers to keep clients happy without improving updated processes. “Insurance, especially life insurance, remains a very rational and boring product proposition. It’s sold through agents and brokers in most cases, so newly acquired policyholders don’t have any relation to the issuer of the policy, the insurer. Contracting is still quite paper-based and long, especially if it also requires medical underwriting, where they send you to take fluid tests and further detailed analyses.
“The risk for insurers is two-fold: at contracting, they lose too many applicants due to the long and boring process, and during the contract lifetime, as there is no emotional connect and interaction with the insurer, the risk of lapse (breaking the contract) is very large. As a result, insurers have tried to improve customer experience at contracting (accelerated underwriting) and exploring more the customer during contract duration.” For example, Digital Health Engagement Platforms, like the one offered by dacadoo, can emotionalise the proposition during contract lifetime and add lifestyle data that can add further personalisation.
Don’t just focus on streamlining
Insurance companies do not have infinite resources and must prioritise where they spend. Resource management has become even more important with the current financial market where many are focused on cutting costs and boosting efficiency. Due to this, firms will likely tighten the purse strings and only fund initiatives that have the most impact and value.
With engagement a tougher egg to crack, it is easy for companies to focus digitalisation efforts on streamlining claims and onboarding. These are core touchpoints for customers and improving these can go a long way for boosting customer satisfaction.
Improving the claims process is an area of particular importance. A recent study from Accenture claimed that up to $170bn of insurance premiums could be at risk in the next five years due to poor claims experiences. In fact, 77% of dissatisfied claimants said they had either switched carriers in the past two years, and another 47% or were considering doing so.
Marmur said, “By streamlining these areas, insurers can make it easier for customers to do business with them. This can lead to increased customer satisfaction and loyalty. But that doesn’t mean insurers should neglect customer engagement. There are many things insurers can do to increase and maintain engagement. From our experience, we see the engaged customer is more likely to be aware of the most updated services and knows how to use them.”
Unfortunately, companies are not always able to spread their resources far enough to support all initiatives and will need to take a staggered approach. Rather than fix it all at once, they might need to spend the first year improving onboarding, then the next on engagement. Heuer said the digital transformation effort will depend on the strategy and prioritisation of the insurer as to what they decide to tackle first.
“Insurers are not stupid, they know the risks they are facing, but they have limitations through regulations and laws, and in many markets, they lack the sense of urgency, as they still have profitable and stable businesses,” Heuer added. “Kodak also knew the risks they were facing, as did Blockbuster. None of the managers in these organisations were stupid, they relied just too much on existing business and short-term views. In short: customer engagement is vital for the future.”
Simply put, the key is to not exclusively customer experience as streamlined processes. “I think the future winners will be those companies who can provide a holistic engagement strategy, eliminating pain points along the journey (such as the pay & claim process) and driving loyalty,” Gruber said.
Best ways to engage with clients
Customer engagement within insurance is clearly important for insurance firms, but what can they do to ensure it is a success?
According to Gruber, some of the most effective customer engagement strategies are personalised communication, smooth and seamless user journeys with proactive alerts and reminders, and value-added services like wellness programs. To effectively do this, companies should leverage data analytics to understand customer behaviour and preferences.
“It’s important to recognise that customer engagement in insurance goes beyond just communication frequency. It’s about delivering value at every touchpoint (especially when there is a claim) and making customers feel supported and understood,” Gruber added. Hi.health is helping to transform the claims process through its insurance-branded smart payment cards for members.
Marmur also offered a few of the standout customer engagement methods. The first of these was using data analytics to provide a personalised service to customers, including tailored products and marketing messages. Secondly, she said firms should look to integrate innovative services that can improve the customer experience. As an example, Air Doctor can be integrated to help customers easily find medical care while abroad. Integrating a service like this gives greater value to the customer and can improve loyalty.
The third method Marmur highlighted was offering online tools and resources to help them manage insurance policies. These could include online quotes, claim filing, customer support, and digital cards. Finally, Marmur noted that social media is a great way of fostering interactive online communities and “foster a sense of belonging and trust.”
“We’ve already seen that InsurTechs have the potential to revolutionise the insurance industry, especially when it comes to customer engagement. Due to changing customer preferences, traditional insurance has already changed and continues to change, so continuing to prioritise customer engagement will be what sets insurers apart in the long haul.”
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