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Why the digital revolution in the insurance industry is great for customers

Advancements in technology are leading the global insurance industry to revolutionize the way it engages with its customers. The days of tedious phone queues are making way for mandatory 24/7, platform-agnostic service — and that’s good news for consumers in this trillion-dollar industry.

“Customers are really demanding a different way of interacting with their carrier,” says Karlyn Carnahan, research director at Celent, a consulting firm that serves the insurance industry. “Customers want much more transparency and simplicity. They want to know how much they’re paying and for what, which features they’re getting,” says Carnahan. They also want simpler contracts and clearer explanations, she adds.

According to the National Association of Insurance Commissioners, there were 6,118 insurance companies in 2014 in the United States, employing over 2.5 million people and generating over $1.1 trillion in premiums.

With that amount of money on the line, a slew of new start-ups are beginning to disrupt the industry. In order to compete in this new world, it’s imperative that executives and leaders understand the major trends driving customer experience in the industry today.

As in many industries, the customer experience starts before the sale even takes place. A  report from the consulting firm PricewaterhouseCoopers shows that 71 percent of consumers used some form of digital research before buying insurance, making it imperative for insurance companies to remain proactive in identifying needs and expectations at the very start of the customer journey.

Utilizing data

Data is playing an increasingly important role at all stages of the customer journey. When data isn’t easily accessible to agents, time and opportunities are lost. A start-up called Terrene Labs is trying to change that. CEO Piyush Singh says the company is looking to transform the customer experience by simplifying the application of data to reduce information gaps, incomplete applications, and long processing times of up to 10 days for customers.

Singh says Terrene is trying to make thousands of customer data points – from sources like government databases and other public records – available to agents in seconds with just a few inputs such as customer name and zip code. He says that a transformational moment will occur in the insurance industry when minimal data from the customer on the front end is combined with all the collected data in the background from various sources, to accurately provide a 360-degree view of risk.

Ensuring the growing amount of data is used to the benefit of the customers experience is imperative to driving long-term results, says Mike Wittenstein, customer experience expert and managing partner at Storyminers, a customer experience consulting firm.

Winntenstein uses an example drawn from the car insurance industry to illustrate how Big Data should be used going forward to drive increased value, not just minimizing risk. “Right now, a lot of the focus is on scoring customers based on driving profiles to make sure the company isn’t actuarially losing their shirt,” he says. “But it could be used to help customers manage trips better, alert them to new technology like lane assist, or be more economical and efficient.”

For example, tech start-up Automatic makes a GPS-aware mini-computer that plugs into a car’s data port and reads vehicle performance and telemetry data, like slamming on brakes, quick starts, distance, time of day, etc. — all information points that can provide insight to drivers, actuaries, marketers and others.

Wittenstein says that, instead of just exploiting that data for their own gain, the greatest benefit for carriers will come when they pool that data and deliver it to their customers. “Give them nudges like, ‘Hey, your son is driving too hard, have a talk’ or ‘Hey, you seem to be stopping hard more, check your brakes,'” he says. Delivering that type of added value to customers is like the holy grail for customer retention.

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Another major trend experts have witnessed in the insurance industry is the desire for self-direction. A report on the future of the insurance industry from consulting firm EY, says that in an increasingly competitive landscape, insurance providers must enable their customers with self-service features, while also making insurance products easier to understand, compare and buy.

The option to file a claim, reference personal policy material or check the status of a claim online are appealing features for customers. They also serve to reduce contact center volume allowing customers to resolve issues on their own.

However, Wittenstein urges caution when embracing wholesale self-service. He believes some companies can go too far, turning customers off by relying heavily on chatbots, voice automation and other tools that make the customer work harder to find the answers to their questions.

Although many customers are enthusiastically embracing self-service, there is a strong need to retain the comfort of empathetic one-on-one service that can only be delivered through human interaction. “In 80 percent of cases, those tools will get the job done, but the remaining 20 percent feel lost if a company doesn’t have a world-class telephone experience to guide them,” says Wittenstein.

Personalized approach

Customers desperately want a more personalized interaction with their insurance companies, says Carnahan. “They want proactive outreach. They want companies to call to let them know their bill is due, tell them that their claim check is coming, or to tell them to put their car in the garage because a hail storm is coming,” she says.

Wittenstein believes that this type of personalized loyalty-building between renewal cycles can be achieved by simple but thoughtful outreach. For example, calling customers to let them know they’ve noticed a lot more long-distance trips, and have they checked their spare tire, or downloaded the company app to help them develop a checklist for their next road trip?

Technology, especially when thoughtfully combined with the human touch, stands to steer the insurance industry in a much more customer-centric direction. And as progressive companies begin using technology and data to better serve their clients, they’ll improve the industry’s overall reputation, providing new opportunities and benefits for those who choose to adapt to an ever-more demanding, engaged customer.

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