This article is by Rory Yates, Global Strategic Lead, EIS
For people that work in insurance, most of whom genuinely want to provide the very best service possible to their customers, the headline might seem harsh initially. But I bet if you sit with it for a minute or two, it might feel a little more relatable.
The insurance experience isn’t great even for those working in the industry. Many of us talk about our own relationship with insurance provision and consistently lament the sector’s inability to communicate effectively with us. When we get to key life moments or make claims, we tend to experience the same inability as many consumers to be supported in a profound way.
Even with a fairly well engrained culture of complaining in the UK, the recent data from the Financial Ombudsman Service, published 6 May, which shows the number of complaints received by insurers for the second half of 2024, should come as no surprise. While there was some movement in the rankings, the overall trend was one of continued consumer dissatisfaction, raising the perennial question of why?
FORCE FOR GOOD
Let’s unpack it. Insurance is of course an incredible force for good, but (and it’s a big BUT) its fanatical focus on minimising the costs and maximising the distribution of policies has seen the industry somewhat lose sight of its purpose. By not being built around the customer in personal lines insurance, it has increasingly lost many to price-led consideration.
Certainly, insurers sell and value policies, but in today’s hyper-connected digital world, the product is no longer the premium, it’s the customer. The challenge is the legacy left over from largely failed digital transformations appears to be verticalised insurance businesses, who have built complex and transformation-limiting structures around each policy. In doing so, all of their communication, experiences and supply chains are managed at the policy level. Even their data models are policy based. So, a policy is then appended to a customer in abstracted data models, which is a problem because it puts the policy first.
Largely all of this policy focus has meant low loyalty reflected in challenging retention rates for products like car insurance and high degrees of focus on premiums. The result has been a lowering of prices to acquire customers in some instances, or raising them to shore up ratios in others. Playing with price has become the only lever available, opening a huge competitive opportunity for insurers. As with every commoditised market, service becomes the greatest vector for differentiation and customer satisfaction.
INSIGHTS AND IMPROVEMENTS
Complaint data should be a vital source of insight. It tells us about the moments we let customers down the most. However, few insurers have indicators built into experience-based data models that predict when experiences are likely to trigger these outcomes, and, more profoundly, the ability to intervene and avoid them. This is a huge miss, and in modern technologies something that should be relatively straight-forward.
The ability to respond in real-time to gaps in service delivery would make complaint data a competitive advantage, and drive optimal experiences. Perhaps even providing the potential to transform difficult conversations into opportunities to extend customer value. By making challenging claims experiences optimally supported and empathetic, insurers can form deeper and more meaningful relationships.
Insurance has the opportunity to grab its purpose by the horns, and reimagine it for today. By building its platforms to prioritise the flow and interrogation of customer data in real-time, as we have at EIS, insurers can use data models to create deeply dynamic experiences, adapting them to make customers feel safe, respected, clear on their options and, ultimately, supported.
It’s also where we enable AI to help insurers become more human. By creating intelligent data models that identify sub-optimal experiences in real-time, our clients can now adapt supply chains to dynamically support customers when choosing repair options or generally managing their financial options. Critically, AI can ensure that human intervention is provided when needed. But only if the AI has easy and instant access to a deep lake of real-time experience data.
To turn complaints into exceptional customer experiences, insurers must address trust issues, focus on its value to customers and, in turn, the value of their customers to their business. To do that, the organisation and its technology must be built around the customer ensuring it is far more capable to create positive experiences and co-ordinate supplier ecosystems to do it.
This won’t be easy for many. It will require a complete rethink around how the business and its technology is architected. Most will struggle, leaving the way clear for ambitious insurers to take all by moving away from price-led to relationship-led businesses.
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