Think Beyond Selling: How to Optimize Customer Experience in Insurance?

Insurance companies that extensively focus on customer experience have an 80% higher chance of retaining a customer.
Pratyusha Endula

Pratyusha Endula

The Value of Good Customer Experience

Profits in the core insurance business have been drying up lately. As competition in the category grows, more insurance companies will start focusing on cutting prices, which is not a sustainable strategy. The customer experience (CX) can go beyond a marketing parameter and become a reasonable strategy. There is research showing that:

  1. Insurance companies that extensively focus on customer experience have an 80% higher chance of retaining a customer. 
  2. Leaders on the customer experience metric grow their premiums annually at a rate double that of the metric’s laggards.
  3. Customer experience leaders in auto insurance tend to be 30% more profitable than their counterparts in the same segment. 

There is tangible value in providing a superior customer experience. The question arises – how do you focus on the customer experience that delights and retains the customers? The smartphone industry has created a playbook to show how customer experience excellence can be achieved. 

While the suppliers of hardware, software, and smartphone sales often tend to be common among competitors, smartphone brands focus highly on ensuring a smooth transition through every touchpoint in the customer’s buying journey. 

  1. Product Discovery: Most smartphone brands work actively with the reviewing committee. Products are often sent for free to get public feedback. Smartphone brands understand that users will start their search online and have covered this part of the process. 
  2. Ordering: Unlike other electronics goods, smartphone sales have increasingly shifted online. Most smartphone companies are quite accommodating to easy documentation and one-click orders placed on common eCommerce websites. The process has become so easy that most customers don’t have to consciously think about putting the documents together for buying a smartphone. 
  3. Customer Education: Customers have to clearly understand what they are buying. It might not be just a smartphone; for someone, it might be a camera, a social-media using-device, and an editing tool. For someone else, it might be a portable email managing device, a digital scheduler, and a voice assistant. The same product can mean different things to different people. 

Smartphone companies understand this and focus extensively on explaining each technical feature in detail. With each smartphone, there is a technical guide available in the package, review material available on the eCommerce portal, How-To videos posted in collaboration with influencers, and each feature mentioned across branding collateral. 

  1. Post-Sales Services: Companies like Apple have paid special attention to ensuring customers have someone to help them even with the smaller issues in their device. Other companies have tied up with third-party platforms to offer after-sales services like returns, repairs, and other common issues. Even though people generally change the phone in two to three years, smartphone brands have made investments in ensuring that getting a device repaired and back to working condition is easy for customers.

The parallel between smartphone brands and insurance companies becomes more prevalent when one sees industry dynamics like increasing competition, entry of new & innovative platforms, and concentrated market-share. The insurance companies can start focusing on the entire customer journey from product discovery to after-sales services and create stronger differentiators, without having to spend heavily on cutting prices or on advertising. 

Growth Gaps: Solving Pain-Points To Help Insurers Prosper

If the insurance market had already exhausted its resources in optimizing the customer experience and had still landed in an unprofitable and shrinking market, it would have been a systemic issue and cause of great concern. However, looking at the current industry trends shows room for improvement in the customer experience spectrum. 

Companies that can focus and capitalize on this space will have greater room for growth than the ones focusing on slicing prices or on investment returns being used as a proxy for declining growth in the core insurance business. 

  1. Bridging the Communication Gap: Figures publicized by SAS show that most 90% of insurers around the globe do not contact their customers even once in an entire year. Over 40% of their customers will not hear anything from the insurance company. Most insurers connect with their customers when a premium has not been paid, a claim has to be made, or a policy has to be renewed. This also means that close to 99% of the already limited interaction is entirely focused on sales. 

This communication gap covers the entire pre-sales and policy-holding period. Ideally, over 70% of the communication between an insurer and the insured should focus on helping the customer. The rest can be leveraged for sales purposes. 

  1. Getting Control of the Customer Experience: Quite frequently, there are several layers between an insurer and an insurance customer. There are brokers, advisors, employers, and other third-party institutions who frequently interact with the customer, even when the product being sold comes with the insurer’s branding. While this facilitates the due-diligence and distribution efficiencies, it creates a gap between the insurer and the insured.

There has to be an increased focus on first standardizing the customer experience across markets. Then, the insurance company can focus on optimizing the CX.

  1. Customer Education: While some government agencies, regulators, and third-party advisors have taken customer education initiatives, insurers are often absent from this narrative. A customer might have to understand terms & conditions and product variants that can include coverage of medical payments, no-fault insurance, comprehensive insurance, collision and property damage, bodily injury liability, uninsured motorist liabilities, and gap insurance deductibles, and so on. National Association of Insurance Commissioners has published a glossary of common terms that an insurance customer might have to deal with. The list includes over 500 different terms published in alphabetical order. 

While not all terms and conditions might apply to each customer, insurance customers still have to deal with the exercise of understanding which terms do apply to them. 

Kruzr: Your CX Optimizing Partner

While it is apparent that there are gaps in the customer experience offered by auto insurers, most of these problems may seem abstract. Their impact is quite tangible, and their solution can also be equally tangible. 

Kruzr offers a range of features designed to specifically enhance the customer experience you offer to your customers. From the step of product discovery to after-sales services, here is how Kruzr optimizes your CX:

  1. Product Discovery Stage: Offering Products Sensitive to Customer Needs.

    A central insight common across companies that can offer superior CX is an empathy for the customer that helps them understand what the journey from the customer’s perspective is. Insurance has been priced on risk-models and actuarial frameworks. Both these perspectives generally don’t take into account the actual challenges faced by customers. 

Kruzr helps you offer innovative insurance products that focus on making insurance affordable for the end-users. For instance, – many consumers don’t use their vehicles regularly. Yet, the premiums are to be paid at regular intervals. While this ensures cash-flow for the insurer, it makes the product unnecessarily expensive for the customer. 

By providing an effective pay-per-use model, insurers can offer products that adapt to the customer’s driving frequency, behavior, and patterns. Customers pay for the exact risk they make the insurer bear and still get more affordable coverage. 

  1. Purchase and Decision-Making Stage: Maintaining Transparency to Help Customers Understand What Are They Buying.

Quite often, an insurer might have to go through great lengths in helping a customer understand – what is she buying when she buys an insurance product from the company?

Kruzr solves that problem. By shifting the baseline of insurance coverage from a static year to an adaptive risk-per-journey basis, Kruzr can help the customers easily understand when they are exhibiting risky behavior. Since there is a strong link between risky behavior and costly insurance, the customer understands what elements in her driving style are making her pay more for her insurance. This way, Kruzr creates a feedback loop that makes the customer understand why she is paying a certain rate for her insurance. 

  1. Creating Trust: Leveraging Data Privacy to Enhance Trust in the Brand.

While there are several telematics platforms, Kruzr does not use any additional sensors or dashboard cameras to collect customer data. An app installed on the customer’s phone helps the insurer get access to granular analytics and insights, without hampering the customer’s privacy.

Additionally, Kruzr also uses state-of-the-art measures to encrypt customer data stored on behalf of the customer. Both these points can become an integral part of your marketing collateral.

  1. Post-Sales Communication: Creating Value Without ‘Selling.’

It is easy to see the communication gap post-sales. The question is – what do you fill it with? Kruzr gives real-time feedback to customers when driving to help them control risky driving behavior and have more affordable insurance. Since Kruzr also provides a white-label solution, the app can carry the insurer’s branding. This establishes an extra communication channel between the insurer and the customer, even after buying the insurance product. 

Essentially, the communication frequency goes from nearly 0% after sales to communicating across all the journeys the customers take. 

In Conclusion

Insurance is slowly turning into an industry where profits are declining, and market share has become concentrated. Reducing prices may seem to be a short-term fix, but as most long-term risk managers endorse, it is not a sustainable strategy. Focusing on the end-to-end customer experience, optimizing it, and solving pressing issues at each stage with the help of Kruzr can produce value for the customers and increase product differentiation, loyalty & retention, profitability, and growth for the insurer. 

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