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The Insurance Act One Year On: Was it Bad for Customer Loyalty?

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With the introduction of the Insurance Act 2015, everything changed, and one year ahead of its implementation, Tanmaya Varma, Global Head of Industry Solutions at SugarCRM, tells Finance Monthly about the impact it’s had on the market, its insurers and customers.

It’s no secret that the insurance industry is one of the most cut throat when it comes to customer loyalty. With competitive rates available at the click of a button on price comparison websites, customers have the freedom to pick and choose their providers with minimal effort, from the comfort of their homes. The abundance of insurance companies in the market means they are on a constant uphill struggle to provide not only a competitive price, but a customer experience that sets them apart from the rest. With Gartner estimating that 89% of organisations now compete solely on this, this is the new benchmark of success for insurers.

In a competitive market, retaining that loyal ‘golden customer’ is challenging. Insurers need to show they are evolving to meet the needs of modern customers, and are not just companies who do little more than churn out cheap holiday or housing cover. Research from The Institute of Customer Service revealed an increase in customer satisfaction from July – December 2016 compared to the six months before it, with a number of insurers listed in the Top 50 organisations for customer satisfaction, such as LV and Aviva. Despite this, the sector still experienced a 9.9 point drop in Net Promoter Score, a figure which summarises the overall neglect and disconnect between insurers and their customers.

So what are insurers already doing to address this, and what more can they do to improve customer loyalty?

Changing laws

It’s clear that how insurers treat their customers is being monitored at the highest level. Prior to 2016, the insurance industry had been left to stagnate. In a sense, it was an industry complacent with its low retention rates and poor customer service. This changed last year with the introduction of the Insurance Act 2015 which set a new precedent – with BIBA  marking it the “the biggest change in insurance laws in 100 years.”

The introduction of the Insurance Act promised to deliver greater transparency between companies and consumers. In an industry notorious for false claims, well-hidden small print and poor customer service, the shift was a much needed one. With this new act underway, it’s now more essential than ever that insurers have access to up-to-date data.

Providers were also instructed to improve communications across all channels to ensure clarity at all points in the customer journey. There is also an onus on customers to ensure they’re providing the correct information, and understand the policies they are signing up to.

Turning to technology

The right technology is of paramount importance to any customer-facing business. Insurers must harness tech to empower employees to work more efficiently.  One way this can be done is through customer relationship software systems, which allow customer data to be collected, stored and managed to deliver a 360-degree view of the customer.

By giving employees everything they need at the press of a button, this can help alleviate lengthy, confusing calls and improve the customer experience.  An easily-accessible system can deliver increased efficiency, better communication and happier customers. If we consider that in a survey conducted by Realwire 68% of questions asked digitally are inaccurately answered, it’s essential that insurers become more digitally focused and capable.

Some insurers are already adopting a digitally forward stance. The insurer Lemonade, for example, developed a virtual assistant at the start of 2017 called Jim who is able to process insurance claims in seconds. This virtual assistant reflects the advancements of AI and how some insurers recognise the power of tech. Realwire’s study concludes that with 91% of consumers saying good digital customer service from insurers makes them more loyal, it’s essential that insurers can deliver this.

The importance of the human touch 

The benefits, and potential, of technology as part of the customer experience are endless, but have their limitations. Yes, there have been significant advancements in Artificial Intelligence (AI), and the rise of the chatbot is a forever trending topic. But despite a continued integration of AI in to customer service, research by Vanson Bourne concludes that 91% of respondents still preferred to contact a real person.

AI is great in automating mundane tasks, and taking care of repetitive jobs where humans don’t add value. But, so far, a robot can’t empathise with a distraught traveller half way across the world who wants to check the small print of their holiday insurance policy. That’s something that only a human can do at present. This is proven further through SugarCRM and Flamingo’s research, that found that three quarters of people surveyed still aren’t happy with talking to chatbots – a figure which clearly translates across all industries.

The future of the customer experience

Machines are great at automating repetitive tasks, and chatbots are undoubtedly becoming more sophisticated – and at a growing rate. But the real benefits of technology appear when it aids and empowers employees, and helps customers be autonomous in self-service functions where the human touch isn’t needed.

For an industry that, according to Realwire, saw a 47% decline in performance in 2016, it’s essential that insurers act quickly to evaluate the customer experience they offer at every touchpoint. The insurance industry has generally been slow to adopt a better digital approach, but, when customer dissatisfaction is often rife, it could be the difference between keeping or losing a customer.

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