In a recent interview with Finance Monthly, Dame Inga Beale discusses the current state of the insurance industry, drawing a contrast with the innovations occurring in banking.
“If you speak to some of the challenger banks, and you say, ‘who are your competitors?’ They say, ‘Oh, we don't really have any competitors. We're so unique, we're so different to the old banks that we don't really regard them as competitors.’” she said.
“It's interesting how they think they've created something so new and innovative that they don't even regard the old traditional incumbents as being a threat.”
It has been a memorable year for FinTechs, culminating in British challenger bank Starling pipping traditional firms to the title of Best British Bank. Business Insider Intelligence reported in October 2019 that 68% of consumers are using a checking or savings account with a challenger bank. 83% of those surveyed claimed they are likely to switch to a challenger bank in the next 12 months. Beale believes it is a focus on the consumer that has driven a revolution.
“Insurance I believe is behind banking. I think it's because we haven't been putting the customer at the heart of what we've been doing. They [challenger banks] have appealed to the young generation much more and have managed to brand themselves in a modern, exciting way. I think insurance has got a bit of catch up to do” she said.
“We [insurers] often traditionally look at things from our internal point of view. We segment customers according to the way we look at them; maybe by postal codes or something rather than the wants, needs, desires of the customers.”
“We often traditionally look at things from our internal point of view. We segment customers according to the way we look at them; maybe by postal codes or something rather than the wants, needs, desires of the customers.”
The insurance industry has also been slower to adopt the innovations of InsurTech firms. Usage-based insurance (UBI) is increasingly becoming the norm but the implementation of technologies such as Robotic Process Automation (RPA) has been slow to market. While 30% of companies adopted this technology to review claims in 2018, no insurers were using it to evaluate the risk of insuring a client in the underwriting process. Despite this, the market for underwriting improvements is set to grow to over 60% by 2020.
“Most of the insurers these days are investing in incubators or innovation labs. But to actually amalgamate them into your existing business is the tough call. There are not many [insurance firms] that have mastered that yet,” says Beale.
“If they don't learn how to amalgamate this new InsurTech and this new technology approach, the interaction with a consumer will suffer. Consumers want a different type of product that's more tailor-made, responsive. We need to think differently and incumbent large insurers, unless they adapt, will be left behind.”
A multitude of choice is available to today's insurance consumers. Beale pointed out the moves the industry has made to simplify the process.
“Consumers want to shop around and the price is important to them, so, lots of companies have responded by providing an online product where they're part of price comparison websites. That means the consumer can make instant decisions,” she said.
“Consumers want to shop around and the price is important to them, so, lots of companies have responded by providing an online product where they're part of price comparison websites. That means the consumer can make instant decisions."
Though price comparison websites have now serviced an estimated 85% of consumers, Beale believes they may already have peaked.
Beale says: “There might always be a place for comparison sites but I think this idea, that you will partner with a firm and they would be your financial support is much more likely to be the future. Therefore, you will have a strong affinity with that firm providing the customer service is up to it.”
“I think you'll shop around far less on price because we'll be using data triggers to feed in automatically, and you'll feel, actually, that pricing is fair because I only paid for the exposure I had on that day.”
Beale also admitted that there is a long way to go before customer loyalty reaches such heights to make a dent in the role of price comparison websites.
“We tend to have people buying insurance products that are very geared to specifics; so people will buy insurance for their car, insurance for their travel, insurance for their home. We haven't yet managed to package that up nicely so that the consumer's life is made simpler.” she said.
“We've got a long way to go to build that ecosystem around an individual and surround you with this nice bubble of the financial protection and support that you need in your life.”
Since leaving the demands of corporate life behind, Inga Beale has become a regular keynote speaker with the Champions Speakers agency, where she specialises in topics such as diversity and inclusion, insurance and business management.
Customer satisfaction isn’t something that resonates when we think about insurance companies, so what are they getting wrong? Karen Wheeler, Country Manager and Vice-President of Affinion UK, here presents for Finance Monthly 4 ways insurers can improve customer fulfilment.
The insurance industry didn’t have much cause for celebration when the Institute of Customer Satisfaction released its latest Customer Satisfaction Index. In a survey of over 10,000 UK customers, the sector faced the unenviable accolade of being the only sector not to improve its satisfaction index score compared to the previous six months. In contrast, banks, leisure and telcos were some of the sectors to show improved levels of customer satisfaction. This bad news was echoed by research by The Actuary, which revealed 27.9% find the insurance sector the worst when it comes to customer service.
So, for an industry which is notorious for low customer loyalty and bad service, what can providers do to build better relationships with their customers?
- Stand out in a crowded market
The challenge insurers’ face is that they operate in a highly commoditised environment, with customers faced with a sea of overwhelming choice. And the truth is that customers are often only basing their choice on price. According to research by Marks & Spencer, 95% of respondents stated that price was one of the most important factors to them when deciding which insurance provider to choose.
Insurers also know their customers will typically only make contact when they either need to make a claim, or renew a policy. And making a claim usually happens at a point of crisis, for example theft, damage or loss – when people are, understandably, feeling worried about their possessions, health or family.
These factors combined means insurers need to work hard to differentiate themselves from competitors by engaging with customers in a positive way, and finding new reasons to be a part of their lives. For example, thinking beyond the traditional, physical products insurance policies cover – homes, cars, phones – to solutions that can help customers keep their personal data safe online.
- Deliver the right digital service
In a world where we live our lives through our devices – using apps to transfer money, ordering shopping to be delivered on the same day – it’s clear that insurers need to keep pace with the digital age. However, there are still improvements to be made, a recent survey by Eptica found the UK’s leading insurance companies fail to accurately answer more than two thirds (68%) of routine questions asked through the web, email, Twitter and Facebook.
Looking to the US for inspiration, digital insurer Lemonade is making waves for its digital-first, fuss-free approach to claims. At the start of 2017, its virtual assistant Jim set a world record as it reviewed, processed and paid a claim in 3 seconds – with no paperwork. If all insurers can aim to deliver this level of service, which brings cost and time-saving benefits to consumers, this could lead to increased engagement, loyalty and advocacy.
- Think outside the box
Many people take out insurance policies and never have to make a claim. The appeal of a policy is the peace of mind it offers; consumers feel better knowing that if the worst happens, they have the support in place to help them. Of course, it isn’t just physical possessions – houses, cars, phones – that people want to protect.
With cyber hacking scandals hitting the headlines every week, consumers are increasingly aware, and worried about, the threat of online fraud. According to research by Callcredit Information Group, 66% of consumers perceive the risk of identity theft and online fraud as one of their biggest concerns around sharing personal information online.
As the old saying goes, prevention is better than cure – and this is certainly the case when it comes to online fraud. If a hacker finds out the password a person uses across several sites, it can quickly snowball out of control. This is clearly a risk many take, with Callcredit also revealing less than half (49%) of consumers regularly change their passwords as a way to prevent fraud.
- Become their digital guardian angel
So what can insurers do to help their customers? When you consider the perception consumers’ have of their insurers as guardians of their belongings, there is a natural role they can play in helping customers to prevent and detect fraud incidents before they have even occurred – and help assist and resolve issues if they do arise. For example, providing cyber prevention and detection services that continually monitor their customers’ activity online and flags incidents when they’re at risk.
With insurance often seen as a necessary, but not particularly enjoyable part, of life, insurers need to think beyond their remit and consider how else they can add value and benefits to consumers’ lives. That way, they may well move up the table in the next Customer Satisfaction Index.
More than 50% of the customers of UK financial services brands would be willing to spend more – potentially equating to billions – if only they felt more valued by them, according to new research from Jacob Bailey Group.
Missing Billions is a new report from Jacob Bailey Group, the creative business services agency, based on a survey of 1,200 UK consumers in Spring 2017, to better understand the concerns of financial services customers today.
Key findings include:
Brands are missing out on billions
- More than 50% of financial services institutions’ existing customers would be willing to spend more money on multiple products with the same provider if only they received better communications;
- This would equate to: £2.6 billion spent on debit cards, £2.3 billion on credit cards, £2.3 billion on car insurance, £1.9 billion on home insurance, £1.7 billion on mortgage lenders, and finally £1.6 billion on life insurance;
- 15% of people would spend more than £100 extra per year.
Customers do not feel valued
- More than one third of people (37%) do not feel valued by their current bank; while one in ten (12%) do not feel valued at all by bank brands;
- Nearly a third of people (31%) do not feel valued by their credit card provider;
- Just over a third (35%) do not feel valued by their home insurance company;
- 22% do not feel valued by their life insurance company.
Communication is poor
Almost one fifth of people believe their financial services provider does not communicate with them enough. This figure is higher for people who earn between £45,000 to £55,000 (22%), as well as people with an income above that bracket (21%).
The study uncovered a number of issues around how financial services brands communicate with their customers, including lack of timely, relevant, personalised and helpful information, and general misunderstanding of financial circumstances.
The Missing Billions report also ranks financial services companies according to how valued their customers feel. Out of 20 brands examined, Bank of Ireland was the top performing company with the fewest customers feeling undervalued (22%), followed by Nationwide (31%) and RBS (33%).
Rob Manning, Strategy Director, Jacob Bailey Group, said: “In an age dominated by digitisation, convenience and personalisation, the financial services sector has never been under so much pressure to evolve.
“We set out to understand why these brands are failing, losing out to savvier, more agile new market entrants, finding that how financial services brands communicate with their customers is potentially costing them billions every year. To unlock these missing billions, these brands need to connect relevance through microtargeting, based on the best use of data, technology and creativity, leading to brilliant customer experiences.”
(Source: Jacob Bailey Group)
