Connecting the customer experience in the insurance industry

Heloise Rossouw, senior consultant at Willis Towers Watson, discusses insurers’ new gold standard for customer service which requires a seamless back office that connects customer data and insights with service delivery and value

By Guest on 25 January 2018
Connecting the customer experience in the insurance industry

This article first appeared in the Winter 2017 issue of The Record.

The term ‘customer-centricity’ is now firmly established in the global business lexicon, but it is far more than just business speak. A new generation of retailers and technology specialists are resetting customer expectations, attracting consumers and finding ways to generate and satisfy retail demand across a number of business sectors.

This new focus on the customer hasn’t been lost on the insurance industry. New start-ups want to exploit digitisation and technology to disrupt the market, and many existing players are now taking strides to reinvigorate their business models to compete in this new -customer-centric environment.

But the question is, how? Where do companies focus their efforts, and what strategies will deliver greater customer value and a competitive advantage that rewards shareholders? A good place to start is getting to know the customer. Customer insights on product, price, sales and brand – the four key competitive differentiators in business – make it possible to create a sustainable business model that meets customers’ needs at an affordable cost, provides a great experience and generates profit.

We have observed that many insurers have focused mainly on the customer-facing elements of the end-user experience, such as faster, intuitive websites and user-friendly apps, in their bids to become customer-centric. The next step, and more consequential challenge, is to get to know customers better and uncover insights from how insurers interact with them. And finally, once those insights are learned, insurers need a corresponding agile and seamless back-office architecture to connect customer data and insights to service delivery and value.

Reengineering back-office operations to deliver improved customer experiences typically requires substantial work. For many insurers a mix of old and new technologies, internal and external data, and creaking processes makes it hard to achieve the levels of IT connectivity that provide the foundation for data and technology to enhance the customer experience. Fortunately, software is now available to act as an interface umbrella, helping insurers integrate their data and provide a seamless customer interface across all communication channels.

That connectivity is particularly important when considering the three main capabilities a connected, customer-focused digital insurer typically wants to enhance: analytics, distribution and customer service, and efficiency and expense management. To date, many insurers have tended or were forced to concentrate on only one; whereas, the right level of connectivity would have made all three possible.

Enhancing analytics capabilities has often been insurers’ first step to better understanding their customers. But analytics on their own aren’t enough. Companies need to be able to extract actionable insights and deploy them into their businesses, so the right people access the right business intelligence and decision support materials when decisions are made.

Technology needs are also closely allied to distribution and multichannel customer service. Technology has raised expectations among end customers and, increasingly, intermediaries, that they can obtain products and services they need or want, when and how they need or want them. Back-office systems need to be up to the task of packaging information for customer-facing technologies.

Furthermore, online retailers are shaping expectations for customer experience by taking attributes such as ease of use, algorithms that can pre-empt customer needs, fast or real-time service and individual customer recognition to new levels. Distribution and customer service nirvana for insurers is therefore increasingly likely to involve an omni-channel approach, allowing customers to interact in ways that suit them.

Improved expense management and operational efficiency are further incentives for insurers to pay as much attention to the back office as they do to customer-facing features. Equally crucial to success are relatively simple – but often surprisingly hard-to-achieve – goals such as streamlining processes free of legacy system constraints, increasing automation and removing duplication such as data rekeying.

Essentially, customer-centricity doesn’t just hinge on eradicating inefficient processes. It also looks at the value and cost chains of an omni-channel, integrated business model in a completely new light. This can seem daunting, but it’s definitely achievable.

Momentum behind the customer-centric approach in insurance is building, irrespective of major technological disruptors from outside the industry. One option is to do nothing, but frankly, that seems risky when most of the current innovations in ¬customer-centricity call for implementation of technology, data and analytics – all familiar territory for insurers. Moreover, many of the most disruptive innovations of recent years have not relied on superior technology. The difference has come from enhanced user experiences, more possible price points and a commitment to align back-office operations with a positive customer experience.

Insurers need to recognise that while they may not be financial technology organisations, they have a lot working in their favour. Most have the capital to turn ideas into reality. They have customers providing plenty of data with which to work and develop new analytics insights. Crucially, they also have people with deep industry knowledge and relevant experience.

The challenge for many insurers will be to organise their existing capabilities differently to meet more customer-focused and ¬cross-functional goals, and to prepare to experiment and try new things. A useful approach may be to strategically identify opportunities that can deliver value to the business, framed in an ‘if you’re going to fail, fail fast’ mentality. This requires a culture of confidence where management can act quickly – a comfort level facilitated by accurate real-time analytics and rapid monitoring.

Tomorrow’s truly customer-centric insurers will favour understanding the behavioural reasons insurance is needed rather than simply selling insurance products, positioning themselves to deliver relevant information and services in an engaging, understandable and efficient way. This is likely to happen only if the shop window and the back office align to serve the customer’s best interest.

Heloise Rossouw is senior consultant at Willis Towers Watson

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