Reimagining the customer experience in insurance

Lemonade, founded in 2015, claims to be an insurance company for the 21^st century. Their bold claim? Get insured in 90 seconds and get paid in three minutes! And that’s not all. They are checking several boxes when it comes to new-age customer expectations. Their digital experience is fast, seamless, and intuitive. They offer transparency and social impact. And they make it easy for customers to make a switch to Lemonade. Another example is Root, that offers insurance for “good drivers.” Their USP? A usage-based policy personalized to individuals’ driving risk. They are doing great on customer expectations too. They offer personalization, savings, rewards, and of course, faster claims processing.

While these new-age insurers are clocking business, more established brands are struggling to deliver on customer experience demands. And that’s not going too well for them. Data says that just 29% of insurance customers are satisfied with their current providers. On top of that, customer acquisition expenses have been rising and will reach 17.9 percent of GWP in 2022. Customer retention is, therefore, an important focus area for insurers – especially when there is a fight for customer ownership going on within the extended insurance ecosystem. If insurers continue to focus on policies rather than customers, they would be reduced to mere record keepers.     

Putting people at the center of the insurance experience

The thing that we need to understand about insurance is that no one wants to buy a policy – they want to mitigate risk and avoid loss. The question is, how can insurers become partners in this quest and help people achieve these goals? There are several areas they can consider:

1. Shift from policy sellers to advisors – The way insurers connect with their consumers needs to change from a terms/ coverage discussion to a more advisory role. Tell the customer how they can mitigate risk, help them prevent losses, and recommend coverage that best suits their circumstances.
2. Improve personalization – Use the power of data and AI to understand your customer better and offer them customized products that suit their goals better. For instance, usage-based insurance allows customers to pay for their personalized risk profile and not a mass generalization. As these kinds of policies “reward” good behavior, people drive better or focus more on their health and therefore reduce claims.
3. Make the process faster and more user-friendly – Currently, the processes involved in getting a policy or getting a claim settled are cumbersome and time-consuming. No one wants to fill out reams of forms, send multiple documents, or wait for an assessor to investigate the claim. And honestly, with the advancements in AI and automation, it’s not really needed either. Today, AI can extract data, get revenant details, analyze documents, and issue a new policy or clear a claim in a matter of minutes. Insurers need to start adopting these technologies and offering this convenience to their customers.

Technology: The key to insurance transformation To keep up with the emerging competition in the insurance space, insurers need roadmap to leverage the advancements in digital technologies – like AI/ML, Computer Vision, and Data Science – strategically yet rapidly. Haphazard implementations in isolated areas may yield short-term gains but will not be sustainable in the long run. Instead, what is needed is a holistic end-to-end relook at the insurance value chain, reimagine the role of the organization in the value chain, redesign the processes from the perspectives mentioned above, and augment them with the right technology.

Authored by Jagadish Kundu