Traditional insurance companies are finding it harder to stay competitive against new trends in technology and the low premiums seen in many lines of cover — but they can react to stop the slide
Andi Dominguez is product marketing manager at customer experience software provider Quadient. Here, she offers her insight into the market trends insurers are jumping on to improve their customer experience, and how traditional insurance providers can prevent businesses from slipping behind.
In today’s insurance market, trends like competitive prices and exciting new technologies are making it difficult for traditional insurers to stand out.
With EMEA markets more established than other areas of the world, and price comparison sites commoditising the industry, this means that many are forced to drop their prices.
An example of this can be seen in the recent car insurance price index report released by market research firm Consumer Intelligence, which revealed that increased competition and the use of telematics pushed insurance premiums down by 9.1 percent in the 12 months prior to September 2018.
Pressure on prices may be great news for consumers, but it also means that insurers who can’t compete on price must think of new ways to differentiate themselves from competitors.
As this revolution unfolds in the market, prioritising the customer experience is only going to grow more essential.
By wowing customers with the overall experience they provide, insurers struggling to find an edge in the market can not only keep customers happy and attract new ones, but also ensure regulatory compliance and overall cost-savings.
This sounds great in theory, but how can it be done it practice? There are four lines insurers must defend if they want to get on top and stay there while the customer revolution unfolds.
Four ways traditional insurers can take advantage of market trends to stay competitive
Be innovative with new products and services
It’s a simple fact that insurers won’t be able to attract customers and keep them happy, unless they introduce new products covering new markets and risks.
Quadient’s own research found that more than half (56%) of insurance customers would like their provider to use technology to offer a more accurate premium, while Accenture reports that 82% percent of insurance executives agree their organisations must innovate at an increasingly rapid pace to maintain a competitive edge against current trends.
This isn’t just a theory, as innovative insurance companies across the board are offering a wealth of new products and services to their customers, and to prevent themselves from lagging behind, traditional providers must do the same.
Take Hiscox, for example: the Bermuda-based insurer recently announced it was offering a new type of cyber insurance that not only provides cover against cyberattacks, but offers cybersecurity workshops and training modules to mitigate the risk of future attacks.
With the threat from recently-founded insurtechs also packing a punch, the risk of being outshone by more innovative competitors is more pressing than ever.
The motto to remember is that if you can’t beat them, join them.
Serve existing customers better
Earlier this year, regulators and industry bodies including Citizens Advice, the Competition and Markets Authority, and the Financial Conduct Authority, warned insurers against offering better perks and premiums to new customers whilst neglecting existing ones.
It’s no wonder this has gained so much attention – what incentive do loyal customers have to stay with an insurance firm who prioritises new customers at their expense?
To avoid driving away customers – and facing the wrath of the regulators – insurers must constantly review how they can offer their loyal customers something better.
A number of insurers have since promised to offer better prices for loyal customers – but this reward doesn’t necessarily have to be a cheaper premium.
Vitality now offers customers it already covers the opportunity to link their fitness tracker to their policy, rewarding loyal customers who exercise frequently with free Starbucks drinks and cinema vouchers.
By following suit and rewarding loyalty, insurers can make sure they don’t lose existing customers to the wave of competitors with better prices and superior technologies.
Embrace the technology revolution
Realistically, if traditional insurers want to fend off the competition and keep customers happy, they need to use technology to drive down costs, and become faster and more efficient in their processes.
With start-ups like Lapetus using facial recognition technology to predict the likelihood of future health problems occurring – meaning fewer admin tasks and assessments to carry out – the potential of automation to cut costs and make customers’ lives easier is endless.
However, although digitising and automating manual processes can revolutionise the services insurers can offer, the majority just aren’t keeping up.
According to Accenture, 77% of insurance executives believe AI is advancing faster than their organisation’s pace of adoption.
To make the most of this potential, insurers must realise that technology can help to create a more seamless, integrated customer experience by streamlining the customer journey and enabling customers to engage with their insurer quickly and directly.
From chatbots and straight through claims processing, to linking existing communication channels together, technology and automation will empower insurers to offer faster, more efficient, and relevant interactions on the right channel, at the right time.
Simply put, those insurers who aren’t taking advantage of technology risk losing out to competitors who will – and already are.
Be smart with your data
Finally, to stay ahead in the insurance revolution, insurers must ensure they’re making the most of their customer data.
From the outset, they must do everything they can to avoid keeping customer data in siloes, where it can’t be accessed and utilised at any time.
If, for example, an insurer knows that a customer rarely responds to emails but frequently interacts via a messaging app, these preferences should be recorded and made accessible.
That way, when it’s time to remind the customer their policy is up for renewal, they can ensure they’re contacted over the right channel.
Being smart with customer data not only helps offer seamless omnichannel communications, but can help ensure regulatory compliance and set the path for new products.
Knowing exactly how and where your customer data is stored and keeping a record of customers’ communication preferences can provide transparency should the regulators come knocking, while improving your data insights can enable you to offer better services to customers.
Taking the recent surge in dashcam usage as an example, many insurers are using the data captured as a way of lowering premiums – a sure-fire way to maintain happy customers and attract new ones.
Using customer data doesn’t have to be complex. By making use of the data they already have, insurers can make smarter decisions that benefit both the customer and company.
Adapt or fail
In the battle to stay afloat in the ever-competitive insurance market, prioritising customer experience holds the key to surviving the unfolding revolution.
If traditional insurers want to stand firm as the emerging wave of competitors attempt to storm the industry barricades, they must make sure they maintain happy, loyal customers across the board.
To ensure this, they must prioritise the needs of the customer, automate processes and invest in the latest and most innovative technologies – or risk finding themselves in serious trouble.