Technology and new data sources are changing our economy and society fundamentally, and promise to transform the insurance industry as well. Digitalization is changing the role of insurance, from pure risk protection towards predicting and preventing risks.
The risks insurers cover and the ways they underwrite, distribute, and manage claims are also changing. In an increasingly digitalized world some risks will become less frequent, while others, like cyber, will gain in importance, and again others may cease to exist.
Rapid advances in technology, the continuing talent shortage and rising customer expectations for experiences of all types have disrupted the insurance industry over the last several years, challenging carriers to evolve their service strategies and business processes accordingly. Doing things the way they’ve always been done is no longer an acceptable option; those who fail to adapt risk losing customers and market share.
The insurance business is one of the most competitive industries and faces multiple challenges. These challenges are not just caused by changing customer expectations and behavior or by the advent of ‘disruptive‘ organizations from outside the industry, although that is a growing concern for quite some time now as well.
Examples of such ‘disruptive’ firms include InsurTech players and, since many years, the initiatives taken by some of those technology giants which we tend to refer to as Google, Apple, Facebook, Amazon and Alibaba.
It’s time for carriers to embrace innovation, leveraging technology to set their organizations up for future success. There are three key areas to watch as strategies and roadmaps are planned for this year and beyond.
1. The Use of Artificial Intelligence is on the Rise
AI is increasingly being leveraged to enhance the customer experience while creating efficiencies for the carrier and service team. Chatbots that can intelligently route customers to the best available agent is a popular use, but Artificial Intelligence can do much more. For instance, when a policy is being written, insurers can apply
AI to conduct background research and more closely monitor for red flags. AI is emerging as a valuable tool from a risk perspective as well, providing a more holistic view of customers and helping to determine if there have been any involved with fraud.
The field of artificial intelligence is moving so quickly that even experts are having trouble keeping up with developments. So how can the rest of us get to grips with the dramatic changes that are coming?
In an effort to provide a clearer picture of the state of AI, a team led by Stanford University has compiled the first index to track activity and progress in the field.
The inaugural AI Index begins by telling readers that “without the relevant data for reasoning about the state of AI technology, we are essentially ‘flying blind’ in our conversations and decision-making related to AI”.
The inaugural annual report is part of Stanford’s One Hundred Year Study on AI (AI100), a 100-year project looking at the effects of AI on people’s lives.
Carriers are increasingly prioritizing the experiences they deliver, both for customers and service employees alike, as a way to differentiate their offerings. Those that prioritize investing in the digitally optimized tools for service and support will be well positioned to increase customer satisfaction, retain top talent and grow market share this year and beyond.
And when it comes to finding a job, studying AI could prove useful as employers increasingly want people with skills in the field. An analysis of global employment site Monster.com shows that job openings requiring machine learning and deep learning skills, two major components of AI, have more than doubled in the last year.
A significant number of these jobs are created by start-ups. These companies are able scale up thanks to the money put in by investors. And investors are bullish on AI.
2. The Digitization of insurance customer service
The insurance industry is familiar with the new social reality that is taking place. The clients, policyholders, and employees of entities are becoming increasingly digital and, above all, they are more and better informed. Adapting to the situation and meeting new customer expectations, based on (See The Future of Digital Transformation in Insurance), the demand for new services and products, and an improved experience, are probably the biggest industry challenges.
The digital transformation must be based on defining a strategy and the roadmap, and then ensuring the effective execution of the digital initiatives that improve and adapt key aspects of entities’ value chains.
These initiatives must take their surroundings into consideration, but above all, they must adapt to an organization’s degree of digital maturity and the business model defined by the types of clients, distribution channels, products/services sold, internal processes, organizational structure, culture, history, and individual brand features.
More than 50% of customers consult online channels, insurance company websites, comparison platforms, and social media before purchasing an insurance policy. With the onset of digitalization, entities with traditional customer relationships based on agents and brokers, or direct channels such as call centers, are focusing on digital channels, especially those that use mobile devices, social media, or the expansion of new online features, to provide comprehensive solutions for multi-channel customers (see Insurance Digital Full-Funnel Marketing).
However, the challenge lies in creating an integrated customer experience at all the points of contact with the company (customer journey) by making the necessary adjustments to processes, products, and services, as well as by managing the change in a gradual manner.
This improved customer experience affects three key business aspects:
- More contracts
- Resistance to changing providers
- Becoming an opinion leader for the product and the existing provider
The new expectations of digital customers — immediate responses, new consumer habits, and changing schedules — result in the need to create infrastructures, processes, and efficient internal capacities that are able to quickly address customer needs.
To implement these changes, entities must understand how their customers interact with the company through the customer journey and the impact on back-office processes in order to optimize the organizational and operational structure, lower costs, and offer personalized yet profitable products.
Compared to traditional data analysis systems that use sociodemographic criteria, the mass processing and advanced analysis of data will allow companies to develop new products and services that are personalized and profitable, and also focused on knowledge of the customer.
The ability to design an offering in a flexible manner that takes into consideration the real needs, preferences, and lifestyles of customers will allow insurance companies to strategically position themselves to face client requests via the multiple ways of contacting the entity, thereby improving the customer experience and the impact on the business.
The notable shift in customer preference toward purchasing policies online has prompted an increase in digital transformations. As carriers work toward modernizing their technology, more will also look to modernize their approach to customer service.
Expect more carriers to invest in the tools necessary to meet customers where they are within the digital domain, without interrupting the experience in favor of clumsy phone experiences, to help answer questions and resolve issues as they arrive (see Global Macroeconomic & Invest Outlook).
By embracing a digital-first approach to customer service, customer service representatives can meet their customers where they are and communicate with them through whichever methods they prefer, including chat, voice and video, using CoBrowsing as needed to guide them. Platforms that enable a seamless experience with the ability to transition across digital channels can greatly enhance customer satisfaction, lower abandonment and boost conversions.
3. The Insurance Agent experience has become a strategic priority
Agent experience (AX) refers to the overall experience of the contact center agent across their physical environment, mental well-being, morale, financial well-being, and their experience in doing their jobs. The current state of agent experience leaves much to be desired, driving up agent churn to 30%-50%, depending on whom you ask, one of the highest across job types.
Just as there is an urgent need to reinvent the customer experience, there is a great opportunity to nurture the agent network as well. Insurance agents are an important sales vehicle for carriers and require access to a broad range of information related to policyholders, policy applications, underwriting updates as well as billing and payment information. Digital technologies that help insurance agents become more productive can boost agent loyalty, accelerate sales and ultimately grow overall business for both carriers and agents alike.
Why is agent experience so poor?
- 84% of contact center agents do not think that their desktop tools help in resolving customer issues
- Agents navigate across 8.2 different applications on average to answer a customer question
- Moreover, in an exclusive agent-only survey conducted by BenchmarkPortal, a leading contact center benchmarking organization, 63% of agents said customer queries are getting more complex but 64% of them do not have any tools to guide them through customer conversations. In fact, 33% of them read through voluminous documents when the customer is on the line, not good for AX or CX for that matter.
In a digital-first, and often digital-only world, agents are struggling with desktop tools designed for phone customer service in the 1990s.
Too often today, agents have little to no visibility to this critical information within their portals and few digital tools to help them when questions or issues emerge, leading to frustration and churn. The carriers that offer the best digital experience have a distinct advantage and build brand loyalty. The same technology that’s being used to transform the customer experience should also be applied within agent portals, helping them to generate online quotes, streamline processes, provide faster support and help them conduct more business.
Just like with policyholders, meet agents where they are within the digital experience and empower them with flexibility and choice for how they want to connect. This frees the agent from ever having to disengage from the digital experience, for example to dial into a call center, a clunky and inefficient experience. Providing tools that boost productivity and accelerate sales for agents strongly positions carriers to build agent loyalty and increase sales.