Digital Engagement in Insurance: Building a healthy relationship with the modern consumer

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Reading Time: 7 minutes

Key Takeaways

  • Digital engagement is an indefinite term for connecting with the audience using technical aids such as websites, apps, social media, email, etc.
  • It enables operational efficiency by reducing operational costs and amplifying retention rates. 
  • Recognizing the pain points of the customers, grossing customer data, offering personalised products, digitalisation, etc. are a few utilities of digital engagement.
  • Telematics provides a real-time, cross-channel platform, capable of assessing the opportunity cost of retaining a customer.

To reach modern consumers, insurers need to be plugged in and connected. The physical restraints on communication are rapidly and permanently unravelling, but online. The only way to stay ahead of the curve is to embrace digital engagement.

 

As more and more customers use social media and other digital platforms, the demand for paperless and contactless communication is on the rise as well. To quantify, based on a survey conducted by PwC, 41% of consumers say they are likely or more likely to switch providers due to a lack of digital capabilities. 

 

Thus, it’s of pressing importance to digitally engage and brainstorm omnichannel approaches to enlarge customer experience.

 

Understanding digital engagement

 

Being a vague term, the meaning of digital engagement varies as per usage. However, at the crux, it’s an activity of connecting with the audience digitally.

 

It envelopes everything from offering instant quotes to achieving positive financial results. This is done through touchpoints such as websites, mobile apps, email, chat, social media, etc.

 

For several years, most agent-customer communication for insurance has taken place via paper, over a call, or in person. As delivering operational efficiency was the prime focus, communication was largely customer originated, making it reactive in nature.. While agents are known to reach out on multiple occasions, it was done in an unstructured manner and sometimes had a negative impact on the deal.

 

In contrast, digital engagement is proactive and initiates a two-way conversation. This leads to increased retention rates and reduced costs, all while reaching operational efficiency. Today’s modern customer expects that. 

 

Application of digital engagement to meet customer expectations

 

As famously said by Roy. H. Williams, “The first step in exceeding your customer’s expectations is to know those expectations.”

Modern consumer expectations are constantly in the works. Mega brands like Amazon, Netflix, etc. are leading the effort with renewed demographics. Their innovations and solutions are functioning as prototypes for the rest to follow and catch up to.

This is the new battleground for insurers as well.

 

Here are a few strategies that can take insurers a long way in garnering a loyal and content customer base:

 

1) Engage through understanding customer needs

 

Research shows that customers who receive a competent and knowledgeable service are more likely to remember their experience. Customers cited “rude and rushed” service as their number one reason to abandon a brand, more than “slow service” and “price”.

According to research by American Express, customers are willing to spend more money with a company that delivers excellent service. Insurers should actively engage in recognising consumers’ obstacles. This is the first step toward addressing customer needs.

Data is the new oil to wheel any industry. Insurers should develop innovative ways to encourage customer interaction to obtain data relating to purchase patterns. This can be done by ensuring the data is saved in the right place to be able to use it in the right way forward. 

 

Agents have done this for several years on offline bases, to convert the same experience to an online model and do it at scale, agents will require the right tools.

 

This measure will help insurers classify and address customers with products that cater to their respective needs, therefore, making the insurance process customized and customer-oriented. Customers want the choice of buying insurance from different providers. They like having both mobile and in-person channels, as well as self-service. The latter may be great for certain needs but in insurance it is important for the customer to feel that human help is always available for them.

 

2) Engagement through personalised insurance products

 

Making use of customer data to design holistic digital insurance products that surround the requirements of the customer is imperative, given the ferocity of demands.

 

Customized products with cost-saving features will overpower the insurance industry. Insurance products in general are complex and rigid, and the modern consumer is moving away from such products. Personalised products also ensure real-time engagement and contribute greatly to retention. 

 

3 ) Create a product customiser 

 

Before anything else, it’s important that you do your research and know your target audience inside out. This includes understanding their demographics, wants, and pain points. Only then will you be able to create products or services that they’ll actually need. Creating innovative different, and customized products with advanced analytics to identify risks that are new or different from other more mainstream risks helps in gaining loyalty and trust.

 

Best fit for example of the product customiser : 

 

  •  Cuvva 

 

It introduced a mobile app that enables the user to sign up, get a quote and buy coverage in less than 10 minutes. It’s a completely digital experience run from a smartphone. Quite different from what customers have to experience when they apply at the average insurance firm.What is also addressing a customer need is that it gets customers covered for only as long as they need it; from a single hour to a whole day – rather than the usual single option of a year.

 

4) Engagement through telematics and gamification

 

Telematics in insurance usually refers to devices, usually provided by the insurance company, which are installed into your car for recording information about your driving behaviour, including how fast you drive, quick brakes and the distance you drive. Lots of customer information can be obtained by applying telematics. It helps to assess the opportunity cost of retaining a customer and locates low-risk customers.

 

Telematics dramatically changes the user engagement and personalization aspects of motor insurance, allowing consumers to pay as and how they drive. It brings customer engagement to a whole new level leading to interactive, cross-channel, and real-time communications.

 

5) Engage through digitalisation

 

Incorporating digitalisation into customer experience can strengthen the brand image and trustworthiness. Insurers with digitally dynamic products least face the fear of losses.

 

Thus, customers should have the option to go through the entire experience, right from quotation to the repayment of claim, in a digital manner. 

 

While insurance is still a people business, and customers will need agents to help them and guide them to the right product, according to the next personalization 2021 Report 71 % of consumers expect companies to deliver personalized interactions on the other hand 76% get frustrated when this doesn’t happen. Hence modern customers will appreciate having the option to go through the flow on their own.

 

6) Overall digitalisation further decreases the probability of human error 

 

Customers use a combination of different methods to contact their insurer. Most customers mix online and in-person communications with online searches, phone calls and app, and chatbots to research insurance policies or claims having a presence in all mediums increase the likelihood of lead conversion. (McKinsey) 

Understanding what the next generation of insurance customers want is always an edge over the competition.

 

7) Distribution: Ecosystem Orchestrator

 

Creates an integrated ecosystem (typically via partnerships) that offers customers “more than just insurance,” focusing on distribution and product offerings to win at the point of sale.

 

This is a smart way to think about building secondary revenue for digital companies that already have an engaged audience. It is also valuable for traditional distributors, who gain an edge when selling that product. One of the most successful ways of selling insurance is to make it contextual and sell a benefit package

 

8) Communicate Strategically to Drive Engagement

 

Today’s consumers don’t want their hands to be held during a sales process. They want the necessary content to make decisions on their own. All digital content is not created equally.

 

  • Valuable. 

Above all, every communication with your customer should provide value. Yes, you can promote your products and services, but if the information is not helpful to your audience then they’re likely to exit it quicker than you can say “skip ad.”

  • Memorable. 

Opt for a digital channel that helps customers remember you and your message. Video marketing is effective because it’s engaging, entertaining and makes complex info easy to understand.

  • Interactive

Encourage engagement with interactive elements. Turn passive viewers into active visitors by letting them enter their information to generate a custom quote or play with a visual diagram of different plan options

 

Stay Ahead with Data-Driven Innovation

 

As a part of evolving consumer base and ever more competition, insurance companies need to keep innovating in order to really stand out.

 

PWC discovered that insurers in Asia were able to tap into customer needs and increase brand awareness by thinking ahead, taking risks and prioritizing data as a source of innovation. The insights they gathered from analyzing data allowed them to boost efficiency, modify new products, and improve customer experience.

 

What innovations will emerge may vary from company to company, but  McKinsey & Company anticipates that multiplied insights will result in a larger focus on claim prevention. Relying on data, insurers can proactively suggest actions that would help reduce the risk of a loss.

 

Shortcomings of Insurance companies in adopting digital engagement

 

Modern consumers demand frictionless communication. The quantum of this demand is further enlarged by the competitive forces in the market.

However, insurance industries haven’t been as swift as other service industries like banking.

 

The basic reasons for this are enlisted below:

 

1) Functionality failures

 

On a macro level, insurers have become adept with digital tools and have improved their user interface front. However, this is only skin-deep.

 

For instance, as per Accenture, almost 75% of customers who attempted to purchase insurance online reported problems.

Thus, digital failures are still present, this affects the trust that customers have.

 

2) Outdated core systems and rigid data centers

 

Agility is a key factor for insurers. Insurers should be able to change form as per externalities like new cloud-based competitors, regulatory powers, fickle customer needs, etc.

 

An all-pervasive data center that ensures one-stop, integrated access to all seekers will add efficiency and flexibility to the insurance experience.

 

3) Lack of personalisation

 

“Insurers that implement personalisation tend to have high digital customer satisfaction scores.” – J.D. Power

Creating a personalised customer experience is not just about personalising the content of your product communication. The entire customer journey needs to be tailored to each individual’s needs and expectations.

 

Personalisation is offering products as per needs. For example, a customer receives suggestions based on their print on the algorithm.

However, insurance companies are still far behind in offering personalised products. In fact, 88% of insurance customers demand more personalization from providers. (Accenture)

 

Companies who have focused on digital engagement in insurance

 

Policy Bazaar

 

Took the initiative to create awareness through digital engagement where the insurance industry was push-driven. Policy bazaar gave an opportunity to the end users to compare a host of insurance products on their website and make a buying decision on their own.

 

Digit Insurance

 

It is a completely digital company that provides simple and transparent insurance solutions that matter to consumers. It is also one of the fastest to market, having launched products across 3 categories (motor, travel, and personal accessories) within the first 12 months of starting operations.

 

Digit Insurance have settled 10,000 claims in less than a year. For their flight delay claims they have an interesting process – if a customer’s flight is delayed beyond the given time, starting from 75 minutes, they get an SMS automatically on their phones with a link to upload their boarding pass and bank details this way claim settlement takes lesser time than usual.

 

Conclusion

 

Thus, if insurers want to align with the evolution in customer expectations, they need to swiftly transition from one development to another and hold customer experience at the heart of their insurance product.

 

Everyday technology is able to increase the opportunities to connect with your customer in an honest and authentic manner. What do you think? Would you use digital engagement methods to reach your customers?

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