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Insurers need 'digital heart' to deliver better customer experience

A survey of insurance policyholders in the U.S. and Europe said they want a more personalized and convenient experience when interacting with carriers.

That experience should include being able to buy every insurance product consumers want from a single carrier, having access to subscription and usage-based coverage and being able to combine insurance and noninsurance products into a "lifestyle bundle," the survey said.

EIS Group Inc., a San Francisco-based insurance software company, partnered with GlobalWebIndex Ltd for a survey that asked 1,057 consumers who own insurance policies in the U.S., the U.K., France and Germany for their insights concerning their expectations for customer service when looking to purchase insurance.

The survey showed that the top priorities for consumers are having the ability to purchase products and services online (44%), availability of pricing that fits their needs (42%) and access to an easy-to-use mobile app (32%). The survey also revealed that despite insurers investing close to $28 billion toward improving customer experience, only 49% of the respondents are confident their insurance provider will be responsive to their basic needs.

Samantha Chow, life, annuity and health marketing lead at EIS Group, talked with S&P Global Market Intelligence about what the survey means for the insurance sector as the industry continues to undergo rapid changes. The following is an edited transcript of the conversation.

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Samantha Chow, life, annuity and health marketing lead, EIS Group
Source: Stanton Communications

S&P Global Market Intelligence: What does the customers' lack of confidence in getting a personalized experience from their carriers indicate to you? Are they doing something wrong or are they missing something?

Samantha Chow: What has happened is that the insurance industry just has a lot more to do to catch up in that area. They have to start all the way back at their core and make drastic changes to how they do business, how they evaluate risk and how they communicate. Most insurance companies have been around for decades and it was a hand-holding, face-to-face situation when it came to customers. Now consumers have different expectations, and that's a massive transformation for [insurers] to undergo. It doesn't happen overnight, and it doesn't happen within a year or two or three. It takes time.

A number of those long-time insurers have taken some of their processes online, such as for applications and underwriting, especially since the outbreak of the COVID-19 pandemic. How much further do they have to go to make the whole insurance experience better for the consumer?

Most insurance companies are saying, "OK, we've got to start where a customer sees us. Let's get on the web; let's make some things digital." COVID helped with that transformation, but it's just "Band-aids and bubble gum." They have to start transforming at the core. That means investing in core tech, and unfortunately, it's expensive. That doesn't mean you have to change your entire policy administration system, but if you don't replace the core, the heart of what the insurance company does with a digital heart that can grow and expand with the organization and make it easy to transform in a minimal viable product format, then all you're doing is "Band-aids and bubblegum."

Consumers in the survey are not very confident in their insurers' ability to change in order to give them a better mobile or web experience or know them and their needs after talking with them. How do insurers go about fixing those perceptions?

What we found in the survey is that consumers are willing to share their data so insurance companies can learn who they are and offer things to them that are meaningful. They want to know that they will be covered when something happens. [Insurers] have to give them that experience and comfort, that they're going to meet that promise.

There was positive feedback in the survey for combining insurance and noninsurance products into "lifestyle bundles," such as blending auto insurance, auto loans, buying or leasing options, remote monitoring, maintenance and driver safety guidance into a "mobility bundle." How can insurers make this a viable product for consumers?

This is where partnerships really come into play in the insurance market, such as a life and annuities company being able to partner with a P&C company that isn't a multiline carrier, or a company with ancillary services, and health and well-being. That's where they're going to be able to meet the needs [of consumers] without the risk of creating a new product or getting into new markets.

That sounds like a radical change for the insurance market.

It absolutely is. I've referred to it on blogs and such as "frenemies." You've got to make frenemies. It's part of what we're calling the modern insurance ecosystem: being able to partner and being able to provide unique experiences that are personalized. Insurance companies are not that different. For all intents and purposes, the products are the same. But being able to create an ecosystem, which again starts with modern core technology, and being able to build that ecosystem is where insurance companies have the opportunity to create their unique fingerprint in the market, provide personalized experiences, and partner with their frenemies or other insurtechs to provide better experiences and personalization.