In the words of Mukund Krishna, founder CEO of Suyati Technologies, “There is consensus on the need for improved customer experience (CX) across domains.”
But when it comes to consensus on what makes for great CX in insurance, especially during the pandemic, opinions are divided since the key touch points where customer experience matters most are spread across quote generation, purchase, onboarding, claims, customer engagement, renewals, and recommendations.
In short, the whole onboarding process, end-to-end.
The Impact of COVID-19 on Customer Sentiments
Predicting customer behavior and preferences in the post-COVID world is crystal-ball grazing. There are several uncertainties at play, as the situation evolves.
Clara Burns, the CMO and Chief Strategy Officer at Prudential Insurance, considers the COVID-19 pandemic to have changed customer needs and sentiments. But the change in sentiments varies across geographies, depending on the state of the pandemic. People who have already gone through the worst of the pandemic have higher optimism compared to those who are seeing the worst of it.
Customer sentiments depend on the state of the economy. The shrinking economic opportunities because of the pandemic has led to a decline in consumer income around the world. The biggest hit is in discretionary income. Customers now spend less and are postponing purchase decisions in some categories. But side-by-side, the demands for protection inclusion is going up, as people seek stability in a future pandemic scenario. Lapse protection guarantee add-ons, to safeguard against the inability to renew policies, is striking a chord with customers.
The challenge before insurers is to help people with what affects them or answer their focal points of worry. The major worries of insurance customers in COVID-19 times are:
- If their policy will cover the pandemic
- If they can claim for COVID-19 infection
- If the insurer will waive their premium factoring the economic hardships
Smart insurers adapt their policies to factor in such worries and make their customers feel secure. For instance, Prudential Insurance has offered pandemic inclusion as part of life policy in Brazil. Brazil’s relatively young age group demographic, who could afford exposure to the virus, makes such an inclusion viable. The company is emulating its earlier “Dengue shield,” offer in India by offering similar coverage for COVID-19. The cover is available in India, Indonesia and Brazil.
The Impact of COVID-19 on new customer acquisition
A big part of the insurance business is still face-to-face. Conversions occur when agents and customers engage across the table. With the COVID-19 shutdowns and social distancing impeding face-to-face meetings, there is a drop in the acquisition of fresh policies.
Insurers set up virtual solutions to facilitate meetings between agents and customers. Many insurers have deployed remote collaboration tools such as Zoom, WebEx, and even WhatsApp to engage with clients. These initiatives have helped insurers such as Prudential to recover lost ground during May and June. In July, the company is almost back to pre-COVID levels in customer acquisition rates.
The digital part of the insurance business has thrived during these three months though. The climate of uncertainty and fear has spiked the demand for insurance products online.
How to Make Changes to the CX Process to cope with COVID
COVID-19 presents an opportunity to make foundational enhancement to customer experience. Insurers strive for consistent infrastructure across touch points. The key elements of CX, such as cloud-based customer engagement models, APIs for seamless accessibility, and measuring the Net Promoter Score, remain unchanged. Insurers have to adopt a more rigorous approach to these factors.
Also, adopt the following approaches to focus on activities based on new realities:
- Digitalize the business approach.
- Review what needs rework and what needs to continue. Take off whatever is not helpful to customers now, and be on the lookout to put in place new, helpful things. Prudential Insurance’s risk assessment module allows customers to make risk assessments. Customers may assess their risk of having contacted COVID-19. The simplicity of the solution, first adopted in Indonesia, led to its translation to Spanish and Portuguese. The solution is now adopted in Latin American countries such as Brazil, Mexico, and Argentina.
- Promote innovation centered on the business model, to adapting business models to new realities. For instance, many insurers’ foray into wellness. Customers prefer resilience and safety for the future.
- Review ecosystems and partnerships.
The key to success is being adaptable. Smart insurers track the situation day by day and make changes based on demand. They react to feedback fast, and consider the human side of the business driving transformation.
Measuring value and profitability from effective customer experience
Measuring the effectiveness of CX initiatives is hard. Quantifying the ROI of customer experience is harder.
According to Larry Nisenson, SVP and Chief Commercial Officer, US Life Insurance, measuring effectiveness requires clarity on all aspects of customer engagement.
The first step is to understand how customers think and what experience matters. For instance, is the customer willing to interact after they buy? Is cross-marketing possible? Understanding what the customer statistics reveal is critical.
Next, align internal priorities to deliver what the customer wants.
The five key areas of strategic customer service and policy management include:
- Building learning and education systems, enabling customers to gain awareness.
- Coding to facilitate continuous processes.
- Building first-class purchasing systems, allowing customers to buy policies seamlessly.
- Building a state-of-the-art servicing system, to service policies promptly and effortlessly.
- Robust claims processing.
The roadmap to meet these areas are clear. What is less clear is the profitability of such measures.
Certain aspects of CX outreach are easy to qualify. For instance, self-service portals have a direct ROI. Calculating the number of customers who use the platform makes it easy to calculate the HR outlays.
The hard part is making attributes and quantifying the learning component. Whether a customer came because of a website, or if they came in pre-disposed anyway has been the subject of constant debates. Insurers need to make an opportunity cost analysis, to determine whether to spend the money on acquisition, service innovation or providing best-in-class digital experience.
Also, there is no short cut to find out the ROI of using AI and other tools.
Data analytics deliver insights on what customers want. Analytics technology has come a long way. It has progressed from the rigid and siloed apparatus of the past to being very fluid and dynamic now. Date engineers can now connect different systems and organize data. They can analyze and model data, and push data through machine learning layers, to surface insights. They may further plug in such insights into live application workflows. Techniques such as data visualization and RPA further speed up the process. Cloud-based Artificial Intelligence and Machine Learning services from Microsoft, Salesforce, Amazon, and other providers support data-rich applications, at scale. These facilities enable insurers to derive insights from the data. Insurers use such data-driven insights to improve customer touchpoints.
Need for Speed
Traditional long term care policies take anywhere between 60 to 90 days to underwrite. Customer satisfaction in today’s digital age depends on speeding up the process.
Positive disruption requires reinventing the process, some of which have been in place from the time Abraham Lincoln was the President of the USA!
To cut down on underwriting time:
- Use technology to digitalize fast.
- Pull in third party data into underwriting, to ask fewer questions to the clients. A shorter application form and fewer questions speed up processing. A review by US Life found as high as 45% of questions on insurance applications superfluous to understand risk.
- Doing away with medical examination for clients under 65 years of age cut down underwriting time. Insurers such as US Life rather use AI, machine learning, and analytics to understand risks and price effectively instead.
- Use electronic signature to speed up the process. This also promote contactless processing, so essential in COVID-19 times.
These interventions helped to cut down the application to policy delivery time from 60-90 days to as little as two days, at US Life Insurance.
The Changing Role of Intermediaries
Brokers and intermediaries pass on new products and plans from the insurer to customers, easing and adding value to the process.
COVID-19 has changed everything. It forces a relook on the role and relationship of brokers and intermediaries in the insurance sector. Chris Keegan, Senior Managing Director, Beechen Carlson regards aligning end-user customer need with solutions offered by insurers as the biggest role, and also the biggest challenge, of intermediaries.
Brokers and intermediaries:
- Ease the process for clients. Aligning services and consultancy with policies make customers understand what exactly they buy.
- Offer value-added solutions. Modelling tools and actuarial tools provide numbers, scenarios, and estimates.
- Help clients in risk assessments. In the cyber marketplace, clients expect a level of sophistication. Insurers respond by developing platforms to provide streamlined and data-rich experience. For instance, brokers use the insurer’s risk assessment tools and other independent tools to make clients aware of risks. They also suggest remediation measures. A case in point is work from home increasing cyber security risks for the enterprise. Work from home increases Microsoft remote desktop vulnerabilities. The intermediary uses the insurer’s application to detect vulnerable ports in the client’s network.
- Make it easy for clients to compare various options. Many intermediaries build platforms to aggregate inputs. Such sophisticated platforms align technology and gather information from many insurers. Customers gain through insights on the breadth of products available. They may compare prices and product to make informed decisions.
- Intermediaries who build platforms to aggregate data face the challenge of connecting to disparate systems. Different insurers use different tech configurations. They use API to transfer files and link to important modules from insurers. They also apply interim solutions such as coding and web scraping tools to gather information into their platforms. For instance, a scraping tool may access information from an insurer’s rating model spreadsheet and use it to provide quotes to clients.
Challenges to the Insurance industry
The claims process puts customer experience to test. If insurers cannot meet customer needs, or provide the right answers when it comes to claims, nothing else matters.
The use of AI and machine learning helps to understand customers better, to ease claims submission and processing. Automation and self-service portals cut down processing times.
The COVID-19 pandemic has affected claims processes. The immediate crisis when the pandemic struck was the shutdown of offices. The saving grace has been brokers and claim processing agents moving to work-from-home. Since many of them were accustomed to working from home and traveling, the transition has been smooth. The IT team at US Next worked on war footing to shift technology to people’s homes, and help 4000 employees work from home.
There has been a significant uptick in the number of claims, from businesses affected by COVID-19. Many policies with unclear pandemic exclusion raised several questions and led to disputes. Ambiguous business interruption clauses in commercial insurance policies will escalate disputes. Litigation has not started so far only because the judges and lawyers could not take their places in the courthouse.
Disputes will increase in the long term when the money from the government stops flowing and companies stare at bankruptcy. Companies looking to cut costs may think of pulling back on their insurance policies.
But it is still early days to find out if COVID-19 will bring in substantial long-lasting changes in insurance. Every day brings new information.
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