It’s hard to be in the insurance business. Sure, people like to get insurance because it provides a sense of security while going about life, but there’s this mindset that insurance companies are “evil” and they are out to bleed customers dry with inflated premiums and dismal, inefficient service.
With this kind of stigma attached, insurance companies must provide an excellent customer service experience to prosper in the industry. McKinsey research found that in 2016, 85% of insurance companies had customer engagement and the customer experience as their top strategic initiative.
There’s definitely a drive to give the service customers expect. If you are an insurer, you are in a market that is already actively competing to provide the best service, and you can’t afford to be left behind.
Here’s an effective three step plan to improve the customer service experience:
1. Trust your Customers
Psychology teaches us something interesting: if people feel that they are trusted, they are more likely to behave honestly. This is the credo that insurer Lemonade takes to heart, and it’s as disruptive a mindset as any. Lemonade’s business model is something of an oddity in an industry that takes forever to approve a claim, that charges high premiums and keeping the profits.
Lemonade’s tagline is “Instant everything. Killer prices. Big heart.” That pretty much describes exactly how they do business, from approving claims in as quickly as three seconds, providing instant assistance through their chatbot Maya (or through customer service representatives), premiums starting as low as $5 a month, and donating the leftover money from premiums to a charity of the policyholder’s choice.
This transparent way of doing business that places its trust in the customers has reaped the rewards for Lemonade, with a 20% loss ratio in 2016, far lower than the industry average of 52.5% at the time. Who would have thought that making the insurance process easy and charging low premiums could be so profitable?
2. Provide Insurance Online
Back in the day, insurance was sold door to door with insurance agents canvassing the market to close a sale. As with many business practices from before the digital era, this has been supplanted by a more efficient method. A study from J.D. Power and Associates shows that 74% of new customers will use online resources to compare insurance policies and get a quote. In addition, 25% of those customers getting online information will purchase the insurance directly from the website.
Providing this extra channel of service ensures that you are able to reach that ever important swathe of Generation X and Generation Y consumers, both of whom make up a large part of today’s market.
3. Modernize your technology
State Farm is one of the largest insurers in the United States and is the number one ranked property-casualty insurance company in America. With more than 82 million policyholders serviced by 65,000 employees, it is ranked 33rd in the Fortune 500. It’s secret? Staying on top of things.
State Farm was one of the early adopters of the Internet of Things (IOT) paradigm, and used telematics to provide usage-based insurance (UBI) models to its customers. Their telematics devices are used to provide monetary rewards that incentivize drivers to drive more safely, and they have many touch points with their policyholders, including Driver Feedback app which provides drivers with an analysis of their driving performance. It’s a system that rewards the drivers and simultaneously teaches them how to become better, safer drivers.
While it sounds like a simple matter of gamification and incentives, the truth is that it’s light years ahead of the competition. Many insurance companies still use legacy systems, and most firms still use manual entry of data into huge, unwieldy spreadsheets. Microsoft recently found that companies with better-designed technology infrastructure outperform their rivals by 211%.
State Farm accurately gauged industry trends to predict the behavior of the market. This gave them a huge advantage in the digital era, where everyone has a smartphone and is connected, resulting in several channels that drove engagement; that Fortune 500 rank isn’t just for show; J.D. Powers found that their overall customer satisfaction rating for 2017 were better than they had ever been.
The final step of improving your firm’s technologies will put everything together and keep your business on its toes. It starts with trust, and creating a brand that values its customers, but it ends with you providing the tools and the expertise to make everything run smoothly. There are many options to modernize your systems today, so if you are looking to make it in this competitive but lucrative industry, your business deserves the upgrade.