This article first published in Feb 2018 issue of Asia insurance review and reproduced with permission from Asia insurance review.

Savvy business leaders recognise that customer experience (CX) is the new battleground in the pursuit of gaining competitive advantage – no matter which industry you are in. For the insurance sector, which has traditionally had a less than stellar reputation, the task of transforming the customer experience is a pertinent one.

 For many consumers today, the choice to purchase is in large part driven by their perceived experience interacting with brands that offer the best-in-class customer experiences.

“Customers have become accustomed to better experiences from their favoured brands and now hold these same high standards for all other interactions they have with product or service providers – regardless of how complex or regulated the provider’s industry may be,” said Mr Zia Zaman, Chief Innovation Officer at MetLife Asia.

Aside from meeting rising expectations, there is evidence linking customer experience to profitability. A report by the Economist Intelligence Unit, “The Value of Experience: How the C-suite values customer experience in the digital age”, found that companies that prioritise investment in CX have better revenue growth (59% vs 40%) and are more profitable (64% vs 47%) than companies where CX is not a priority.

Meanwhile, research by Avanade and Sitecore shows that there is a US$3 return on investment expected for every $1 invested in the customer experience – further reinforcing the link between CX and profitability – while a Bain & Company analysis carried out in 2015 shows that companies that excelled in CX grew revenues 4%–8% above their market.

The simple truth is that a superior experience leads to stronger customer loyalty, meaning they stay longer and are more likely to make recommendations to others.

Overcoming barriers

While insurers are indeed trying to move away from being product-focused to being customer-focused, having an intimate understanding of the customer is still somewhat of an obstacle for some companies.

“Customer information is disintermediated in Asia due to the large agency workforce. This makes it hard for insurers to gather customer information directly, and even harder to better understand the customer to improve their experience,” Mr Jonathan Zhao, EY’s APAC Insurance Leader, pointed out.

“Being able to break the customer data gap will be the first step in addressing better customer experience,” he said.

Mr Tobias Farny, CEO, Australia & Greater China at Munich Re, also mentioned other contributing factors which have inhibited insurers’ ability or desire to double-down in transforming the customer experience.

Firstly, he said the overwhelming focus on motor, especially in places like China where motor dominates more than two-thirds of general insurance portfolio, meant that companies naturally focused their efforts on milking such a reliable “cash-cow”.

Further, he added that in some markets, insurers may just not have the expertise to transform insurance solutions.

“To overcome such barriers, Munich Re has, over the past two years, successfully established dedicated entities, supporting insurance companies in areas such as new insurance product development, Big Data analytics and digital sales channels,” said Mr Farny.

The digital equation

An enhanced CX and more direct consumer relationships are often a target of digital transformation programmes. Surveys conducted by EY show that global insurance consumers place an extraordinarily high value on quality digital experiences – with 40% of consumers deciding to continue insurer relationships based on the quality of the experience.

“Rising consumer expectations and increasing willingness to switch to new providers are forcing insurers to be more accountable, transparent and effective. Again, these attributes are frequent by-products of successful digital transformations,” said EY in its recent report.

While a good digital journey is a key element, it is still very important to equally consider the non-digital experience to ensure an equal and holistic set-up.

“Equipping relationship managers, agents and brokers with the right tools in order to improve their interaction with clients is key. This is especially important for life and medical insurance where non-direct channels are still the main selling channels in Asia,” said Mr Zhao.

Experience often boils down to the ease of interactions, and it is a “baseline customer expectation that hand-offs between channels are seamless, with insurers capable of managing the proper processes, training, governance and controls to make it happen,” according to EY.

Really knowing the customer

Really knowing your customers’ needs, and thus being able to create personalised user experiences will have to be the standard that insurers strive towards in the coming years.

“Reducing friction and providing an experience that just intuitively ‘knows me’ is what customers want,” said Mr Zaman.

“There are many factors that help to build this type of experience, but it starts with knowing the customer and understanding their needs. This should inform everything from the kinds of products and services you create and offer them to how you interact, whether that be through digital or face-to-face channels,” he added.

Mr Farny thereby believes data analytics will be crucial for insurers to be able to offer a more intuitive experience for customers.

“Retail insurance customers expect to engage in a different way, similar to their experience when they do online shopping. Insurance offerings for retail customers will be driven by a combination of artificial intelligence, data analytics and social media information, eliminating lengthy questionnaires while also creating positive experience through immediate claims payouts.”

Analytics certainly has the power to help insurers transform the CX, and will likely be the new battleground for insurers moving forward. For instance, predictive analytics can identify suitable products for customers, in particular regions and demographic cohorts that go far beyond the rudimentary cross-selling and upselling approaches used by many insurers, according to EY.

Closing the CX gap – some low hanging fruits

Simplify things

Reaching the end goal of a superior CX starts with small steps and “simplification and reducing friction are the low-hanging fruits,” said Mr Zaman.

Mr Zhao touched on a similar point when he said: “Streamlining existing processes where you can clean up application forms, or remove redundant steps to handle a customer query are all parts of the customer journey that insurers can begin to transform today with little cost or time investment.”

And Mr Zaman added: “By simply identifying and rethinking the ways in which friction sullies the experience, we can improve quickly.”

Simplicity also extends to products and channels, said Mr Prakash Matthew Thomas, General Manager, Insurance AMEA at DXC Technology.

“Insurers need to provide access to simpler products and the ability to buy across all channels,” he said.

Be proactive – increase interactions & touchpoints. 

Being proactive allows insurers to increase the amount of meaningful interaction it manages to have with customers – an area which insurers have traditionally not fared well in.

From simple reminders that their policies are up for renewal to more proactive product recommendations based on customer needs, insurers need to show a better connection to customers’ lives.

“Companies should look to provide agile relevant personalised products faster to meet changing consumer needs,” said Mr Thomas.

There is perhaps inspiration to be taken from their counterparts in China who have continually shown their inventiveness to react fast to different customer situations. For example, in view of the Chinese New Year period when there are typically large movements of people, insurers in China have offered cover in times when drivers are caught in traffic jams and need to spend an extra night on the road – especially useful when the cost of hotel rooms can spike during the holiday season.

Better user interface

Another simple and urgent step needed is to simplify the user interface on both mobile and web platforms, said Mr Thomas.

“Insurers ought to look at improving the mobile and web experience as it has the highest rate of penetration in Asia.”

Greater use of automation

In the longer run, it would not be surprising to envisage a higher usage of automation tools across the value chain that would allow insurers to deliver a more frictionless experience for customers.

Mr Thomas predicts that automation and digitalisation will play a significant role for insurers to compete with other industries in terms of speed and quality of service.

“Robotic process automation (RPA) to automate manual processes like New Business, Underwriting, Claims are possible. RPA can help optimise resourcing for insurers whilst improving quality, transparency and hence the overall customer experience.

“And chatbots can be utilised to improve customer support, quality and predictability thus reducing call centre’s volume and cost,” he envisaged.

However, in the near term, some of the more likely options include things such as straight through processing for instant payments.

“Insurers can provide an interface to multiple payment channels including mobile payments, thus offering customers with wider payment options,” he said.

Meanwhile, Mr Farny pointed out some of the automation are already seen in motor insurance with regards to loss assessments for minor claims.

“The insured can take pictures of the damaged cars at the scene of the accident, and the pictures are transmitted to the insurer where links to combined spare part and claims databases estimate precisely the cost of the damage and provide an immediate claims payout to the policyholder.

“Such solutions will create a positive customer experience, setting standards for future client interactions,” he said.

Measuring success 

So for insurers embarking on the journey towards delivering a more superior customer experience, how should success be measured along the way? No doubt companies would continue to measure both revenue and customer-related metrics to assess the effectiveness of their strategies.

“Eventually the importance of customer experience shows up in lag indicators like VNB (value of new business) and persistency, but the lead indicators are more telling,” said Mr Zaman.

“It’s often said that insurers interact with their customers on average only 1.44 times a year. To improve the experience would be also to increase the frequency of interaction. How many more impressions or touchpoints does the insurer have with the customer, on average, over the course of a year? And how meaningful are those interactions?

“Do they choose and favour our experiences and our intermediaries? Do they value the reduced friction that we offer when you ask them? Are customers fans of the brand?”

Meanwhile, Mr Zhao pointed out the value of just listening to customer feedback on social media as another useful metric.

“Especially so when customer comments can be translated into practical engagement scores for insurers to act and improve on,” he said.

Changing perceptions

Beyond revenue and profits, success ultimately ought to be measured by how differently customers perceive insurance in the future.

Summing it up, Mr Farny said: “For this, insurance will have to undergo a systemic change, and become a pull instead of a push product. Clients need to understand the benefits, the entire purchase and claims experience needs to be different, more convenient and transparent. And it will be crucial to create more touchpoints between the industry and the client than just when one starts the insurance contract and when one ends it.”