4 technology tips to retain insurance customers
New customer acquisition costs are typically seven to nine times higher than selling to an existing customer. According to a 2020 poll, the UK’s insurance industry has the second lowest retention rates, with 38% and 43% of customers reporting switching their house or vehicle insurance in the previous year.
76% of European insurance CFOs plan to reduce their enterprise-wide cost base in the next 12 months, but the competitive landscape calls for innovation into new capabilities to maintain their customer base, which requires investment. Numerous firms are now ill-equipped to provide the sophisticated, tailored client experiences or effective servicing that customers need. However, strategic cost transformation has been identified as a strategy for long-term sustainable success. It involves creating flexible, scalable business models driven by better digitalisation and a customer-centric approach.
Customers leave insurers for several reasons, including a lack of personalisation, poor customer service, and pricing. Customers of today demand simple interactions with their insurers. Thus, service providers must ensure that their channels provide an easy-to-use, seamless experience. Insurance companies can attract and keep consumers while enabling their agents and brokers to build stronger connections by investing in the proper technologies.
Retain insurance customers through technology
1. The need for hyper-personalisation
Machine learning (ML) and Artificial intelligence (AI) can help insurers operationalise their data to deliver more personalised insurance recommendations. For example, it’s possible to integrate disparate IT systems for a single view of your customers so you can better understand them. AI can help with hyper-personalisation by enabling models to learn from data and anticipate the best course of action.
With the plethora of data accessible from IoT devices like smartwatches and in-car telemetry, models can also be developed to customise insurance pricing, enabling better lives and safer driving to be rewarded. At the same time, higher policy accuracy saves the company money. Additionally, insurers may differentiate themselves from competitors by personalising coverage and enhancing consumer experiences.
The more traditional methods used to help personalise customer communication and marketing involves generic, demographic information to segment customers. These traditional attributes are often unhelpful and won’t help consumers with their specific needs. The amount of data analysed must be increased to find more precise segments. Automation must be developed to enable hyper-personalisation as it would be impractical to do this manually due to the vast amount of data handled by insurers.
2. Fantastic customer service = happy customers
In today’s world, customers become frustrated with bad customer service and won’t stick around. Especially with the internet at your customers’ fingertips – they can easily find a new insurer and select a new policy.
The customer onboarding experience is one of the most important parts of the insurance customer lifecycle. It should be streamlined through automated communication, easy set-up, and regular communication across multiple channels.
Contact centres are investing heavily in digital transformation, enablement of self-service omnichannel communications, and zero-touch engagements. With 71% of consumers willing to use digital messaging to get customer support, online communication is the way forward.
Over 40% of personal line customers surveyed found it challenging to contact agents and brokers outside typical officer hours, with lockdowns and social distancing complicating the service.
Insurers should streamline their adoption of the omnichannel experience ensuring agents are available across channels and can drive faster issue resolution while allowing agents to focus on enhancing the customer experience.
3. When the pricing is right
Customers are more likely to be loyal when they are satisfied with the pricing of their insurance.
In May 2021, the FCA released its Policy Statement General Insurance Pricing Practices Remedies, outlining solutions to the problems raised in the final report of its research on General insurance pricing practices. These remedies include prohibiting companies from charging different prices to new and existing customers, facilitating the cancellation of auto-renewing policies, extending product governance regulations to already-existing products, and limiting companies' use of price optimisation techniques when setting prices.
Companies will need to make the operational changes required to not only comply with the new rules but to consider how this affects their business models. What this means for the industry is that it makes sense for customers to become long-term, and with that in mind, customer retention is more important than ever.
4. Modernising technology applications
New core technology platforms are a significant part of modernisation strategies for insurers looking to accelerate new products to market while focusing on efficiency, flexibility, and cost reduction. The industry is still heavily dominated by legacy systems due to the cost and complexity involved in significant modernisation. Yet, insurance customers want contemporary digital services. Thus, insurance carriers and their clients must be adept at using the digital tools and platforms that power the industry.
A common strategy is to opt for a phased-out replacement of ageing systems. Once business priorities and clear goals have been established, the company can assess the applications that must be overhauled. Another option is to automate legacy system updates to improve operational efficiency.
Applications modernisation allows insurers to respond to changing market dynamics quickly, helping them remain competitive, attract new customers, enhance loyalty, improve employee experience, and ultimately, reduce churn.
Improving your insurance technology can help retain insurance customers
The benefits of being a customer-centric organisation, which can be done through innovative technology, mean insurers can remain competitive and provide an improved experience and overall excellent service to their customers.
It’s clear that there is a huge opportunity for better customer retention with improved customer service from insurance companies, and technology is an essential part of a sustainable strategy.
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