Loyalty and the Customer Experience for Insurance Consumers

At West Monroe Partners, we define the Customer Experience as the sum of a customer’s interactions with a company across all of its touch-points – including agents, channels, systems, products, and services – and the resulting perceptions about the brand.

Research within the Insurance Industry has shown that a policyholder’s perception of an insurance company is developed as a result of their interaction across multiple-channels, not through one individual transaction or moment in time, and that a positive and effortless customer experience can result in increased policyholder satisfaction, loyalty, advocacy and greater customer lifetime value.

Diminished customer loyalty coupled with increased online comparison shopping, and ultimately purchase, represent a shift in the Insurance marketplace. Insurance Carriers, particularly those invested in Personal lines, must be able to produce an ideal customer experience through a variety of delivery vehicles and channels to attract and retain business. In addition, operational enhancements that improve efficiency and drive down the cost of doing business are imperative for success.

Assuming a leadership position in the marketplace means having customer experiences designed based on a full understanding of customers’ brand specific expectations, emotional relevance, and the expected tactile and emotive performance. Some of the capabilities of carriers that are leading in this area include:

  • Customer experiences designed on specific expectations
  • Predictability about what customer wants to accomplish interacting with firm
  • Ability to relate decisions among customers to align concerns over purchase decisions

In general, the financial benefit of customer experience is also validated by the following data cited by Forrester:

  • 51% of US consumers switched providers due to a bad customer service experience in 2013, up from 46% in 2012
  •  81% of customers who switched providers, felt their service provider could have done something differently to prevent them from switching.

Couple these financial benefits with those specifically about policyholder engagement in the insurance industry from a 2013 Forrester Survey:

  • Companies where customers rated customer experience higher were also associated with a reduced churn rate.
  •  Among property & casualty insurance providers the rate of customers who switched providers due to poor customer service increased from 3% in 2012, to 5% in 2013.

Improving the customer experience can result in improved policyholder retention, greater capability to cross and up-sell, ability to achieve superior premiums, prevent commoditization and margin erosion, and increase the propensity for customer advocacy.

As an example, claims have been determined to be the largest component relating to consumer churn, hence interaction with a consumer during the claim enables insurance companies to take actions enabling retention or up-sell opportunities. Most companies claims departments measure customer satisfaction after each claim, but very few companies are able to react to customer responses in a timely fashion. Most customer experience strategies are defined after analysis of data that is gathered over multiple days, leaving few opportunities to remedy consumer issues in a timely manner.

A solution that captures, analyzes and alerts departments about consumer sentiment during a claim in a timely manner could enable opportunity to increase customer retention. However, the solution has to apply across other departments also to be able to provide maximum benefit to the customer experience group:

  • Claims: An end to end status capability allows insurance companies to be connected with the consumer at all points of the claim lifecycle. Intermittent surveys provide further insight. Key triggers or consumer sentiment when captured allows other departments to take actions
  • Distribution (Agents or Direct): Distribution channel owners want to be trusted advisors to their consumers. The solution should provide a medium for the distribution channel to provide status update, advise on repair vs not repair, or recommendations on shop selections

For instance, one of West Monroe Partners’ clients, CCC Information Services, a leading software and data provider to the Property & Casualty insurance industry, has historically been involved only in claims process. They are directly connected with the consumer and the insurance company from First Notice of Loss (FNOL) to settlement and restoration of a vehicle. Expertise in claims allows CCC to analyze customer sentiment and identify key triggers that could result in positive or negative experiences for consumers during an auto claim cycle.

For more information about this topic, please contact Dave Tilson at dtilson@westmonroepartners.com or at 312.980.9449

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Phone: 312-602-4000
Email: marketing@westmonroepartners.com
222 W. Adams
Chicago, IL 60606
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