Mar 28, 2008

Customer Experience in the Insurance Industry: Barely Halfway There

By Rob Walker, Chordiant

A recent benchmarking of the customer experience in the insurance industry by international research firm The Customer Respect Group placed insurers at an unhealthy 5.5 out of 10 when it comes to interacting with customers online. Yet the findings are of little shock for an industry already weighed down by regulatory compliance, complex relationships and a steady stream of new entrants to the market. Rob Walker, vice president decisioning and marketing at Chordiant, explains that analysing the online experience is only a small fragment of the greater customer relationship picture.

The origins of the insurance industry can be traced right back to the Great Fire of London and face-to-face interaction at old coffee houses. It is an industry built on historically complex, yet very personal relationships. However, as with countless industries, customer relationships within insurance are more recently characterised by call centres or the increasing dominance of online channels. In the midst of growing pressure from comparison websites, the weight of regulatory compliance and increasingly tumultuous markets, the need for underwriters and brokers alike to attract and retain customers has never been more pressing. However, the difficulties in achieving this, both technological and organisational, have never been so daunting to overcome. This month’s report on the online experience in insurance by the Customer Respect Group highlights one area of a much wider problem.

The array of underwriters, brokers, deals and websites on offer to today’s customers has created an unprecedented level of choice, but in many cases this has been at the cost of personal interaction between customer and agent. Market sites such as the Royal and Sun’s alliance market site opened last year are notable attempts to offer a forum for face-to-face discussion and relationship building in the industry. Money talks, however, and electronic trading has reduced time and costs while increasing efficiency.  Arguably, personalised services are easier to offer within smaller regional brokers rather than within the larger global broking and underwriting giants where archaic systems tend to be further entrenched due to the size of the organisation alone. The key to delivering a unique experience to a customer for any insurer, regardless of size, is to manage a conversation and make real-time decisions and analysis for every individual. This can be realised through technology, however the strength of technology is forever dependent on the strength and competence of the people driving its use.

The insurance industry in the UK has historically lagged behind other industries in rapidly embracing and deploying new technologies. However, many large insurers and brokers have now found themselves in a position where they struggle to manage the complexities and inflexibility of having disparate systems and multiple channels. Organisations must ensure that data does not become siloed across different departments and channels, making a consistent and recorded dialogue between any parties impossible. Equally, the need to access data across silos and channels cannot result in an information overload for customer service agents. As consumers are likely to contact their broker about a particular problem, the call centre agent who ultimately has to deal with the enquiry will benefit from having the relevant data to hand.  For example, a customer enquiring about a new policy will require vastly different data to an existing customer looking to making a claim. Ensuring that agents have the appropriate data to deal with the individual needs of a customer will vastly improve efficiency, cutting the time and therefore cost of each service call.

In a complex industry, it is worth pointing out that these intricacies apply across the broad spectrum of relationships. A call centre agent for a large insurer must deal with multiple underwriters and provide them with timely and accurate information. On the part of brokers, consumers must be provided with a good experience in order to protect brokers from switch sites and the ferociously competitive prices offered by supermarket giants and other non-traditional players. 

In any scenario, managing systems is only half the problem, managing people from culturally different departments is another hurdle. Technology must be implemented and driven in conjunction with the marketing heads within a given organisation. Technology is typically seen as the sole charge of the IT department and chief information officer, yet when it comes to analytics and customer experience the input of marketing managers is absolutely vital to the decision-making process. IT and marketing directors must work with the same goals in mind, a harmony only bred when both are on a level playing field in boardroom discussions.

Despite these difficulties, however, the recent change and market pressures should ultimately bode well for customers. Branded distributors that are not necessarily from the insurance industry, such as Tesco, who have core competence in service and know their customers, have realised that they can profit from the industry and have more highly developed customer-centric strategies in place. This is particularly evident in personalised lines. There is greater pressure for transparency around products and price for customers. Customers have been empowered through the internet and have voted with their feet, not only for information but for products. With consumers having more choice, more control and elevated expectations, the industry needs to work toward a higher customer experience score.