December 6, 2019

The Customer is Still King

InsurTech's focus on Customer Experience brings insurers and their policyholders closer together, with benefits for both groups.

Anyone even remotely involved in the insurance industry would have to be living under a rock not to know that innovation has set upon the industry like Black Friday shoppers intent upon snapping up that coveted holiday purchase. This oft-described "boring" and "old fashioned" industry is witnessing legions of insurance technology ("InsurTech") startups ready to help launch the industry forward from the dark ages of slow, paper-driven processes into the current millennium, and even the future, with digital, on-line processes – apps even – that promise to shorten by days or even weeks the application and claims handling process, and offer more personalized coverages or individualized premiums calculated using publicly available data or the customer's own data from connected devices on their person, in their cars and in their homes.

At the recent Connected Insurance USA conference hosted by by Insurance Nexus in Chicago, over 700 insurance industry and InsurTech professionals gathered to discuss the innovation phenomenon that is InsurTech. And while the conference's big question from just a few years ago over whether connected devices would really become "a thing" has been answered with a resounding "yes," what I came away with is the undeniable notion that the biggest winner of all this excitement will be none other than the customer.

I've heard it said that the insurance industry has had a bad case of bank envy. Banks have frequent contact with customers, which allows them to have a closer view of what is happening in their customers' lives and enables banks to offer more tailored products and services. Policyholders, by contrast, have traditionally had contact with their insurance companies only during renewals and when they have a claim. The first is when the customer receives notice of the inevitable premium increase, and the second when they've suffered a loss and are hoping against hope that (a) their loss is covered, (b) their insurance will make them whole financially, and (c) their premiums won't go up or, even worse, that their policy won't be cancelled or non-renewed as a result. Not exactly the kinds of interactions that create feelings of endearment.

Technology is undoubtedly helping to bring insurers and their policyholders closer together with a focus on improving the Customer Experience (or CX, as those in the know like to call it). But what does that really mean to the customer and where are the real advantages for insurers? First, the expectations of customers of all ages have quickly evolved and the failure of an insurer to deliver a quality on-line experience, or to have an app for that, can cause a policyholder's eye to wander and explore other options, particularly at renewal time. Aggregator sites help provide price transparency, so if an insurer wants to retain a policyholder when another carrier is offering a better price, there needs to be a CX that builds customer loyalty.

An Insurance Nexus survey revealed that customers value most highly the price and the best coverage for that customer, with high quality customer service a close third. The most successful companies will be those that can cover all of the consumer's needs and be affordable. Examples from the conference include MetLife, where customer centricity is at the heart of every aspect of their business. Hippo, a fast-rising InsurTech and recently declared unicorn, balances technology and risk management services for its homeowner policyholders (which only used to occur for commercial businesses) with connected devices as well as access to live humans to help solve trickier issues. And Lemonade, the first full-on InsurTech insurer, uses technology to speed all processes, with the tag line: "Forget Everything You Know About Insurance – Instant everything. Killer prices. Big heart."

Consumers should be excited to be at the center of the InsurTech revolution. As the conference name implies, innovation is connecting customers and their insurers in myriad ways – improved websites, apps, devices, instant messaging, photo sharing of damages to accelerate claims handling, AI and Big Data to accelerate underwriting, the list goes on. Part of the payoff for insurers should be to keep their customers connected to them and reduce turnover. As well, those of us who operate in the insurance industry have double the reason to be happy – our industry is evolving and getting the advantage of the latest technology, and we ourselves, as customers, are getting the advantage of improved CX from products, to services, to claims handling and beyond.