Why Customer Centricity is Driving Insurtech Growth

Customer centricity means frictionless experiences, low cost products and better customer management say experts

Traditional insurance companies have not always considered the value of customer centricity, sometimes even cultivating an ‘us versus them’ culture that has lacked transparency and created animosity between company and customer. 

This, along with the digital transformation, means some of the biggest names have a long way to go when compared to smaller insurtechs that have structured themselves around the concept. 

Alex Wilson, Vice President at White Star Capital says the move towards customer centricity is driven by a fundamental business need. By definition, being customer-centric means putting the customer first, and ensuring they get what they want or need, when they want or need it. Those who are able to do that successfully without sacrificing their profit will win.

However, the ease of purchase and speed of transactions, while convenient, doesn’t give companies a lot of scope to establish a rapport with new customers, points out Wilson. 

“Customers only really interact with insurance at purchase, renewal or when they claim. That means most insurtechs will have just two, possibly three, meaningful chances to engage and impress the customer.”

He also points out that the notion of increasing premiums for longer term customers is detrimental to building loyalty.

“For the purchase process, that means making things as easy, simple and efficient as possible, ensuring customers are able to assess the right products for their needs and transact easily."

Four steps towards better customer centricity

1. Anticipate customer needs

Taking customer opinions seriously, and listening to staff on the front line about what things customers most appreciate and ask about, is central to the anticipation process. AI technology and predictive analytics can be used to predict market trends too.

2. Get feedback

Frequent customer feedback is essential in understanding processes that are working well versus those that don’t. Use emails, chatbots, SMS, messenger apps and direct phone calls.

3. Initiate pilot programmes on new products

Trial new products and services can be done through the latest marketing tools, enabling companies to get real time feedback on the latest offerings before launching them fully. 

4. Take advantage of technology

The latest pay-as-you-go cover options use AI and the IoT to successfully predict how high customer premiums should be, making the service far more cost-effective and competitive. 

How technology improves customer centricity

Meeri Savolainen co-founder and CEO of Insurtech INZMO, says technology can help to improve a number of critical areas. She says, 

"In today’s digital age customers want shorter response times and seamless interaction and preferably on a mobile. They don’t want to fill in lengthy application forms only to receive the insurance policy a week later. Customers typically expect things to be turned around in a matter of minutes and hours, not days. Automated solutions within predefined parameters for example can help expedite both policy purchases and claims processing.

"The offers need to move towards dynamic pricing based on the clients’ profile and behaviour. Customers today have more flexibility when it comes to selecting the level and type of insurance coverage they actually need, which also affects the price. 

"Customers want to know exactly where in the process their application or claim is at any given time. Providing customers with an easy to use mobile app means they can receive continuous updates on the status of their policy or claim."

Customer centricity now essential for insurtechs

Acxiom’s SVP of Professional Services EMEA, Jochen Toepfer, says, “According to Acxiom research across industries, customer-centric data is considered critical to business success, with 85% across industries and 94% of insurance executives saying data is the most important factor in delivering a positive customer experience. With more data comes a better understanding of one’s customer. Customer-centricity is here to stay - it is almost inevitable that as insurance providers look to transform digitally that they will become more customer-centric and data-driven as they look to leverage their data streams to provide new services for their customers”

Growing competition for incumbents

Incumbents are feeling the pinch as insurtechs broaden their offerings. But they are also striking out at new opportunities insurtechs provide, by investing heavily in start-ups and also partnering with digital insurers to broaden their own portfolios. Andi Dominguez, Principal – Global Insurance at Quadient, says, “The wider industry’s move to customer centricity is driven by the simple fact that if insurers do not deliver the right combination of digital, mobile, in person, and traditional channels – at the right time for the needs of each consumer – they will lose market share to newer insurance providers. As tech giants like Amazon that are known for their seamless customer experiences begin to enter the market, the threat is only increasing.”

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