Insurance customers are increasingly demanding claims settlements that can be made within hours, not days, a new report from insurtech,Sprout.ai, reports.
The demand for faster services is putting pressure on incumbent insurers still reliant in legacy technology, to upgrade the services they provide cutting-edge underwriting services.
The report researches the demand for more automation within the claims settlement space and shows that one in five customers want their claims settled within hours (21%) and that 100% of 18 to 24-year-olds expect a resolution within a week.
Sprout.ai carried out the data analysis as part of its market research. The insurtech is an end-to-end claims automation technology solution for the insurance industry. Sprout.ai works in partnership with major insurers - including Zurich UK - building groundbreaking AI and data-led products to automate the claims process for customers.
The insurtech startup has a robust industry reputation and uses AI to help insurance companies settle claims within 24 hours. In May of 2022, it also raised US$11mn in a Series A round led by Octopus Ventures. It was also seed-funded by Amadeus in 2020.
Customer expectations are not being met by insurers
The data shows that because the majority of insurance claims still take over two weeks to resolve, there is a considerable disparity between customer expectations and insurance services. A hefty 43% of respondents said they had to wait over a fortnight for their claims to be settled.
Sprout.ai conducted the study in collaboration with CitizenMe - and queried over 1000 consumers who had purchased insurance coverage over the past 24 months across multiple insurance lines. The study shows a significant trend toward the adoption of digital-first services.
Insurtech brands seeing a surge in new customers
Indeed, 50% of customers purchasing solely from traditional brands would consider buying from a challenger brand because the services are faster. A further 34% of respondents said they already purchase policies from a combination of both traditional insurers such as AXA, Aviva, and Allianz, and challenger brands, such as Lemonade and WeFox. This rapid adoption is particularly prevalent amongst 18-24-year-olds, with 18% solely buying insurance from digital players, in contrast to 0% of 55-64-year-olds.
Insurtech services are better at generating customer loyalty
The study also indicates that good customer service boosts customer loyalty, with 62% of claimants reporting a “good” or “very good” customer experience saying that they remained a customer, and 31% said that they would use the same provider at some point in the future. In comparison, of those that had a “bad” or “very bad” experience, only 19% said they are still a customer and 89% said they would not purchase a policy from the same insurer in the future.
Speaking about the findings, Roi Amir, CEO, Sprout.ai said, “Insurance companies should be laser-focused on customer experience - as measured by ‘transactional net promoter scores (tNPS)’ - but have traditionally been slow to recognise rapidly evolving consumer expectations, particularly when it comes to the claims process. The relationship between customer service and loyalty is particularly prevalent amongst younger people who are less loyal to traditional insurers and are switching to digital challenger brands.
He added, “Traditional insurance providers hold the lion's share of the market for now, but need to focus on automating their claims processes, or risk losing out to digital-first competitors.”