Are You A Truly Customer-Centric Insurer?

It is no surprise to anyone that financial services providers recognize the need to change the way they interact with their customers - everyone speaks about a customer centric approach and the need to be a customer centric organization. But what does this mean in practice? What are the necessary steps to take to have a “truly” customer centric approach? For many, this is still a mystery.

Let’s take a look at some organizations where perception and reality seem to clash; where organizations think they have the customer in mind but they really don’t. Then ask yourself, where does your organization fit on the customer-centric scale?

1. When you sell/re-sell, do you really have your customers in mind?

Recently, I was bombarded by numerous emails; each and every email was encouraging me to renew my car insurance policy while taking advantage of the “great” offer they had for me.

When looking deeper into these emails I realized that the offer wasn’t that great after all. In fact the offer was a 20% increase over last year’s premium although I had a clean history and from what I know my expected loss cost had gone down, not up!

Justified or not, letting me know, indirectly, time and again, that my premium just went up by 20% is not a great customer experience - in fact, it is quite annoying.

Obviously, I was unwilling to renew with a click of a mouse and pay 20% extra and so I ended up calling the insurance company and talking to an agent who assured me that this was not the final price. So, while this insurer thought he was being proactive and reaching out to me with a new offer before my policy expired, the reality was the customer experienced backfired, leaving a bad taste in my mouth.

The good news is that I ended up paying 5% less compared to last year’s price and eventually renewed the policy.

But, how many of you call or email your customers to inform them that it is time to renew their policies? Do you have a pricing software system in place that looks at the customer’s current policy and historical data in order to provide a valuable sales offer to the customer? Alternatively, do you have a supporting model that decides if you should email, call or rather not engage with your customer at this time?

Let me ask you another question:

2. Does the customer experience you provide, really put your customer first?

I travel frequently with my family overseas and so I needed to arrange travel insurance. I called the same insurance company as I used last year - I only had last year’s policy number and the name of the insurance company but I didn’t remember that the policy was issued through an independent agent rather than directly through the company. This time, I happened to call the company directly. Once I gave them my personal information and policy number I was expecting the customer experience to be smooth; that the voice on the other side would recognize me and have all my family’s details on tap, that they would know immediately what coverage I took last year and offer me the same coverage if there were no changes and that they would know that I hold other policies with their company, so that the discount they were advertising would apply.

But alas this was not my experience, in fact I had to provide the ID number for each family member, renegotiate a suitable policy and mention the fact that I held other policies with the firm. The loss of my time was the most frustrating part of the process because it could have been avoided had the insurer had a system in place to retain data from our previous engagements.

And why do I tell you this, because insurance companies are often not using customer data that it collects in an effective way. In fact, many insurance company’s CRM systems do not even capture customer information in a way that provides the agent or representative with a comprehensive view of the customer (case in point), let alone, using data for more advanced analytics that can drive pricing, marketing and servicing decisions.

You may be asking yourself why you should care about my personal stories. As a statistician, I often find myself explaining to executives (mainly) as well as pricing and product managers, why they should move away from managing their businesses based on anecdotes or personal stories. However, I think personal stories can greatly help shape ones’ understanding of what should be improved when dealing with customers. I trust that this blog has done just that.

In my next blog, I will discuss what it takes to be a customer-centric organization and how analytics can help make more informed and ultimately optimal decisions with respect to our customers.