Insurance is one of the oldest industries, dating back more than 4,000 years to Babylonian times – where policies to protect merchants’ goods from bandits were created.
It shouldn’t need saying that none of those Babylonian insurers survived to today – but by failing to meet the expectations of today’s customers, many modern insurers are inviting the same fate, without the excuse of millennia of history in-between.
Our own research found the insurance industry struggles to meet the expectations of modern customers, with 93 percent of customers wanting more choice when it comes to how they communicate with insurers. If insurers fail to meet this demand, they could find themselves losing customers sooner rather than later, as more dynamic companies enter into the market.
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Beware the Amazons
Earlier this year, tech giant Amazon announced it was entering the insurance industry by investing $12 million in Acko technologies – stating it wanted to back insurance companies which focus on improving customer experience. A behemoth such as Amazon shaking things up in the sector could be bad news for traditional insurers; much as, when Google quietly experimented in investing in the market a few years ago, many commentators said it was the beginning of the end for the old guard. The issue is Amazon knows its customers in minute detail, thanks to the wealth of data it has already gathered across its services – from shopping to books to music and film.
For instance, if we can’t yet calculate premiums based on individuals’ favoured entertainment, we can be sure someone is working on the equation. Amazon is well-placed to use this knowledge, and its experience as a global business, to provide exquisitely tailored products to customers. This approach may just help them to win over customers who are disgruntled with the current ‘one size fits all’ way insurers operate; to combat this, insurers will have to move with the times and embrace customer experience as a pillar of their business.
Sooner rather than later
Some insurers have attempted to fight back against the march of the tech giants. Aviva, for example, has invested billions in its ‘Aviva Digital Garage’; Aimed at bolstering its systems and products provided to customers through the funding of tech start-ups, the investment has already led to new products such as a dashcamthat helps provide lower costs for customers. However, investments such as these won’t be enough to prevent seasoned customer experience experts like Amazon from turning the heads of customers, should insurers fail to recognise the need to communicate with individual users. The overarching threat remains; to be competitive in today’s constantly evolving market, insurers need to be on the front foot and show customers that their products and customer experience are the best in the business, to avoid losing them.
Time to wake up
The older players in the insurance market must work on their customer experience – a crucial element of which is how the business communicates with customers, or fails to. With that in mind, here are three strategic steps insurers need to follow to survive the Amazonian threat.
- Get to know your customers:It isn’t just about ensuring the product you are providing fits the traditional criteria such as being cost effective. Everyone is different and wants to be treated as such, so understanding customers and their preferences is crucial. If a customer wants to go paperless and receive all communication via email, then be sure not to send them a letter. Companies such as Amazon are such a threat because they know their customers well and keep vast data banks of their preferences and contact habits. Treating your customers as individuals rather than just a number on a screen will go a long way to helping keep them.
- Have a conversation with your customers:Communication is a two-way street; it’s important to listen to your customers and share any information they need to know. Making sure your staff are available to provide support and answer questions via customers’ preferred communication method – whether that’s traditional telephone or an online chat. Additionally, by proactively providing information when needed, rather than waiting to be asked and having to react, will go a long way to providing a better customer experience.
- Use your data in an effective manner:People want to feel as if they are known by their provider instead of just another number, yet too many organisations are guilty of not using the data they have on customers to its full capacity. Even simple details – such as when a customer has made contact, the issue they were concerned with, and details of the conversation – can be like gold dust if they are easily referenceable the next time that customer gets in touch. By building up this information, insurers can ensure they have a complete history and an ongoing relationship with their customers, rather than a random sequence of unconnected communications.
Challenge the challengers
When an established name enters a new market, existing players will always be concerned about their future. Amazon’s investment in insurance is a wakeup call that could help make the industry as a whole stronger. Surviving the potential Amazonian threat means rethinking the way insurers talk to their customers and following the three steps of getting to know your customers, having a conversation with them, and effectively using their data. Insurers need to make people feel as though they are being listened to and not just another customer reference number, otherwise they may just find themselves becoming part of the history books.