Customer management in the insurance business 2019: It all comes down to personal contact
Discussions of customer management within the insurance industry have long focused on the constantly changing needs of customers, the impact of digitization and the development of a successful customer journey. Two thirds of insurance management executives consider customer experience management in their company to be important or very important. But is this assessment reflected in their companies’ actions? And how do customers perceive the situation?
Majorel Germany and Versicherungsforen Leipzig surveyed more than 600 customers and 70 management executives from leading insurance companies on this topic. The new study “Customer Management In the insurance Business 2019” analyzes the relationship between insurer and customer along the customer journey in the insurance industry. It begins with an information and consultation phase (phase 1) and ideally continues with a (positive) purchase decision (phase 2). During the contractual period, good customer support is important in cases where it is required (phase 3), as well as in cases where claims are made (phase 4). The central issues in each of the individual phases of the study are as follows:
How and where do the demand for and the provision of insurance products arise?
How do customers make purchasing decisions and what added value is provided by insurers who facilitate the conclusion of an agreement?
What kinds of services do customers want? What services do insurers offer?
What are the customers’ experiences in the event of a claim?
Insufficient use of opportunities for customer communication
The section of the survey on the information and consultation phase indicated that customers do not actively seek for information about insurance products until their personal circumstances change. In that sense, communication only begins when there is already a demand for insurance products. Insurers, on the other hand, rarely contact their customers proactively – and consequently, they are missing out on a significant potential. “One third of management executives surveyed indicated that they did not actively communicate new products and services to customers,” says Madeleine Kracke, Manager Sales & Business Transformation at Majorel Germany. In fact, according to Kracke, insurers rarely use regulatory changes or loss events with significant media impact as an opportunity to contact customers and offer them relevant insurance products.
This means that thus far, the customers themselves have been the ones initiating contact. But how do they search for insurance products? Internet research, including insurance company websites, is the number one communication channel that customers use. This is closely followed by recommendations from friends and family, as well as comparison websites. Modern channels such as apps or virtual assistants play a less important role. Insurance companies, by contrast, do not consider friends and family to be particularly relevant here. From their perspective, insurance brokers continue to play the most important role in providing information to their customers. In light of this, customers’ friends and family are another source of untapped potential for insurers; programs in which customers refer their friends and family are a good example here.
Personal consultation is still important for purchase decisions
According to the study, personal contact between the insurer and the customer is the most important point of contact during the second phase of the customer journey, the purchasing phase. “Customer demand is in line with what insurers are offering here. When customers decide to purchase an insurance product, they often contact the insurance provider directly – via the broker, the service center or the company’s website, for example,” says Kai Wedekind, Head of Sales & Service Competence Team at Versicherungsforen Leipzig. The insurance broker is much more important to the customer during the purchase process than during the information phase. 64 percent of customers indicated that they purchased an insurance from a broker. And another interesting result: A little more than 40 percent of survey respondents had purchased an insurance product from an insurer’s website or a comparison website at least once. Consequently, it would be advisable for insurers to make use of a range of channels during the purchasing process.
Communication channels are just one aspect, however. Value for money is the most important factor for customers when purchasing insurance. The comprehensibility of the information (70 percent), the ease of the process (36 percent) and the customization options available (42 percent) were also relevant considerations in the decision to make a purchase, according to the customers surveyed. Management executives felt that a personal consultation before a purchase was the most important factor (more than 68 percent). Insurers also rely on service quality to set themselves apart from the competition. It is all the more important that insurance companies communicate the benefits of their service and, thus, its (financial) value.
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Personal, fast and easy
During the usage and support phase, after the insurance agreement has been signed, customers prioritize three attributes when it comes to customer service: It has to be personal, fast and easy. 45 percent of survey respondents felt that digital communication channels such as e-mail and chat were important, and 35 percent wanted self-service solutions. More than 60 percent of customers surveyed said that they preferred a personal consultation when they had questions about their insurance product. This demand is covered by the fact that the insurance companies offer options for personal contact and a permanent contact person within the company. Insurers take corresponding measures to appropriately manage customer relationships during the contractual period, and the same applies to claims and benefits management.
In cases where claims are made, customers primarily prefer personal contact with the insurer. How quickly insurers respond to inquiries is also a vital factor. Customers rarely use digital services in such cases, however, and as a result, digital services do not achieve their full potential in terms of added value. Customers generally contact the insurer directly in the event of a claim. And 75 percent of customers contact the service center in this case – by telephone, e-mail or chat, for example.
Conclusion and recommendations for action
“At a time when it is nearly impossible for insurers to differentiate themselves from the competition through the products they offer, customer experience is becoming a crucial factor in giving companies a competitive edge. There is potential for optimization here, and it could have a major impact on customer loyalty,” says Thomas Dietsch, Vice President Sales & Business Development at Majorel Germany. Customers generally do not take an interest in insurance products until they have an immediate need for them. For this reason, it is becoming increasingly important for insurers to approach customers proactively and inform them of new products, benefits or regulatory changes and the associated risks. When customers need an insurance product, they generally decide to purchase one in the context of a direct conversation with an insurance broker or the service center, or via the website of the insurance company. Value for money is a decisive factor in their purchasing decisions. But the customer journey goes far beyond that. In cases where customers need support or in the event of a claim, service that is personal, fast and easy will always come out on top. Consequently, the experts at Majorel derived the following four recommendations for action from the study results:
Insurance companies should focus more strongly on customers’ friends and family. As customer’s friends and family are an important point of contact for the customer, particularly during the information and sales phase.
Customers need information to recognize the added value of products and services. For this reason, insurance companies should concentrate on communicating their services to customers.
Customers are open to an active approach by insurance companies. Insurers should be more proactive in making use of opportunities for communication to tap the full potential of their customer relationships.
Personal contact should remain the focus of customer communication in the future, as well – but insurers should make sure to take full advantage of the range of communication channels available.
It will be fascinating to observe how customers’ behavior and channel preferences develop, especially in the areas of consulting and sales. In insurance and other industries, it will become increasingly important for companies to visualize developments based on customer experiences as part of the customer journey and to reorient themselves based on those insights.