In his latest article, Jon Lott, Customer Solutions Director for INSTANDA life and health, argues its ‘back to basics’ when it comes to meeting customers wants and needs. So how can insurers react?
Customer research by the CEB, (now Gartner), has demonstrated that customer effort is the key driver of customer engagement in insurance. In large volume quantitative research (over 97,000 customers), they have demonstrated that low effort is the principal driver of NPS and loyalty (repeat purchase) and that low customer effort drives down costs and increases employee satisfaction (The Effortless Experience: Conquering the New Battleground for Customer Loyalty, CEB 2013).
This research demonstrated that customers don’t want to be “sent flowers” when it goes wrong- they just want no mistakes in the first place- and they don’t want excessive choice either, between products that are usually poorly explained, or which are just plain unintelligible. They just want to be confident that they will be looked after if life deals them a hard blow; that they understand what they are covered for, and for how much, and that the insurance company will simply do what they said that they would do. Likewise, to keep customer effort low the insurer needs to know that it can trust the customer.
But currently the industry makes life insurance much more complicated than that. With copious amounts of jargon, how many people can really tell you the difference between Income Protection and Critical Illness cover? Even when buying there are in the main only single offers so multiple purchase points are required to get covers and even then the cumulative effort deters even the most ardent insurance buyer. As an example for decreasing term life, one major insurer takes three pages of their website to try to explain what that is!
No wonder so many people are underinsured and at risk of losing their homes and the ability for their families to be provided for. ("Only 1 in 10 people feel confident they/their family would be financially protected in the event of a life/ health shock." Swiss Re 2015)
So, it’s all about keeping Customer effort low
It's back to basics with meeting the customer’s wants and needs in as frictionless way as possible. If customers are offered products that they can understand and can clearly see provide them with the cover that they know they want, so effort reduces. If they can purchase it by answering simple questions that they can also understand then effort reduces again.
Even better, to use open banking APIs, such that the customer doesn’t need to be asked these questions at all.
Rather than make them work to understand and buy traditional products, simply get them to think about questions like: What worries me? If I’m ill or injured and can’t work, who will pay the bills? How will the family cope if I die?
Engaging with the customer in their language enables cover to be provided that will reduce the customer’s worries; cover that the customer understands.
Effort is reduced through personalised experiences
We’re in a world where consumers expect more personalised experiences. Starting from addressing needs and wants, a personalised experience makes it easier for the customer to see that these are being satisfied. They can immediately see the relevance if they can see their own situation reflected in the language and the product; their own concerns played back to them in their language; how their situation and concerns are directly assuaged by the straightforward product in front of them. It’s all about effort.
Personalisation reduces effort through how the product offered clearly matches the customer’s needs, and budget; the language used, terminology, and questions are all clearly relevant to the customer. And the number and complexity of questions are minimised through external data feeds too.
However, traditional life insurance products are not designed in this way. Existing inflexible solutions and legacy platform constraints mean that insurers are struggling to react to stay current and meet rising customer expectations, driven by those businesses they engage with every day, and who do understand effort: Amazon, Google, Facebook, Apple etc.
Protect What is Important to Me
At INSTANDA our fully configurable platform is being used to develop innovative new customer propositions which are commercialised at scale. Not just products, these propositions are an experience that delivers to customers the clarity, ease of purchase and reassurance that they want. They do this while retaining the underlying traditional protection and other products that technical insurance professionals know how to provide.
The answer is at the customer’s fingertips
This means being wherever the customer is. Whether they are on their banking portal or on a social media app. It may be via an ad triggered from somewhere else. Wherever it is, it has be a low effort, familiar, easy means of engaging with customers and easily fits within their daily life.
By asking a series of simple questions, customers can design the product that suits their needs. The kind of questions need to relate to their daily life and concerns:
Then simply ask about their income and outgoings, adding in data enrichment, to reduce the number of questions needed to underwrite and price the product.
This output is a simplified view of the cover against each of the things they are worried about. Using simple interfaces to tailor the cost and cover levels according to their own needs. The products are subscription based, offering monthly dial up or down of covers or driven by shift patterns from time sheets for gig economy workers.
The above describes a world that is already up and running on INSTANDA.
The challenge to deliver
The INSTANDA platform enables these products and experiences to be designed and built by business teams: Marketing, Customer Experience, technical, underwriting; with minimal IT support.
It allows the full end to end functionality from the back end:
Through to the front end:
Not just at pace, but at scale too due to the cloud-based infinitely scalable platform, and so the “protect what is important to me” product becomes a reality.
INSTANDA enables rapid market entry and growth at full scale- these products are not prototypes; they are fully commercialised and infinitely scalable and optimisable.
Ingenuity is alive and well. And it starts with INSTANDA.
To learn more about how INSTANDA can help you get in touch: