The future of customer service in insurance

As the cost-of-living crisis continues to squeeze consumers and businesses alike, many people are reviewing their insurance policies to see if they might find a better deal with a different provider. Against this backdrop, it’s more important than ever for insurers to focus on the customer experience (CX) they provide to boost their renewal rates and maintain profitability.

That’s the view of Fady Khayatt, partner at management consultancy Oliver Wyman, who says that, when you offer “a positive experience, you see that people become less price-sensitive. There’s a clear link between experience and retention. Retaining customers and not needing to reacquire them can have a big impact on any insurer’s overall economics.”

If an insurance firm can engage effectively with customers at their point of need, that could also encourage them to buy more products from it, Khayatt adds.

Some insurers are seeking to grow their business by creating more self-service channels enabling customers to manage their policies or make claims in their own time. Esure, for instance, has introduced an online portal designed to give its policy-holders maximum control.

“First of all, they’re not having to queue up to speak to someone on the phone,” explains Alison Edge, data product owner at Esure. “They can input information at their leisure. This means that, if they haven’t got the right details to hand, they can come back to the portal later and pick up where they left off.”

This is not something that customers can do if they’re talking to an agent in a call centre.

Understanding the customer

Digitising the process also enables Esure to gather more data throughout the customer journey, helping it to gain actionable information about policy-holders’ behaviour.

“We used to know whether someone had purchased a policy or cancelled one, but now we can see every step of a customer’s journey from the moment they log in,” Edge says.

This can provide near-instant feedback on steps where users are commonly abandoning a given process, enabling the company to tackle those problem areas and improve conversion rates.

“We can see where along the journey they’re likely to have dropped out, which gives us some real insights into what the pain point might be,” Edge says. “We’ll try to improve the experience at that stage and then compare performance to see whether our changes are making a difference. We’re constantly refining our journeys and trying to make them as pain-free as possible.”

Insurance companies must therefore ensure that the CX they provide is of a consistently high quality across the entire relationship, from sales and onboarding through to claims management and renewals.

Nelson Castellanos is chief partnerships officer at HDI Embedded, a provider of embedded insurance in sectors including retail, travel and events. He says that his firm is “really focusing on delivering an excellent customer experience across all the different touchpoints”.

That is arguably even more important for embedded insurance providers, Castellanos adds, because a poor CX can damage the reputation of the brand that’s selling the cover. Mess that up and the insurer risks losing hard-won partnership deals.

“Most embedded insurance solutions are white-labelled, so you’re really playing with the brand of your business partner or distribution partner. The service you provide could really affect their customer satisfaction scores,” he says.

Digitising the claims processes

The efficiency with which claims are handled is likely to have a big bearing on satisfaction scores and retention rates. Because HDI Embedded has digitised the entire claims procedure, they can be processed more quickly than a traditional manual system would allow. Castellanos says that his firm will often resolve a claim in three days – even sooner in some cases.

While CX is an important factor when it comes to policy renewals, customers also want the best possible price, of course. Given that risk determines price, insurers must seek other ways to reduce costs, says Ed Halsey, co-founder and COO of commercial insurance broker Taveo.

One way they could do that is by cutting the amount of staff time spent on administrative tasks. By using technology to automate much of that work, insurers and brokers can not only reduce costs; they can also improve the CX, because they should be able to devote more time and resources to providing exemplary customer service.

“Technology is not about getting rid of humans – we’re not going to just automate everything and have our customers speak to a robot,” Halsey stresses. “This is about taking all the low-value interactions away from our people so that, whenever a customer calls, they get straight through to a human being with the expertise to help them.”

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The rapid advance of generative AI has the potential to reshape the insurance industry from top to bottom. Largely manual activities, ranging from risk pricing to claims handling, could be enhanced or even completely automated by firms adopting the latest GenAI tools.

“These are the lowest-hanging fruit when it comes to applying generative AI – and they’re also the lowest-risk uses,” says Rahul Kumar, vice-president and general manager of financial services and insurance at Talkdesk. “You’re not putting generative AI directly in front of your customers and you have the opportunity to test, learn and optimise by using the technology internally first.”

For instance, GenAI can help customer service agents become more effective and efficient by accelerating document searches and image scans. It can give them real-time guidance while they’re interacting with customers, Kumar adds. It can even help new agents by generating scripts to follow based on the conversations they’re having.

While GenAI can enhance internal processes, it can also be used to take the customer experience in new directions. For instance, the technology could dynamically adjust a customer’s coverage as their circumstances change.

“Imagine a scenario where you’re going on a long car journey,” Kumar suggests. “You enter the destination on your satnav and your insurance co-pilot suggests increasing your cover, because it can see that you’ll be travelling through territories more prone to things going wrong. That’s a new type of customer experience because it’s the insurer proactively looking out for you.”

Despite the potential that GenAI offers insurers, integrating it into their systems and processes won’t be straightforward, partly because of legacy technology problems, but also because players in this sector generally aren’t quick to embrace change.

“If you compare insurance with other sectors, its technology adoption has traditionally been a challenge because the industry is very risk-averse,” Kumar says. “Insurers typically take the fast-follower approach: we need 15 people to tell us that something new is working for them before we even consider talking about it.”

To embark on the process, insurers must take numerous steps. First, a mindset shift is required: insurance leaders need to become more open to adopting new tech. Second, they have to recognise that integrating AI is an iterative process, so they shouldn’t be afraid of getting things wrong as they test and learn.

“If you don’t incentivise people to fail, you’ll never get them to try out new things,” Kumar stresses. “This is about promoting an organisational culture where it’s OK to say: ‘This might not be perfect on day one, but we’ll get there eventually.’”

Insurance firms must also ensure that humans are heavily involved in any AI processes, particularly given the risks concerning so-called hallucinations – where GenAI makes fictional claims that it confidently passes off as facts.

“You need to put guardrails in place to ensure that the technology doesn’t go rogue,” Kumar warns. “Automation is great, but you must have a human in the loop so that they can see what’s going on and intervene if things aren’t proceeding the way they should be.”

Humans also need to ensure that GenAI tools are being trained on accurate information, he adds, pointing out that “the insights that generative AI outputs will only be as good as the data it has access to”.

As regulated entities, insurers have to be cautious about potential compliance problems concerning data protection, particularly when they’re using third-party tech providers. 

“Proper control mechanisms need to be in place when it comes to who can access and analyse data,” Kumar says.

A final tip for ensuring a successful GenAI deployment is not to try to implement everything in one shot. 

“You don’t have to go all in with a big bang,” he says. “Conduct internal tests first with your employees, picking a few processes where the risk isn’t that severe but the possible efficiency gains are significant.”

In other words, focus first on areas where using GenAI can achieve cost savings and then move to areas where it can generate value, such as customer-facing processes. By taking that approach, insurers can radically redesign their businesses without causing unnecessary disruption.

While a hasty implementation project will undoubtedly cause problems, such is the potential offered by GenAI that insurers must still act quickly and decisively. Indeed, Kumar’s prediction is that, “if things continue to go in the direction they’re going, generative AI will transform the industry to the point that it will be almost unrecognisable by 2030”.

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For more information please visit talkdesk.com

For many people, buying insurance is a simple matter: you purchase your cover and hope that you’ll never need to use it. That means most customers’ interactions with insurers will be at the point of sale or when something has gone wrong. The latter situation is where an insurer can really differentiate its customer experience (CX) by providing an empathetic service that builds trust and loyalty among policy-holders.

“Some insurers really focus on controlling the claims process, so they take charge of the supply chain more than others and don’t use so many third-party providers when it comes to intervention and repair, for instance,” says Fady Khayatt, partner at management consultancy Oliver Wyman.

An insurer that can respond promptly to a customer’s problem – a water leak in their property, say – and resolve it quickly will potentially reduce the damage caused and also strengthen the relationship by proving its attentiveness to the policy-holder in their moment of need.

“When a customer makes a claim, it’s during a heightened emotional moment where a good interaction has a much bigger impact than it does at other points in the process,” Khayatt says. “Players that control their supply chain closely and use it to deliver good outcomes for customers can help themselves in terms of lower claim costs, but doing so also has a big positive impact on their customer experiences and policy renewal rates.” 

British insurance firm Esure is taking a similar approach by using AI to process car insurance claims, automating the initial damage assessment and then recommending local repair services for policy-holders to choose from.

“That helps our customers get through the claims journey so much faster,” says Alison Edge, data product owner at Esure. “It saves cost for us, because the settlement time is reduced and the vehicle can get to the garage for repair more quickly.”

Personalised insurance offerings

Insurers can also use AI and advanced data analytics to hyper-personalise their CX so that all product recommendations made to a prospective customer are relevant and based on that person’s specific needs. For instance, when it comes to covering small firms, providers that can make their offerings more relatable to a particular customer’s business are likely to be more successful.

“When a small business owner feels that the conversation and the policy are clearly tailored to their requirements, you’ll typically see a clear uplift in conversions, as opposed to when they’re interacting with an insurer that’s offering products that sound a bit generic and could apply to any company,” Khayatt says.

Another way by which insurers can elevate their CX is to make buying cover more seamless and convenient by partnering with businesses and offering embedded insurance products when a customer makes a related purchase. For instance, they could offer a travel policy to a customer who’s just booked a holiday.

“For fintech firms and marketplaces, embedded insurance also increases engagement and the ‘stickiness’ of their platforms,” says Nelson Castellanos, head of partnerships at embedded insurance specialist HDI Embedded. “That’s because the more products and services they can offer, the more likely their customers are going to stay in their ecosystem.”

Castellanos reports that his firm sees conversion rates increase by 15% to 20% when partners offer insurance products that are embedded at the point of sale.

Streamlining customer interactions

Insurers should be considering ways to minimise the friction that customers encounter when dealing with them, according to Simon Thompson, head of data science at digital transformation consultancy GFT Technologies. 

That will not only help improve the CX a firm provides; it will also give the insurer greater revenue-earning potential, because customers are more likely to choose a provider that offers the most streamlined processes, he argues.

Technological advances are also creating more potential for insurers to completely redesign their offerings by thinking differently about customers’ likely future needs and how their products can be packaged.

“For example, you could have an integrated home insurance and assistance product with a chatbot and online expertise for solving problems around the home bundled with insurance, or a tool that would help bundle the right sorts of cover for a small business,” Khayatt suggests. “So you have a real modular insurance product, with AI helping to identify the right combination of products and services to offer.”

This is a pivotal period for the industry – a time in which any insurers that are slow to embrace tech to elevate their CX are sure to get left behind. That’s the view of Ed Halsey, co-founder and COO of insurance broker Taveo.

“There’s an impending explosion of AI and automation,” he says. “The brokers and insurers that can’t work out how to integrate this technology and are still operating on legacy systems simply won’t be able to match the service levels being provided elsewhere by players that have built modern, innovative tech stacks with the customer at their centre.”