The future of customer management in insurance

  • Financial Services
  • Solutions
  • Christian Maier
  • 2022
20 September 2022

Customer management in insurance: a man and a woman sitting at a desk

What exactly does customer management mean? In many insurance companies, the term customer management stands for pure customer administration—i.e., a database with various customer contracts and transactions. Due to long run-time of contracts and few points of contact between the insurer and the insured—normally limited to the conclusion of the contract, a claim submitted, and the termination of the contract—the available data is often fragmented and outdated.

In addition, multiple databases for the different risk carriers often coexist in parallel. Important lifetime events and potential starting points for sales activities are not systematically recorded; only a few fully automated processes exist.

Marketing and sales then try to build up their customer communication and sales activities on this basis. The results are irrelevant information, inappropriate customer approaches, incorrectly addressed customer needs, or even the same communications sent multiple times. This leads not only to unnecessary costs, but above all to countless wasted sales opportunities—which has a significant negative impact on insurers' earnings.

Customers are becoming more demanding

What's more, insurers are now meeting customers who are becoming increasingly demanding. After all, in other areas of their lives, insureds have become accustomed to fast and straightforward digital services and automated recommendations. Today's consumers are increasingly difficult to persuade to interact if they do not feel they are receiving tangible added value.

At the same time, the insurance industry has been slow to shift significant portions of its insurance business online.

If we look at these two developments in combination, massive risks become apparent. On the one hand, it is questionable whether insurance companies will be able to maintain their sales volumes in the future if they do not respond to these developments. On the other hand, there is the risk of losing substantial shares of business in the future to potential new market players who actually place the insured at the center of their activities.

Changing your own view of customer management

To meet these challenges, it is first important for insurers to change their own view of customer management. Put simply, from capturing data to actively using it to enable constant highly automated customer interaction that puts the customer's interests at the center.

How can we move in this direction in the insurance industry?

There are two starting points for this:

  • First, we need to take customer interaction to a new level, responding more quickly while ensuring that the information obtained is used.
  • Secondly, it is more important than ever for every company to align its actions consistently with its customers—in other words, to live true customer centricity. Ultimately, this means no longer managing customers at all, but rather allowing customers to manage the insurance provider in a certain way, allowing the customer's needs to drive and control the insurer's decisions.

To accomplish this, the first step is to really understand what customers want.

What moves customers, what expectations do they have of their insurance partner?

Collecting this information in detail is a lengthy and ongoing process that requires intensive customer interaction. Appropriate operational processes must be set up for this purpose, such as genuine complaint management combined with regular evaluation of the data received and active questioning of customers.

The expansion of existing digital processes provides additional support for data acquisition, as the number of customer contact points is expected to increase significantly once it becomes easier for customers to interact with their insurer in a straightforward manner.

At this point, we are now faced with the challenge that not all details are immediately available to further sharpen one's service. Therefore, the recommendation is to first focus on some key improvements that can be considered universal. These include reducing the complexity of the solutions offered.

Most customers experience processes that are far too complicated, often only available digitally in parts or even not at all. Feedback on inquiries usually takes several weeks, and there is hardly any interaction between conclusion and claim. Complaints are far too often ignored instead of being treated as valuable customer feedback. Customer touchpoints are infrequent, and customers usually experience them as complicated, time-consuming and annoying.

So how can an insurance company act in this situation to actively drive the aforementioned initiatives and improve its own positioning?

Insurers must create workflows and use IT resources efficiently

The answer to this is to automate processes so that work "flows" better, as the word "workflow" expresses it beautifully. Insurers need to create workflows that are linked to their backend systems to ensure that data is collected and processed in an automated way. But IT resources are scarce, making it difficult to implement all the workflows required.

Therefore, we additionally recommend the consistent implementation of low- and no-code applications, which enable non-IT professionals to create fast and uncomplicated solutions and processes in order to be able to react quickly to customer requests. The workload for IT teams will be reduced significantly when simple, uncomplicated solutions can be created directly in the departments concerned.

But real IT specialists also benefit and can achieve significant time savings in their daily work through the use of low-code solutions; they can reduce the programming effort by more than 80 percent in some cases. Given the extreme difficulties in recruiting a sufficient number of IT experts, this is an essential factor in meeting the challenges of the future.

Competitive advantages through automated workflows arise in many areas

Let's first look at the essential service of an insurance company, claims processing. Claims notifications could be completed by the customer in just a few minutes. Once they have been entered in a corresponding portal, automated workflows based on this information take care of the remaining steps and accelerate claims processing. Immediate payment would be technically possible, creating trust and customer satisfaction. Of course, checks can be added to the workflow to protect the insurer, such as additional approvals or fraud detection.

Until now, changes to contracts, addresses or accounts have usually been made by clerks or call center employees; digital self-service solutions enable customers to make these changes themselves quickly and easily at the desired time. This is supported by AI-based chatbots that process customer inquiries 24/7.

All these measures significantly reduce the complexity for the customer and at the same time the workload of the call center and clerk teams. They lead to significant cost savings and higher customer satisfaction while ensuring more up-to-date data. The improved data quality in turn increases the effectiveness of sales and marketing activities. Information gained can be used for targeted marketing campaigns and automated transfer of leads to the sales teams, thus having a direct positive impact on company revenues.

Also, backlogs in processing are reduced as processes are automated and clerks have more time to focus on the important issues. Simple repetitive tasks are completed automatically, which enhances the role of the clerk and increases employee satisfaction.

Increasingly automated, individualized communication with the customer after all interactions is also conceivable. Such feedback can be automatically fed into the processes. This has two positive effects: the customer is constantly informed, feels well looked after, and the processes are successively improved.

Furthermore, customer portals can be used to record requirements and provide information to the customer. Dashboards give the end customer an overview of their situation and thus create clear added value and sales opportunities.

All in all, fast uncomplicated customer-oriented unified digital workflows create a completely new positive customer experience and thus satisfied customers. At the same time, insurers reduce their costs and create new sales potentials.

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