Home insurers should encourage bundling with digital: J.D. Power
Bundling insurance policies increases customer satisfaction, and digital tools can help encourage customers to do so, according to J.D. Power’s 2018 U.S. Home Insurance Study.
Home insurers overall improved digital interaction channels, leading to the highest level of customer satisfaction in the history of the study, the market research firm said. However, due to the growth of insurtech, incumbent companies may not be the best at fulfilling customers in the long term.
“Making payments, verifying payments, [or] adding vehicles and drivers, are all very transactional activities in nature that the vast majority, customers would prefer to handle through a self-service platform,” says Robert Lajdziak, Business Consultant for the North American Insurance Practice at J.D. Power. “But insurers should note that the preference for digital channel interaction has notably increased for several years, across all types of interactions and all generations of customers. That evolving consumer preference could provide an opening for digital-native insurtech companies.”
J.D. Power’s previous Pulse survey on insurtech trends found that user-friendly features from new entrants are spurring their growth. A preference for using digital channels for interaction has increased significantly from 2017, across a wide range of interaction types ranging from payment verification and billing inquiries to policy renewals and price quotes, especially among younger customers.
Bundling coverages also leads to happier customers, but 20% of home insurance customers who also have auto insurance do not bundle their auto policy with a home policy, representing a growth opportunity for home insurers that insurtechs may not have access to.
“Technology is making the value proposition for bundling insurance products (and financial services products) with one institution even more compelling to customers beyond discounts. The ability to see all your products and services on a single platform or through a single app makes it easy for customers to get the information they need, when they need it, without having to track down policy documents,” says Lajdziak.
However, he added, many insurers struggle with legacy systems so even if customers are able to see home and auto in one place, if they have a life insurance policy or a specialty vehicle policy with the same insurer they may not be able to see those. That’s an area insurers can improve.
“Technology in many ways is making the long-time promise of cross selling financial services and insurance plausible and has aided in the breakdown of the traditional industry silos of banking, investments, insurance,” he concludes. “The digital strategy should reflect both the ease of doing business but also deepening customer relationships.”