Customer experience: Where do insurers really stand?
Every industry wants to improve the experiences they provide to their customers. And perhaps more than any other area of business, companies are looking to other industries for examples, case studies, and lessons learned. Recent personal experiences with three industries highlighted how experiences have changed and how different they can be. In a period of one week, I was engaged in transactions with a car dealer, a mobile phone company, and an insurance company. You might have some guesses as to the types of experiences I had based on your own interactions or perceptions, and they may or may not align with the ones I just had. So, without further ado, here were the scenarios and some observations – especially what it means for the insurance industry.
New Car Purchase
Situation: My daughter purchased her first new car
The first reaction that most people might have it that this was a frustrating, poor experience. That, in fact, was not the case. The sales person was knowledgeable and helpful. The auto industry figured out long ago how to simplify the purchase options and price haggling. Gone are the days of walking in with printouts of the dealer cost for every option/feature and using that info to determine which features can be combined to create the right, affordable vehicle for each person. Also gone are the days of endless back and forth negotiations – will you reduce the price by $500 if we downgrade the stereo package? The proposal from the deal had four line items and a simple bottom line price. "Easy-peasy, lemon squeezy." It still took some time to get through all the paperwork – much room for improvement there. But overall, it was a relatively painless, mostly pleasant experience.
Mobile Phone Upgrade
Situation: A family member swapped an old iPhone for a newer iPhone
The phone companies MUST get it together. Maybe there are some that are better than my provider, but I couldn’t say from personal experience. (In case you’re wondering why I don’t change, I’ve heard too many complaints from the customers of other providers.) But, my provider’s plans are so complicated and obtuse that it’s a nightmare to try to understand what I’m paying for. And, if that’s not enough, the plans are frequently changing. It took almost three hours in the store to swap an old phone for a new one. And that does not count the time spent at home activating the new phone and downloading all the apps and data from the cloud. One of the culprits is the “family plan.” Like many families, my twenty-something “kids” are still on my plan. By the time all the various devices (phones, tablets, telematics devices, etc.) are tabulated, there are many “lines” that are part of the plan. And every time you call the provider or go into a store, they have a “new plan” that will be better for you. If you are really a glutton for punishment, choose the option of a full paper statement every month. It can easily be 50+ pages. Seriously? It is way past time to think about the customer experience.
First Time Insurance Buyer
Situation: Purchase of a new auto insurance policy
My daughter called the insurance company to get insurance for the new car. The agent recognized that it was her first time buying insurance and asked if she wanted to understand the coverages. She said yes, and he proceeded to carefully explain every coverage and the options she had, which was greatly appreciated. In addition, the agent discovered that she just moved into an apartment. She thought she had purchased renter’s insurance through the complex, but he helped her understand that the coverage was only for the structure, so he sold her an inexpensive policy to cover the contents. Plus, with two policies, she got a discount on her auto insurance that almost made the renter’s insurance premium a wash. She walked away with a positive view of the insurance company.
One thing these three situations have in common is that the experience was all delivered primarily through humans – not through digital self-service. In each case, the transaction was heavily aided by digital systems, with the agents/salespersons using tablets or desktop computers. All three products were complex, which made it preferable, if not necessary, to have a human intermediary explain and discuss options with the customer. Also, even with the easy car purchase, maybe with the insurance purchase, but especially with the mobile phone purchase, there are opportunities to simplify the product and the process.
From an insurance perspective, this example demonstrates why I have a contrarian view about agents in general. I believe that agents, brokers, advisors, and other human intermediaries will be around insurance for a long time in most lines of business. Auto insurance is deemed a commodity, and many will expect sales to all be conducted by digital self-service – the agents will be gone. But even in that line, there will be a role for agents for some time to come. More and more people will purchase auto insurance, term life insurance, renter’s insurance, and others online over time, but it may be a long time before we reach the tipping point where more policies are sold online than through agents. This does not mean that insurers and agents should be complacent. In fact, an aggressive plan for digital transformation for both groups is mandatory to remain relevant and competitive in the future.