How life insurers can kick-start digitalization efforts
Customer interactions in life insurance can be few and far between. More than half of customers (57%) have no touchpoint with their insurer throughout the year besides paying the premium. That lack of contact is devastating to customer satisfaction: It shifts the entire customer perception of value to premium payment, without consideration for the true value of the policy. What’s more, this lack of a regular, positive touchpoint with customers puts life insurers at a disadvantage in broadening relationships with current customers.
The obvious solution to this problem, as so many other industries have found, is to expand digital touchpoints with customers. We’ve seen the trend unfold in retail banks, who now count 30% of their total customer base as digital-only; property and casualty (P&C) insurers, for whom 45% of all auto insurance shopping interactions are now omnichannel; and the mortgage industry, where 59% of Millennial borrowers are now shopping for loan information online.
Sustaining a strong digital strategy to assist customers from the initial phases of comparison shopping through account maintenance and customer support is a foundational component of customer experience and overall customer satisfaction.
Unfortunately, life insurers have fallen behind in this digital evolution. The phenomenon is most pronounced among traditional carriers. Unlike P&C-focused and retirement-focused insurers, this group has been slow to invest in upgrading legacy systems and digital experiences because, frankly, there was less of a need for them to do so. With roughly 90% of life insurance policies being sold by agents and few reasons for a customer to access their policy online, the demand for a robust digital offering simply wasn’t there. Often, traditional life insurer websites don’t even allow customers the self-serving capabilities to change their mailing address.
However, as the economy grows and the digital native Millennial generation – the eldest of whom are just entering their 40s – starts to shop for their first policies, many life insurance customer journeys are now beginning with a web search, making the website the first touchpoint insurers have with a prospective customer.
The digital shortcomings of traditional life insurers are starting to become clear in our analysis of customer satisfaction with insurer websites. Specifically, we’re finding that life insurers with a P&C or wealth management/retirement-oriented pedigree have been far more successful wooing life insurance customers on the web. In fact, P&C insurers with a primary business in auto insurance have the highest overall website customer satisfaction scores, followed by retirement-focused firms that also have large wealth management businesses.
For the traditional life insurers this is a real challenge because banks and P&C insurers are likely to have already established strong digital relationships with these customers which can benefit them in several ways:
1. Credibility with the customer for a good service experience in the past
2. Ability to bundle and view all their policies in a single customer platform
3. Ability to anticipate the need for life insurance and make the offer before the customer shops around
The P&C- and retirement-focused insurers have higher website satisfaction for several reasons. First, they can take advantage of the web platforms developed for their other lines of business that have more frequent interactions throughout the year. Second, more frequent use of a company’s website increases customers’ familiarity and therefore ease of use. Lastly, integrated systems, at least from a customer experience standpoint, create an ease of doing business factor that can only be achieved when customers have multiple products and services with the insurer.
That doesn’t mean it’s too late for traditional life insurers who have historically underinvested in digital. If nothing else, all life insurers should consider re-evaluating their digital strategy and pumping new investment into their websites and digital offering for three key reasons:
1. Customer service portals and consumer-facing websites make customers aware of other products and services available which ensures the company is top of mind the next time that customer is in the market for such products – it also means insurers are less reliant on agents for all revenue.
2. Effective websites can be a valuable sales channel and the market is still looking for a life insurer to emerge as a leader in online sales. Most customers shopping for insurance begin their search online. While agents still close the majority of auto insurance sales most quotes are via the website and an agent or rep follows up. However, effective websites with assisted online chat features are twice as effective at closing new business online because it provides customers a convenient way to research and get information but then validate it with a professional.
3. Digital provides a scalable way for life insurers to re-engage customers with the lowest satisfaction scores and therefore the least likely to recommend their life insurer to friends and family—an important source of new business.