Last week I shared the three fundamental questions that every insurer must answer to succeed in a new customer-driven world. Today we’ll take a closer look at the first, as we transition away from being a product-centric insurer, how far–and how fast—should we proceed toward customer-centricity?
The steady commoditization of insurance products is eroding both insurers’ margins and differentiation. Twenty-one percent of respondents in our consumer survey believe most carriers are the same in terms of their products and services, a 7 percent increase on the previous year’s finding. This explains why price is the main reason for customers to switch providers (46 percent included it in their top three), followed by value for money (38 percent).
While many insurers have improved their customer-centricity, only a minority are actually putting the customer at the center of their business. Our Digital Innovation Survey found that 82 percent of Digital Transformers have invested in digital channels and technologies to advance customer-centricity and provide tailored customer experiences across all products and channels. Only 56 percent of the Digital Followers have done so.
Digital Transformers recognize that what is differentiating now isn’t the product, but the customer experience. But how fast should the transition to customer-centricity happen?
The simple answer is that industry leaders will go as far and as fast as their customers demand – and market conditions require.
Most carriers know they need to improve their understanding and segmentation of customers, enhance their ability to tailor their propositions and experiences to the various segments, and strengthen their multi-channel capabilities. Yet even this may not be enough. To give customers what they truly value, many will have to partner with other companies – probably outside of insurance—to form ecosystems that offer a broad and innovative range of products and services.
It’s also essential that they rebuild customer trust: only 27 percent of customers have a high estimation of their insurance providers’ trustworthiness. This means insurers must find ways to provide additional value to customers and communicate more frequently – and relevantly – with them. And they need to improve the consistency of their interactions, making every touchpoint a trust point.
In spite of these facts, only 25 percent of insurers have a single view of the customer, and 35 percent are working to achieve these goals – so less than two-thirds of our sample are committed to customer-centricity.
There are exceptions. For example, Allianz’s free mobile app, Ma securité, combines technology with a true customer focus by delivering information on the risks users face in their current location, and allows them to plan to keep their families and property safe. With this service, Allianz is positioning itself as a trusted and concerned source of assistance – not just a purveyor of product.
What is your company doing to advance customer-centricity?
Next week we will examine what it takes to be a Digital Transformer.
For more information download the report: Capturing the insurance customer of tomorrow: Three key questions to guide success
Here are some other reports that may be of interest: