Why personalization is the key differentiator for forward-thinking insurers

As insurers, we know that satisfied customers define the success of our business. Yet what customers expect from their insurer is changing. Digital experiences across most sectors have become personalised, mirroring and sometimes anticipating our individual needs. It’s no wonder that customers expect the same tailored service from their insurer.

A more personal approach to insurance doesn’t only translate to customer satisfaction. Accenture’s research has shown that insurers can achieve profitable growth of 5 to 15 by taking a personalised approach to addressing customer needs. In our view, the successful UK insurance company of the future will need to become a ‘living business’—an organisation that can unlock sustained growth by continuously adapting to the evolving needs of its customers.

Why do we need to focus on the customer experience?

Customer loyalty is vital. In fact, it could be the differentiator for insurers as they race to adapt in a fast-changing market. Yet aligning to the ever-evolving expectations and attitudes of insurance customers is not as simple as it used to be. Previously, insurers could rely on building loyalty slowly and steadily, through efficient service or benefiting from customer inertia. But with the rise of price comparison sites, insurance is now seen as a commoditised, generic product. Customer loyalty is low as they seek the lowest price possible. As you can see in the diagram below, this is compounded by low customer trust. Only 29 percent of UK customers say they trust insurers, and an even smaller 21 percent say the same about insurance brokers. This is particularly worrying as 45% of customers rank trust as the biggest factor when deciding on a purchase.

The prize for personalisation

If UK insurers can adopt and embed a customer-centric mindset to become a living business, the payoff is huge. Our calculations predict that new technologies and business models can add up to US$375 billion to the global growth potential of the insurance industry over the next five years. Forward-thinking insurers will unlock as much as 5 to 15 percent of trapped value across areas ranging from lead generation and cross- and up-selling to customer retention. Insurers will also witness significant cost-savings, from operational efficiency to increased returns on marketing investments.

What does a customer-centric approach look like?

Simply put, a customer-centric insurer is one that is in touch with customers’ changing mindsets. It goes beyond traditional methods of segmenting the market and identifying the real factors that lie behind customer loyalty. If required, it adopts new business models that can tap into previously unexploited sources of revenue.

If insurers master the five capability sets depicted in the diagram above, they will outpace competitors in both revenue growth and market-share gains.

How can insurers personalise at pace?

Change needs to be intentional, anchored in data and complemented by the right technology. We’ve identified a clear path for insurers to achieve this growth through three steps that take a test-and-learn approach.

  • Step 1: Prioritise. Identify the greatest opportunities for growth in terms of customer and business value.
  • Step 2: Experiment. Begin experimenting with new customer propositions and experiences (‘treatments’) to capture those opportunities.
  • Step 3: Optimise. Select the best-performing treatments and roll them out to a wider customer base.

A living business in action

In a changing, competitive and high-churn insurance market, Accenture worked with a large UK insurer that was facing significant challenges with customer retention. Customers weren’t sticking around, and those that were, were buying fewer products. The insurer’s legacy technology made it difficult to access prompt data and valuable insights. To add to the pressure, the client had been acquired in 2018 and needed to find ways to increase revenue in the 2019 fiscal year.

Our client needed to shift its workforce culture to become customer-centric, supported by the right technology and the services its customers desired. We were up for the challenge and broke the transformation into two key components: people and technology. We led initiatives to break down barriers and silos in the organisation and combined this with training and improved technology systems. With a fresh cultural mindset, employees were empowered to make data-driven decisions and engage with customers at the right time, with the right offer.

Bringing out the best of people and technology enabled our client to overcome key challenges. It’s now in a much better strategic position and is delivering a vastly improved experience for its insurance customers. The business has seen a 3.5 percentage point increase in customer retention, a figure that is expected to increase to 7 – 9 points through optimised machine learning. Enhanced data insights have enabled customers to receive better targeted offers and communications.

Getting personal is simpler than you think

No matter what stage your business is at, it is possible to enrich the way customers engage with your products and communication. By performing the three steps of prioritising, experimenting and optimising, you can start pivoting towards becoming a ‘living business’ today.

To read more insights on personalisation and the UK insurance customer, download and read Accenture’s report.

If you would like to update your business to one that is more customer-centric, contact me.

This is the first article in my series on personalisation for the UK insurance customer. In my next post, I will unpack just how to identify the greatest opportunities for growth in terms of customer and business value in your business.

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