At this stage of this blog series, I’d like to take a step back to define what we mean by “customer-centricity”. It’s an elusive concept, one that is more easily recognized when it is absent than when it is present.
Like large corporations in other regulated industries and in sectors that lend themselves to natural oligopolies and monopolies, insurers have long felt that they could overlook their customers’ needs and preferences in favor of internal issues such as production and costs.
Whereas telecoms utilities and banks now recognize that they can no longer be internally focused at the expense of their customers, insurers have been slower to change their ways. There are many reasons for this:
- Their focus on risk.
- The belief that regulation shields them from competition.
- The argument that customers don’t understand insurance and its products.
- The belief that customer service should be left to brokers and agents.
- The assumption that customers have a low propensity to switch providers as well as limited alternatives.
Changing this outlook means accepting that each current and prospective customer must be at the center of the insurer’s business and operating models. Digital technologies are a prerequisite to this goal, but are not sufficient on their own. In today’s world, digital + customer experience = customer-centricity.
The real challenge of customer-centricity is to develop the ability to understand the customer’s needs, and to address them by providing personalized, relevant and remarkable experiences that are relevant to each individual’s preferences, circumstances and point in time.
As such, a customer-centric insurer should build its strategy, products, distribution channels and operations around its customers. The vision must be to deliver experiences that significantly increase the value of every targeted customer and of the company as a whole.
The figure below shows the foundations of customer-centricity:
In the next post, I’ll consider the digital enablers for the journey to customer-centricity.