How to Keep Pace With Changes in the Insurance Industry

The customer experience in the insurance industry is a critical aspect of business, but it can be difficult to meet customers’ needs in a changing space.

How to Keep Pace With the Rate of Change in the Insurance Industry

The insurance industry is no stranger to change. If you were to look back, the sector has been in a constant state of evolution since its inception. However, there is a stark difference between today’s change in the insurance industry versus that of the past. Change has been occurring at an unprecedented rate, largely shaped by the rapid use of technology that accelerated during recent events.

Living and working from home for months on end have led to a great deal of shifts — chief among them being new customer expectations. People have simply become more discerning about which brands they’re willing to do business with, so it only stands to reason that the same applies to insurance industry organizations.

Complicating matters further is how the customer experience in the insurance industry is shaped by customers’ encounters with brands in other sectors. Call it the Amazon effect if you like — the e-commerce space not only disrupted retail, but also all other industries. Companies must match what the likes of Amazon, Netflix, Warby Parker, ModCloth, and other digital disruptors have to offer. People can’t help but compare apples to oranges, even when dealing with bananas.

Besides, consumers have become much more discriminatory with their spending. Rarely, if ever, have spending habits been the same year over year, but there is an abrupt difference from 2020 to today. People understand the value of the dollar and are making more conscious decisions about what they’re buying and from which businesses. Younger generations, for example, would rather collect experiences than purchase tangible goods. So, what does this mean for insurance industry leaders?

What Do Today’s Consumers Expect From Brands?

The rate of change in the insurance industry will only pick up pace, and customer expectations will continue to evolve. This raises the question: What exactly do consumers expect of insurance providers today, and how can the insurance industry change to meet those expectations? Though the answers can be complicated, they often come down to a few areas:

Digital Capabilities

An increasing number of consumers expect the same functionalities from insurers as those offered by technology platforms and e-commerce brands. Advancements in how technology is changing the insurance industry have certainly helped move the needle in the right direction as far as digital capabilities go.

Insurance companies can now capture much-needed information on target audiences and meet consumers where they are with modern digital engagement tools — tools that not only respond to consumer preferences, but also can influence the purchase of products and services. Third-party insurtech providers offer carriers the opportunity to take a technology-first approach to selling and managing of insurance policies.

However, many carriers haven’t yet adopted such solutions, choosing instead to rely on legacy systems and service models. For consumers wanting fast, intuitive, and streamlined digital experiences, the choice is obvious — they’ll look elsewhere. There are more options than ever, making it much easier to find another provider that offers the right insurance products with the service best suited to customers’ digital needs.

Frictionless Experiences

It shouldn’t come as a surprise that digital capabilities have brought frictionless shopping experiences to the forefront, and that includes the purchase of insurance. Consumers no longer have the patience to spend an hour deciding what coverage they might need. They want a process that’s quick and easy — turnkey, in fact.

In a recent survey, 55% of consumers said they would consider purchasing a (hypothetical) insurance product from Amazon over traditional insurance providers. The reason comes down to one thing: convenience. The data analytics employed by technology companies can help determine individual policy pricing, adding a great deal of ease to the process.

Younger generations are open to securing coverage from a wide array of options — not only from big tech brands, but also new channels and mobile sources. Although this insurance industry trend is cause for concern for insurance leaders, it poses an opportunity for enterprising providers to enhance the customer experience and create a more frictionless process to purchase insurance products.

Organizational Values

A phenomenon that continues to grow with each passing year is the belief-driven buyer. An estimated 82% of consumers prefer to do business with brands that align with their values. More importantly, 75% of consumers have parted ways with a brand when it conflicts with their values.

Insurance brands aren’t immune from this consumer expectation. You can find a great deal of benefits in shared values. When values align, consumers are more likely to remain loyal, if not pay a premium for that brand’s products and services. Though it might feel like playing with fire, it’s more about being authentic with your customer base.

Align your organization behind a social or environmental cause, institute diversity, equity, and inclusion initiatives, look for ways to improve employees’ lives, and get involved with your community. Demonstrating your support for others can encourage consumers to support your brand.

How Is the Insurance Industry Changing to Meet Customers’ Expectations?

Organizational change is difficult. The reason is often chalked up to the verifiable truth that people don’t like uncertainty, but another factor is also at play. Many insurance industry leaders are simply unsure where and how to start. So many areas of business are affected by changing consumer expectations and digital transformation, which can result in analysis paralysis.

The key to creating long-term, sustainable change is to start small. Perhaps update the front end of your software while letting the back end be for a bit. Pick the biggest pain point within the customer experience and make it better. Or, focus on the one area taking up the most human capital in your organization.

For example, ask call center employees what questions they field most regularly, and then make the answers easily accessible on your website. It might not sound like much, but it will help your customer base and improve their experience while freeing up call center staff to handle more complex questions. (Consider what it could do for wait times alone.)

You could also focus your attention on the value chain. Data and technology are available to build a better, more responsive value chain, helping providers inform underwriting models, recognize risk factors, accelerate the claims process, and so on. Technology does more than simply plumbing. It can add precision to your team’s work. Leverage information from all lines of business to strengthen the creation of your products and services.

The simple process of procuring insurance has room for improvement. It can still be confusing, if not time-consuming, for consumers. Implementing new technology and processes offers the opportunity to make the experience more engaging, demystify insurance products, and even help organizations expand into new markets. The affinity space is ripe for such possibilities.

Think about our partner ecosystem for a moment. There is potential for providers to take on multiple roles to facilitate the purchase of insurance and enable other financial services. Fintech company SoFi has done just that. It started as a student loan consolidation platform and now handles its customers’ wealth, health, and wellness experiences. Look for ways to build partnerships that could be beneficial to those you serve — be it in new products, services, or capabilities.

Prioritizing Consumer Needs During Times of Uncertainty

No one needs to tell you that customers are a priority. Without customers, you can’t sustain your business. Yet, at a time when the frequency and severity of change are so high, it’s more important than ever to be more mindful of existing customers and the shifting patterns impacting their lives — many of which are unknown.

In insurance, providers file everything with the state for approval. That includes insurance rates. Although this is not normally an issue, the cost of almost everything continues to go up. This is problematic in and of itself for insurers. However, organizations covering auto are faced with yet another problem: risky driving habits increased during the pandemic, and reports indicate that the trend might not dissipate.

What can an auto insurance carrier do when the state doesn’t allow a rate increase? The chance of losing money is astronomical if the carrier writes rates based on state standards. Sure, the leadership team could try drumming up new business, but that isn’t always possible — nor does it always fix the overarching problem.

Whether you’re offering auto, health, life, or a combination of insurance and financial products, there are ways to maintain a viable business. The following are often the best places to start:

1. Build deeper trust.
Be aware of the things that consumers care about. Such efforts ensure that those you serve are getting the best experience possible. Instead of pouring more money into a typical marketing campaign, it might be of greater benefit to engage in conversations with customers — or, at the very least, personalize your communications to the individual. The data is available to help you establish deeper relationships with customers. Show them you understand their needs, share information about products that make the most sense for their lives, and, above all else, respond to their questions and concerns in a timely fashion.

2. Focus on core competencies.
Be clear about your core competencies. It can be advantageous, especially within the affinity market space, where it’s become much easier to reimage business models and product offerings. A major insurance industry trend is that partnership possibilities are ever-present, allowing you to outsource the products and services that are not part of your core competencies. It’s possible to build affinity programs that can quickly adapt to your customer base’s changing expectations and needs. It all comes down to your relationships with potential partners.

3. Leverage multichannel communication.
Be mindful of how you engage with customers. If you lose touch with them, they might turn to a more responsive competitor to fulfill their insurance and financial needs. With the data and technology available, you can now reach consumers where they are and when they need you most. Take a multichannel approach to your marketing efforts and employ technology solutions that can automate much of the process for your team.

Using Partnerships to Navigate Changes in the Insurance Industry

Trade associations have long been a way for companies to weather uncertainty. With a PIMA membership, the advantage is threefold. The networking opportunities in the affinity market alone are often worth the time. Many of our members have established relationships that have grown into business partnerships, bringing together technology and insurance to offer customers not only more products and services, but also experiences that match their ever-changing needs and expectations.

These relationships have also led to many peer-to-peer learning opportunities. PIMA consists of more than 500 leaders in the insurance and financial services space. Though some of these learning opportunities and partnerships naturally occur at PIMA-sponsored events throughout the year, others come by way of the connections made. It’s common for members to establish their own network within our larger network, meeting to discuss the affinity space and honing their knowledge and skills — either online or off.

Plus, PIMA has a library of industry-specific articles, research, whitepapers, trend reports, and case studies related to the affinity market. The vast array of resources is accessible in the PIMA membership portal, helping to support members’ continuing education efforts.

If you’d like to learn more about the benefits of becoming a PIMA member, contact us today. PIMA offers more than networking, peer-to-peer learning, and continuing education. It can also help your company meet customers’ expectations and generate business growth through collaboration and innovation with industry leaders.

Published on October, 3, 2022.

PIMA® (Professional Insurance Marketing Association®) is a member-driven trade association focused exclusively on the group-sponsored benefits market.