The new buzz-word in business is customer-centricity. Insurers know why.
In 2019, 73% of insurance CEOs agreed that they were “personally prepared to lead the organization through radical transformation to remain competitive”, according to a joint report by KPMG and The Digital Insurer.
But that was last year. The question today is, how has the Covid-19 pandemic changed the business mindset, generally speaking? The bad news is still emerging from the statistics. Covid-19 has infected more than 15 million people so far, killed more than half a million, and hundreds of millions could be left without work due to its economic impact.
The social and economic crisis induced by the pandemic aside, a pressing question emerges: given the fact that over one third of the world’s population went under some kind of lockdown, and online and mobile channels became the go-to for most customers, how have business leaders adjusted to the new reality?
FintechOS has addressed this question recently, during a webinar for the insurance industry hosted in June.
From challenge to opportunity
”When the pandemic hit, we realized that we needed to accelerate digitalization and rise to our customers’ new needs. We turned the challenge into an opportunity”, said Lidia Drăgan, Products and Services Director at UNIQA Asigurări Romania, who co-hosted the webinar. ”We were the first insurance company on the local market to use a chatbot for the digitalization of claims processes”.
UNIQA worked with FintechOS as a technology partner to respond quickly to the Covid-19 crisis. ”Integration of digital technology into some areas of the business took us to the next level, laying the foundations for a wider shift in perspective”, Drăgan added.
Today, UNIQA’s challenge is to change from a product-centric organization into a customer-centric organization.
The impact of low trust on consumers
But Covid-19 is not the main reason why insurers have taken steps to digitalize. A survey carried out in the UK before the pandemic showed that only 12% have mobile phone insurance, 3% have income protection, and just 14% have pet insurance despite 50% owning a pet.
“Buyers are unclear about what they are buying. Consumers want to feel their provider understands their needs. Unfortunately, too many insurance products lack relevance,” said Marius Lazia, Insurance Product Owner with FintechOS, co-host of the webinar.
It’s about more than relevance, though. A lack of trust in insurers seems to be the core problem.
The Chartered Institute of Insurance revealed that just one in five customers across the United States, the United Kingdom, France, Germany, Italy, Japan and Switzerland consider insurers trustworthy. In the UK, two-thirds of consumers believe their insurer will do what it can to avoid having to hand over money.
What are the effects? ”Low trust inhibits innovation with the potential to help consumers”, Lazia said. So, the most successful players in insurance “will be those who will improve existing products around user experience”.
But how exactly can insurers pull it off? You can read ideas on this topic below, taken from the webinar –” How insurers can compete with insurtechs and win back customers” (available on demand).
Lidia Drăgan, Products and Services Director at UNIQA Asigurări, 20+ years of experience in financial services, covering a wide range of transformation activities:
- The pandemic showed us that we need to move faster in the area of digital. We need to be where the customer wants us to be, and fast. Otherwise, we cannot deliver value.
- Digitalization boosts both the quality and speed of processes.
- We embraced process automation and optimization, but we did it while keeping customers’ needs in mind at all times.
- Customer centricity is a powerful growth engine.
- Running optimization projects brought us closer to our customers and we have seen an improvement. However, we realized we were far from achieving customer experience excellence, so we have decided to run a digitalization programme across the entire company and reinvent customer journey through digital.
- Becoming customer-centric is key.
- We need a strategy to enable transformation. User experience will be at the center of all our actions.
What is hot on the insurers’ agenda these days?
- Portfolio security
- Customer data security
- The reluctance of sales agents to provide data
Marius Lazia, Product Owner in Insurance and Cătălin Dediu, Head of Product Marketing at FintechOS:
- Paying more than 80% of gross written premiums as claims or insurance benefits is a clear indicator that, for insurance companies, their customers’ lack of trust is a matter of perception and communication which can be changed with the help of technology.
- Traditional insurers are crippled by multiple legacies. These include inflexible IT systems and infrastructure, with nonstandardized interfaces and duplication of core and peripheral systems – which slow down digital transformation.
There are four pillars through which technology can improve trust:
- Knowing your customer
- Personalisation of products
- Seamless experience
“In order to regain the trust of consumers, insurers need to upgrade legacy systems to the point where innovation is possible. Currently, the gap is huge”, Marius Lazia said. So, if traditional insurers want to rebuild trust with consumers, as insurtech companies are doing, they need to adopt cutting-edge digital technologies. Who’s ready?
This article is part of a series of articles and webinars dedicated to the insurance industry. FintechOS has talked to leading companies from incumbents and startups, to accelerators and consultants, to get to the heart of the question that is keeping the industry busy: why is there a crisis of trust in insurance?
For more findings on insurance:
➡️ Watch the recording of the webinar – on demand: https://bit.ly/3dTzF0y
➡️ Download our whitepaper: https://bit.ly/34slCM9.
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