4 Customer Experience Boosters for #Insurance

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One of the main reasons so many companies are not improving the Customer Experience (CX) is that understanding customer value is no easy task. And of course there are many as well that have implemented CX processes, although they're operating in their silos and are seen as a "colorful report once a year, which we will talk about, and communicate to customers (if the results are good)"...

Increasing customer satisfaction goes hand in hand with operationally relevant customer information. To truly satisfy your customers and lead as a promoter, you need to overcome the barriers between customer experience, customer service and customer loyalty. To achieve that, you should see the CX framework not as a vertical function but a horizontal one which connects all core business functions. Stilian Milanov explains it so well in his recent article: "In a hardening market, increased competition, the abundance of insurtech companies who have the CX and data in the core of their business models, incumbent insurers should take an approach which connects the CX key performance indicators (KPIs) with the KPIs of core functions within the organization."

Of course this requires a deep understanding of your customers, and to guide you, here are 4 things you should consider doing;

#1 Not a vertical function but a horizontal one

CX is not a vertical function but a horizontal one which connects all core business functions, by linking CX framework deeply in Sales, Underwriting, Claims and Operation.

• Sales: how does CX help increase sales volumes, using retention ratio, cross-sell or up-sell metrics, evaluating the hit ratio, etc
• Underwriting - How does CX help Underwriting to retain and increase loyalty for most valuable clients – the ones which have a positive impact on the combined ratio are in line with risk appetite and underwriting governance policies
• Claims - How CX can improve user experience during one of the most painful customer journeys? How can we have a seamless FNOL (first notice of loss)? Is resolution quick enough? Where is the right intersection between automation and human touch?
• Operations - How do you fit all CX improvement actions into the operational model of the company?

#2 Understand very clearly who your most valuable customers are

While for a lot of the sectors Customer Lifetime Value (CLV) is relatively easy to calculate, for the Insurance industry it's not the case. Insurance companies need to prepare models that reflect variables which a standard approach does not address: claims paid, costs of reinsurance, contingent commissions, various risk & pricing factors, etc to name a few are rarely used in calculating the CLV.

Adopting this approach will create a link between CX and Underwriting. the models widely adopted are static i.e. they reflect the CLV at any given point of time, usually applied anywhere between 6 to 18 or even 24 months time span. In 21st century this is obsolete. Using data analytics to develop a CLV model that can reflect “shock events“ and recalculate the CLV real-time will give companies the opportunity to take actions to maintain or increase the lifetime value of affected customers. For example, in insurance, this could be an increase of reinsurance costs, or external events like COVID-19 or an important variable in the dynamic CLV model event. You need an algorithm that will give you a dynamic CLV updated on a daily basis to be able to make better decisions faster.

#3 Net Promoter Score for all

Know each of your customer individually and what their Net Promoter Score (NPS) score is. Standard CX approach will provide this information only for the 15% respondents to transaction or relationship NPS surveys but you leave 85% untouched. Scaling is fundamental to deliver 5X+ return on any NPS / CSat improvement actions.

#4 A sustainable CX program

A self-financing / sustainable CX program should be a top priority, which does not rely on additional budgets, which might be cut on "a rainy day". The entire program should be connected with the core business and the ROI (return-on-investment) should be calculated and communicated transparently.

Armed with this kind of framework and data, front-line staff and agents will be able to pinpoint the best time to sell the right product for each customer, identify customers who are at risk of expiration, and use customer reviews to support graded service levels. Providing accurate insights into your company framework and the robust data that makes this possible is crucial if insurance companies seek market advantages. However, once again, it is important to recognize that the full value can only be achieved if you take this as a horizontal approach and connect CX KPIs with your core business KPIs.

Talking about the future of insurance, if you believe that you'll start a couple of digital initiatives and implement some systems, and that will prepare you for the future of insurance... you are mistaken! Everything starts with the customers, therefore defining the business strategy and priorities (including the transformation strategies) should be based on the CX framework.

?? Thank you Stilian Milanov! Content from his recent article have been used in this edition above, with his permission.

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