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Is The Insurance Industry Out of Touch With Customers?

The Worthix Team
29 Nov, 2018

One thing that becomes a staple in daily life is insurance. Medical, auto, renters, pet – insurance is something everybody needs. After all, the role the service fulfills is one usually called upon in moments of difficulty. An accident, a sick family member or injured pet. Insurance is there to help handle life's mishaps and help you get back to normalcy.

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Since its beginning, the services insurance companies provide has largely remained the same. What has drastically changed is the customer base. Customers today are more discerning; more willing to seek out information; they’re not shy about demanding what they want; or short on criticism and; they’re also not afraid to try new things.


This new customer is not likely to stay with a company simply because it was their parent's choice. If they're going to choose a service, they need to feel the company checks off the boxes of the decision drivers of quality, price, relationship, brand identification, and social proof. And if one company doesn't measure up, surely a competitor will.

The current environment

Deloitte's 2018 Insurance Outlook reports that in the first half of 2017 insurers saw underwriting losses of around $5.1 billion. This is double the same figure from 2016.

This isn't constrained to a specific area either, as global insurance rates have continued to fall as well. While some will stereotypically blame millennials, for yet another industry "death" (Business Insider even compiled a list of some), it is, in fact, much more than that.

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Complicated and drawn out processes haven't adapted to their changing customer base. Not to mention the pressure to grow top-line sales and boost profit, more stringent regulation, more competition, and the digital revolution.

These are a few of the obstacles this long-standing industry must evolve to satisfy modern-day consumers. Without implementing customer experience changes and integrating the technological expectations, the insurance companies of today may not be here tomorrow. Simply put, a lot of insurers in the market urgently need to rethink how they do business.

Insurtech companies that are doing it right

The fact that insurers seem out of touch today is evidenced by the emergence and success of Insurtech companies. These insurers offer an innovative and simplified approach to insurance. And it’s a hit with customers.

Take Lemonade, for example. A Forbes article describes Lemonade’s “battle” with a major insurer. Here, the major competitor’s attempt to put down the up and comer backfires. Lemonade even sponsored the attack ads themselves! Co-founder and COO, Shai Wininger is quoted saying; “today we’re making history. We’re running and paying for our competitor’s attacks ads - we’ve decided to pick up the tab and run it on our own dime.” This illustrates a confidence that is uncommon not only in the insurance business but also across industries. A confidence that seems to be backed up by the increasing amount of customers who are switching.

Insurtech companies have figured out what traditional insurers miss when it comes to delivering quality customer experiences. Here are 3 examples of how they're breaking through a traditionally bureaucratic and stuffy industry:

1. They’re simplifying the process

Insurance is complicated, and for the discerning customer, understanding it has become a necessity. Filing insurance claims is also a long and time-consuming process. As a result, customers feel discouraged to file. But Insurtech companies make things much easier and simpler. For example, some tech insurers allow customers to submit a claim through a video. Many also offer online assessment using advanced algorithms that calculate a policy quickly. As a result, the whole process is complete in mere minutes.

2. They’re delivering a more customized approach.

Traditionally, insurance was largely a “one size fits all” thing. But Insurtech companies are utilizing technology to know just more than their clients’ names. Customers want more customized and need-based insurance policies. And Insurtech companies are delivering. Many policies from Insurtech companies allow customers to start and stop coverage when they want to. Customers only pay for the coverage they actually use. And it all happens in minutes through a smartphone or computer. It’s a revolutionary concept, but one that has been long needed. And one that has sadly, been neglected by traditional providers. Insurtech companies are maximizing AI technology to keep both rates and overhead low.

3. They’re giving customers freedom.

Again, using AI gives customers the freedom to customize their policies when and where they see fit to do so. Before, you’d need to call an agent, be placed on hold, only to be told that they want to — but can’t — help you. Today, many customers who are trying out the alternative are enjoying doing everything themselves. It probably sounds counterintuitive to folks with a traditional mindset. But customers today want that power. They welcome self-service. And AI allowing for things to be simple and delivering a customized approach is a big factor in that.

Keeping in touch, keeping relevant

The face-off between Lemonade and established insurance giants is proof that even behemoth businesses can suffer from something as simple as losing touch with customers. Insurers should learn from the past and now look to the future. What matters is how services are provided today, and being able to anticipate the trends on the horizon.

Here are a few key things insurers should take note of as they develop a strategy going forward:

Customers want to feel like individuals

Sites like Clearsurance make it easy for customers to compare policies and premiums. Customers are making more informed choices. They aren't going into stores and being sold, meaning they will be less reliant on marketing claims or representatives winning them over.

Insurance companies have to be able to provide a pleasant UX while also offering tailored packages to the changing needs of today's consumer. Customer's don't accept a "one size fits all" or a “take it or leave it" mentality.Those days are gone, now the customer is king.

True success will come from attending to their specific needs. Artificial intelligence is one method to use, but with or without it, one of the greatest tools companies have is spending time and resources on outreach through customer surveys.

However, the surveying has to be meaningful and able to pinpoint actionable feedback. In a highly competitive market, major insurers can lose both new and old clients to newcomers if the latter is more customer-centric.

Customers want convenience and self-service

We've talked about how insurtech companies are already doing this to give quotes, pay claims, and get their customers what they need in record time. Today's customers want to be able to simply and clearly have their questions and demands met.

AI is yet again a tool to invest in so customers can have improved UX. It's a big investment, but one that makes sense for the future. Technology will continue integrating into every part of our lives, no longer restricted to computers or phones. Already, it's in cars, homes, and even in dressing rooms!

By doing the same to insurance processes, you offer the customer the convenience and ease they are growing to expect. This could have added benefits, saving on costs by allowing self-servicing options and automated claims processing. This cost-effective advancement has potential savings which can be enjoyed by company and customer alike!

Final say

Insurers should invest in tools to anticipate, prepare, and adapt to the ever-changing market and customer base. Customer behavior and demands are now the new drivers for growth. No industry is safe if they fail to be mindful of the customer.

Insurers should think of out of the box approaches to this long-standing service and be aggressive in adopting new ways for them to attract customers. The approach shouldn't be to insist that the old ways work best but to explore new things.

Innovative marketing approaches, digital technology investments, improving employee experience to better customer service are but a few examples. Regardless of the department, opportunities are out there. Disruption isn’t necessarily a bad thing. In fact, it companies to step out of their comfort zone and evolve. And that, in turn, is what drives profitability and success going forward.

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