How will insurers reset in the post-Covid era?

Three big trends are affecting the insurance industry as Covid restrictions become a thing of the past and we get used to some sense of ‘normality’. 

First, there’s the rising cost of living. Inflation continues to rise and severely squeezed household budgets are at the worst they’ve been for generations. Every penny matters, and as such, more customers than ever may be reassessing their insurance cover and looking to switch.

Then there’s the return of overseas travel. Covid restrictions are the least stringent they have been since the pandemic first hit. Could this be an opportunity for a reset, with companies offering new products that cater to changing customer tastes and travel preferences?

Finally, we’ve seen increased interest in health insurance. Private healthcare is expected to grow in the UK in particular. How can insurers entice new customers coming into the market for the first time, particularly those who place greater emphasis on the importance of digitally-focussed options?

These three shifts are creating immediate changes as well as setting precedents for the way we will buy and sell insurance products in the future. Many insurers have traditionally competed on price, aided by comparison sites like MoneySuperMarket or CompareTheMarket. This is a cycle they need to break as the industry recovers from the shock of Covid. There are opportunities to be seized by getting closer to customers. With the above trends in mind, the answer lies in creating additional value and loyalty – in many cases with new customer groups.

Currently, insurance is seen as a necessary evil. People buy it, but don’t like buying it. The industry as a whole is a passive one. Consumers don’t see day to day benefits and insurers don’t do enough to interact with customers until renewal time. For example, more than half of drivers (52%) let their car insurance policy renew automatically in 2021, according to research by MoneySuperMarket. In some cases, this wasn’t because they particularly like their current supplier; it was because they couldn’t be bothered to switch. With such low customer engagement, it’s hard for the industry to build the loyalty that makes customers want to stay and grow with an insurer. 

The switch to proactivity

One shift taking place across many industries is that customer experience (CX) is moving from being a cost centre to an area that drives growth. No longer is the CX investment solely about serving a reactive response to customer queries as quickly (and cheaply) as possible. Now, it’s helping companies deliver a more holistic experience that also identifies new ways to expand their current offering and customer base.  

In insurance, this move towards proactivity could present many new opportunities. Businesses are preparing for a data-driven future, when they will have more insights that can help them get a better sense of who their customers are and how they can better serve them. 

For example, telematics has changed the way many people buy car insurance. It’s now more personalised and based on their own real-world driving. It gives a lens into what the possibilities can be - better personalisation based on individual circumstances, rather than educated guesswork and statistical probability. And with this personalised approach, customer service and sales teams alike can do two things: boost loyalty; and ease friction for those looking to switch from another provider. Moving to a simpler and contextual conversation, through the integration of more services, will help insurers stand out.

Opening up revenue models

The ultimate aim is to increase the share of pocket, and having a full view of the customer is valuable in reaching that goal. Understanding the customer using a broader set of metrics and datapoints will help insurers provide solutions and bundles across the lifetime of a customer.

Rather than looking solely at one single insurance product such as car or travel insurance, when you know the customer well enough, you can offer services in bundles or via a subscription model that offers better value. And by keeping an ongoing, open dialogue with customers, rather than just starting a conversation at renewal time, insurers can add value in other ways. Perhaps their driving style would be better suited to a different product that can be recommended. If they take multiple trips throughout the year, a company could suggest year-long travel cover instead of insuring individual trips.

In many cases, companies already have access to the data that can help them to better understand their customers. The problem exists in the fact that the data resides in different places that don’t easily communicate with each other.

One insurance company - that I won’t name - which Zendesk recently worked with, identified this exact challenge. They had two separate teams running two separate pools of data. There was a pre-sales support team responsible for converting leads by calling prospects, and a customer care team looking after post-sales support, monitoring trends, tracking results, and handling escalations. Although the individual operations were running well enough, it was only when they used a singular platform to deploy an omnichannel vision that the company could get a full 360-degree view of the customer.

The insurance industry is shifting to become more data driven as we return to a new normal, where Covid is fading to the background. Insurers can ride the wave of change by building relationships with customers, being present when they need them and providing more everyday value. The technology is available to make this happen - insurers simply need to use it to connect the (customer) dots.