Customer expectations are changing faster than the insurance industry can keep up — but the industry has more urgent imperatives now. Buyers have more transparency and it’s easier to switch providers, at the same time digital-native startups are slicing off the most profitable business, and Amazon, Apple, and Facebook are announcing plans to enter the market. 

Getting CX right is critical for navigating these changes — but fixing it will be difficult. Overhauling key customer journeys is a pivotal place to start improving the customer experience while reducing claims payouts and operational expenses.

The insurance industry has some obstacles — legacy technology and siloed organizational structures — but there are new ways to deliver great customer journeys and CX without retooling your technology and organization. 

This article covers: 

  • Why customer experience in the insurance industry is critical
  • Key trends shaping insurance industry customer experience
  • The growing need for investment in customer satisfaction
  • How to improve customer experience in the insurance industry

Why is customer experience a key factor in the insurance industry? 

The insurance industry lags behind other industries in providing a compelling customer experience — and it’s becoming a problem. Across every industry, experience has become the big differentiator, and even more so in crowded markets. When customers have a lot of choices about whom to buy from, they often choose based on which company offers the lowest price. And that’s a race to the bottom many insurers find themselves in today. 

Excellent customer support — convenient, accessible, empathetic, and knowledgeable — is a critical factor for building and maintaining brand preference. Disappointing customer support makes it more likely customers will seek other options. 

But customer experience is about more than keeping customers satisfied (and sparing yourself the cost of replacing them). The current expectations for more digital and self-service options dovetails nicely with your desire to improve your combined ratio. 

  • Reduce operating costs. Automated chatbots — when done well and trained with real feedback — can create fast and satisfying for customers while allowing you to move work away from human agents. 
  • Speed up the claims process. Adding automated workflows and communications reduces the workload on your agents and customers. And it can help you pay out claims faster so you can free up money in reserves, and property and auto insurers can decrease the amount of time customers spend in rentals. 
  • Use behavioral science to nudge the outcomes you want with customers. Carefully designed communication and workflows enable you to contact customers before they commit to slow repair garages, expensive rentals, or other choices that drive up the cost of claims payouts.  

Without drastic changes, the industry will lose ground to new entrants — both digital-only brands and CX leaders from other industries — and it will continue to pay the price for slower, labor-intensive workflows. 

What insurance customer experience trends are reshaping the industry?

Key insurance industry customer experience trends include personalization, omnichannel support, self-service options, simplified communication, streamlined claims, and a focus on risk prevention and mitigation. 

Personalization: Faced with an overwhelming amount of choices and information, customers desire personalized recommendations that simplify their decision-making. They also respond at a higher rate to well-targeted discounts and offers. 

Omnichannel experience: Customers expect a seamless experience across multiple channels, including websites, mobile apps, social media, and call centers. Insurance companies are investing in technology to provide consistent and integrated experiences across these channels, allowing customers to engage with the company through their preferred methods.

Self-service: Customers want 24/7 access and convenient digital paths to make payments, file claims, make midterm adjustments, and access policy information. But simply providing self-serve options isn’t enough; these need to be easy to access, highly intuitive, and supported by digital aids like virtual and chatbots — as well as 24/7 customer support.  

Streamline claims: The claims process is a difficult time for customers: they’ve typically suffered a loss or disruption of some kind so they’re stressed out, and a burdensome claims process will add to that stress. The brands that streamline claims and processes and communicate well throughout will strengthen the customer relationship at a critical moment of truth. 

Embedded insurance: Consumer insurers are bundling insurance with other goods and services at the point of sale — making it easy for customers to insure everything from concert tickets to health insurance for a trip abroad. It’s a good way to acquire new customers, but retaining them is where you’ll see profit. A personalized communications nurture stream can help you make the next sale to this customer. 

Risk prevention and mitigation: While insurance has traditionally played a narrow role of insuring against the possibility of loss, customers are responding to risk mitigation incentives and communications that build healthy habits. Think discounts for safe driving, automatic shutoff for appliances, and fitness activities. These initiatives can build brand loyalty and make customers less likely to search for lower-cost alternatives, all while delivering the benefit of reduced claims. 

Insurance customer experience statistics show why these trends matter:

The growing need for customer satisfaction in the insurance industry

Claims inflation means that insurers need to increase premiums, and customers may take that as a reason to look for lower-cost options. A recent JD Powers survey shows that while insurers are making some improvements to digital experience, these gains are offset by the higher prices they’re charging. 

But there’s a caveat to this research: While many insurers have created digital shopping tools to help customers find lower-cost plans and options, most customers aren’t using them. 

Customer satisfaction in insurance digital experience is driven by a few factors: 

  • Clarity: Customers want intuitive experiences; for instance, form language should be easy to understand. User experience experts should design and test the forms. Behavioral science can help reduce the cognitive load.  
  • Ease of use: Buyers don’t want to fill in data you already have or have to do extra work. Linking databases and integrating your systems with third-party databases can take some of the steps out of the process and make it less likely for customers to abandon purchases.  
  • Speed: Once a customer completes a task — say, applies for insurance or initiates a claim — they want fast action. Insurers who use AI to process claims, documents, and applications deliver the faster results customers want, and at a lower cost. 
  • Support: Even the most intuitive self-serve tasks sometimes create questions, or customers face unique situations they need guidance with. Customers want fast support via digital channels, e.g., chatbot or live chat. 

Customer service in the insurance industry isn’t all about digital, though — getting the human/technology balance right is still essential to success. Customers typically prefer self-service for simple and routine tasks like adjusting their address or adding a new family member, but to talk to an advisor for help with more complex needs. Their needs aren’t much different now: empathetic, knowledgeable customer support, especially when they’ve experienced a difficult event like damage to their home.

The importance of customer experience in insurance

Improving the customer experience leads to many benefits: 

  • Better retention: satisfied customers stay with your business
  • Cross-selling and upselling: by building brand loyalty and getting to know your customers, you can create fertile ground for selling more products and enhancements
  • Improved brand reputation: buyers want to purchase from brands they trust and like, and they care about what your existing customers say about you

Providing empathetic, thoughtful, always-accessible customer service in the insurance industry is key for attracting and especially retaining customers — but it’s not easy to deliver. 

Effective insurance customer experience management requires many capabilities: 

  • User experience and technical expertise to create intuitive digital experiences 
  • The ability to provide seamless omnichannel support across every channel
  • Deep understanding of your customers (typically gained through analytics)
  • Customer journey design expertise 
  • Recruitment and talent management expertise to hire staff who will provide empathetic and knowledgeable support 

The importance of customer service in the insurance industry hasn’t changed — but customer expectations have. Brands who can deliver the right balance of intuitive digital experiences and skilled human advisors will attract and retain customers and create upselling opportunities. 

How to improve customer experience in insurance

Improving customer experience in insurance starts with analyzing the full customer journey. Many brands track individual metrics, such as satisfaction scores after a support interaction, or high-level scores like brand NPS. These metrics don’t give rich information about how it feels to be a customer of your brand. You need to find out which parts of the journey are working and which aren’t, and build a plan from there. 

IBM found 60% of insurance executives agree their organization is lacking in CX strategy, never mind the capacity to deliver on increased expectations. Many insurance brands are turning to experienced outsourcers to help redefine the customer journey and provide sophisticated 24/7 customer support. 

Customer service strategies for the insurance industry include: 

  • Gathering and analyzing data on interactions and journeys to identify pain points and prioritize which ones to fix first
  • Having insurance support employees act as omnichannel advisors who can interact with customers across all channels, i.e., they can respond to email inquiries, phone calls, and other support channels
  • Using CX workflows to drive outcomes that improve your combined ratio by reducing expenses, such as nudging customers towards your preferred repair network as part of a claims process or reducing the labor cost of customer support through higher productivity

Finally, fraud and KYC compliance may not sound like customer experience priorities — but they are. Overly cumbersome processes, excessive false positive flags, and slow processes to resolve issues can leave customers heading for competitors.

Download our eBook to get the big picture and practical tips on CX modernization in the insurance industry.