How insurers can respond to changing customer needs and expectations

Today’s customers expect fast, personalised service, but insurers are trailing in the customer experience stakes. Data holds the key to meeting new expectations.

Shifting customer expectations, innovative service models, industry consolidation, new startups – the insurance landscape is changing, fast. But these changes aren’t just threats – they’re opportunities too. For UK providers to truly capitalise on them, it will require an overhaul of traditional products and processes. In this blog, we’ll explore how customers’ needs and expectations are changing, and how data can help you design new products and services that drive growth and loyalty.

What’s happening to policy-based insurance?

Across property and casualty (P&C), life, or commercial and health insurance, traditional policy-based insurance is on the way out.

In the UK and Europe, the market is in a state of stagnation. The Economist reports average growth of just 1.2% a year for non-life insurance premiums in developed countries since 2008, with life policy growth falling by 0.5% a year in the same period.

What’s causing this decline? Your customers – or rather, their changing expectations.

87% of organisations agree traditional experiences no longer satisfy customers (Accenture)

Customers expect smart, digital experiences

By 2021, there will be an estimated 2.8 billion smartphone users worldwide, according to Statista. And as customers’ familiarity with smart, personalised experiences grows, the more they expect it in every brand engagement.

Likewise, the shift from products to service-based models, popularised by the likes of Spotify and AirBnB, means customers expect more immediacy, flexibility and control from brands in return for their loyalty.

But where banks and retailers have excelled in the shift from products to services, insurers have failed to move with the times. A 2019 survey by Deloitte found that 45% of EMEA insurers see changing customer needs as their main challenge to growth.

Who’s getting it right?

Paper-based policies, slow claims processes, and impersonal customer service continue to persist throughout the insurance sector. But when consumers are looking for ways to make their lives easier through apps and services, it’s the insurers who step up their game and rally around the customer experience who will survive and grow.

Tech-savvy disruptors know this and are using it to capture market share from incumbents. Reinsurers, for example, have pioneered the market for parametric insurance – which pays out automatically when a specific condition is met, such as a delayed flight or earthquake above a certain intensity.

Elsewhere, insurtech startups are delivering specialist, end-to-end services for niche markets including gamers, eBay vendors and private hire taxi drivers. Even tech giants like Amazon and Google have shown interest in launching their own services in areas like health insurance and insurance price comparison.

Data is key to meeting changing customer expectations

According to Accenture, customer-focused European insurers stand to take $59 billion of business from slower-moving competitors by 2022. These are providers who are aware of changing customer needs and use data at every opportunity to respond with the relevant products and services their customers expect.

Data is key to gaining the insights required to deliver customer-centric insurance – and it’s an area where incumbent providers potentially have an edge. Customer data abounds across large firms, but it’s fragmented across many systems. Bringing it together to create a 360-degree view of each customer is the first step on the path to true customer-centricity.

“Insurers have to figure out how to offer customers products and services that are relevant to them at a time when they need them. And unlike new technology-based start-ups, incumbent insurers already have millions of customers to work with to build engaging propositions that create stickiness.” Andy Masters, Partner, Deloitte

But a 360-degree view is only the start. To stay ahead of changing customer needs, firms must continuously update and contextualise that view with data from across every customer touchpoint. As technology evolves, that will include relevant devices connected to the Internet of Things (IoT), like in-car telematics and wearable health trackers.

And as data volumes grow, artificial intelligence (AI) and machine learning can be introduced to analyse data in real-time, automate slow, manual processes, and help insurers to make smarter, more strategic decisions.

What happens next?

In our new white paper, Data: The Key to Transformation for UK Insurers, we explore how insurers can use data to modernise, innovate and thrive in a rapidly evolving market.

You’ll also learn more about changing customer needs and expectations, and how forward-insurers are responding with innovative new product and service models.

Get the white paper