The insurance industry has always been about placing bets…
The customer pays a small premium and places a “bet” with the company – I will not need hospital treatment, I will not crash my car etc. Then the actuaries at the insurance company figure out how to spread the risk across their pool of customers.
It’s effectively been the same for hundreds of years, just we now have many more things that we can insure and many companies competing for business. However I have been talking in some recent blogs about how the car insurance business is changing through the use of telematics – by giving better information on the real risk to the insurance company, policies can be priced more effectively and this is good for customers and the insurer.
But I saw an article on Customer Think recently that also explored other innovations that are changing the insurance business and how customers experience their interaction with an insurer. Here are a few of the ideas presented in that article with my own comments on their significance:
Pay as you go car insurance; enabled by the telematics systems I discussed earlier. Instead of buying an annual policy for your car it should be possible to offer insurance just for the time you are using the car. The pay as you go concept could also be extended to other types of insurance – as we have already proved with travel insurance policies that only cover single trips.
Digital insurance management; it should be possible to start combining the various policies we all have from life to health to home to car… to get a better picture on risk by bundling them, getting better prices for the customer and creating the opportunity for companies to offer bundled products.
Home video innovations; some US insurers now offer an automatic home insurance policy discount if your home automatically records any visitor to the front door. How can more openness about information related to your home security result in better policies?
Better claims systems; by using better communication tools the process of claiming can move on from an arduous pile of forms that need to be completed to a fully interactive discussion with the insurance company.
I believe we are seeing all these changes take place at present. This is no longer about future gazing. As I mentioned in an earlier blog, almost half a million British motorists are choosing to allow their insurance company to monitor them on the road because it offers a better policy price.
What I do think interesting though is that every one of these measures improves the customer experience. Our latest white paper Insure Against Loss examines in detail the opportunities in the insurance sector. In this paper we will explore how delivering an exceptional customer experience can increase customer engagement levels and reduce customer churn. Insurance companies offering better service is great for the customer and great for the companies that find they have happier and more loyal customers.