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“Nothing is more terrifying to me, really, than the status quo. I’ll make mistakes before I keep doing something the same way”.
Coming from the world of arts, Twyla Tharp can probably afford to be a bit more gung ho than most of us in her approach, but I believe there is still a lesson to be had here.
I was fortunate to be involved in the 2015 Insurance Times Innovation and Disruption Conference which took place in London recently; and although I didn’t quite see terror in the faces of my fellow attendees, there’s no doubt that the threat of disruption from “continuing to do the same things” was a cause for concern for many of the insurance providers that were there.
If we take customer churn for example; in many industries this is seen as a huge problem and quite frankly a sign of an unhealthy business. In the insurance industry, it’s become the accepted norm.
Don’t believe me? According to research by the Chartered Institute of Loss Adjusters, customers of insurers are second only to supermarket shoppers in their fickleness. Their research showed that one in four policyholders had changed their home or motor insurance provider in the past 12 months, and more than a third planned to do so in the year ahead!
The reasons for this are well known. Some of the biggest consumer brands in the market are now comparison websites rather than the providers themselves, and customers often don’t form much of a relationship with the insurer that is actually underwriting them, opting instead for the cheapest available cover.
This reality is costing their business dearly however. Accenture recently estimated that if insurers lost 20 per cent of their customers each year – a very conservative scenario – that would represent £3.3 billion of churn across home and motor insurance alone. This equates to somewhere between £500,000 and £1 million in lost premiums for every 1,000 policies.
We’ve seen in many other commoditised industries that customers don’t really only care about price – they care about value, and they are willing to pay more for a better service experience.
In light of this, I think it’s time for the industry to stop and ask itself whether these levels of churn really are inevitable or whether, by doing things a little differently, there might just be a place for customer loyalty?
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.
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