How life insurers must adapt to an omnichannel world: Part 3

Life insurance has never been an industry associated with rich consumer experiences or even customer centricity. It has generally been believed that low-frequency interactions and routine communications (around policy renewals, for example) were enough to sustain customer relationships, meet regulatory requirements and service customers.  

But, over time, the life insurance industry has come to realize that the expectations of its consumers are now shaped largely by the experiences offered by other industries, including some whose products or services are vastly different from insurance. Nowhere is this clearer than in omnichannel servicing, an approach first developed and mastered by the retail industry. This article is part three of a three-part miniseries we’re running in July.  

The value of customer engagement 

Many of the benefits of omnichannel servicing are related to customer engagement and improved communications. EY’s most recent Global Consumer Insurance Survey found that insurers have very few interactions with their customers; in fact, 44 percent of insurance consumers have had no interactions with their insurers during the last 18 months.

As insurers miss out on opportunities to foster stronger relationships, each interaction becomes a critical touch point with significant potential to affect both near-term satisfaction and long-term loyalty. The results also made clear that customers are open to more frequent, meaningful and personalized communications with their carriers.  

The importance of distribution relationships is also worth mentioning. Agents and brokers increasingly want seamless interactions with insurers across a range of channels.

Independent agents are also likely to recommend carriers who offer the best service experience, if only because it may enhance the level of service they can provide and reduce their workload in servicing accounts. The need to offer enhanced service experiences for agents and brokers will only increase in the future, as an aging distribution workforce retires and a younger, more tech-savvy generation replaces them (a trend that mirrors the demographics of the policyholder base). 

Wearable technology offers a huge opportunity for engagement. As fitness trackers and other monitoring devices become more prevalent, life insurance carriers can offer discounted premiums and other benefits to customers who maintain healthy lifestyles. Further, much like online retailers make continuous recommendations based on users’ browsing or purchasing histories, life insurers can personalize communications and offers based on lifestyle data, such as meeting exercise goals.  

Customer engagement may also include simplification. Today, insurers routinely distribute countless pieces of paper correspondence designed mostly to comply with regulatory requirements. These pieces often feature repetitive and technical language that many policyholders struggle to understand. 

Insurers should seek to rationalize these communications and make them more meaningful to customers. At minimum, insurers must allow their consumers to choose the formats and channels (online, email, text or letter) for receiving required communications.

Related: Digitizing the insurance process – are you ready?

Organizational readiness to support new capabilities 

Implementing omnichannel environments is a formidable undertaking. Thus, success requires strong leadership to address organizational impediments and cultural barriers and promote awareness of service capabilities across functional areas. Organizations with siloed structures will need to address fragmented operating models prior to embarking on an omnichannel journey.