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

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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.

Whether they result from products, business lines or M&A activity, organizational silos prevent even basic transactional data and customer histories from being shared across systems and processes — presenting an insurmountable barrier to omnichannel servicing. Carriers must consolidate similar processes, make data available and promote easier transactions across different lines of business.  

Shared services centers can be useful in overcoming organizational silos and establishing strong servicing operations for core operational processes such as underwriting, policy administration, claims, billing and payments. (See EY’s Shared services in life insurance, 2013.) Centralizing capabilities in a shared services organization typically: 

  • Standardizes processing across product lines, business units and channels. 

  • Facilitates sharing of consistent and accurate information.  

  • Promotes a consistent servicing experience for customers. 

As carriers create shared services and consolidate resources, they should consider maximizing productivity and efficiency through workforce management optimization, which ultimately leads to better customer servicing.  

Importantly, effective omnichannel servicing strategies require strong leadership, organizational alignment and appropriate resource allocations. The right senior leaders must be involved in strategic planning efforts, and implementation programs must be sufficiently resourced with the right skills and capabilities to drive the program forward.

Some forward-thinking and early-adopting insurance companies have created senior positions responsible for the end-to-end customer experience for the entire enterprise. These roles cut across departments, products and organizational silos — an acknowledgement of the urgent need to improve service levels.  

The bottom line: the omnichannel journey starts now  

There is increasing consensus that insurance carriers must overcome their traditional reluctance to change and adopt broad-based transformation if they are to meet rising consumer expectations for quality, consistency and efficiency in customer service. More mature omichannel service capabilities will provide clear differentiation for insurers that can develop them. 

The journey starts with examining current capabilities and identifying and prioritizing opportunities to build new capabilities for omnichannel servicing. 

The views expressed herein are those of the authors and do not necessarily reflect the views of Ernst & Young LLP or the global EY organization. 


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