March 11, 2014

There are so many activities related to the customer experience in insurance today! Insurers are talking about it, studying it, planning to improve it, and investing in it. But what is the customer experience really all about in insurance? At the most fundamental level, there are two very good questions that insurers should consider. Who is the customer? What influences their experience? And perhaps there is a third important question lurking in the background, as well – Why does it all matter?

The first question – who is the customer – is easy, right? It's the guy or gal who pays the premium. That's a correct answer, worth 100 points. But not so fast – it's not the only answer. What about the agents/brokers/producers? Don't they have an almost equal claim to be the customer? I've heard industry pundits poke fun at insurers for thinking of the intermediary as a customer. However, those insurers that distribute through independent producers can make a strong case that the intermediary is, in fact, a very legitimate customer. Sure, the one whose name is on the policy and pays the premium is always the ultimate customer. But insurers using independent channels (which is almost every insurer) would probably have a lot less policyholders if they could not recruit independent agents and brokers and entice them to submit business to the carrier. So most insurers would be wise to also consider the experience they create for the producer and proactively plan for how to improve it, too.

Mark Breading, SMA
Mark Breading, SMA

[Previously from Breading: New roles mean new opportunities for insurance technology pros]

The second question – what influences the experience – is more challenging. Money is certainly a part of the equation. (Isn't it always?) Policyholders want fair premiums for the coverage provided; agents want a good commission plan. Of course, the product is important too. Insureds want a good match to their needs; agents want a competitive product that they can sell. The price and product are part of the delivered value – a central part of the experience.

But money isn't everything – people are also heavily influenced by brand, relationship, and interactions. Brand perception is partially formed by what the insurer says about itself – in the form of advertising, social media, and web presence. Equally important in perception formation (or perhaps even more so) is what we hear or read that others are saying about the company. And then there's the relationship. The relationship that a customer has with the insurer and their representatives is crucial. It's defined by the type and breadth of products a customer has, the personal connections with agents or company representatives, and the customer's or agent's social graph (their network of connections and how those individuals relate to the insurer). And don't forget the importance of interactions. Impressions are formed not just from the interactions with media or people that the customer comes in contact with. Interactions include the document or statement they get in the mail, face-to-face communications, a self-service transaction, or even a text message alert with safety advice. These are the places where the rubber meets the road in the customer experience.

So, does improving the customer experience matter? The resounding answer is yes – if the array of initiatives and resources that insurers are devoting to this area are any indication. But, as in any undertaking, mere money or muscle won't guarantee success. A strategic focus on the key elements of the customer/agent experience can make all the difference. Understanding what is valued is the starting point. Improving the customer experience is a worthy ambition – the value and potential impact of which might make a good subject for another blog!

About the author: Mark Breading, SMA partner, is a recognized expert in advanced technologies and their implications for the insurance industry. He has exceptional knowledge of data and analytics, customer communications in insurance, enterprise content management, and advanced technologies including mobile communications. Follow him at @BreadingSMA on Twitter.

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