How insurance providers can optimize with a modern CX strategy – Pas Trusted News

From addressing staff shortages and negative consumer perceptions to reducing operating costs and increasing customer retention and potential lifetime value, outsourcing CX delivery could be the only way for insurance providers to overcome current market challenges.

Inflation and staff shortages. Rising operational costs and an increasing frequency and severity of risks. Insurers find themselves in one of the hardest markets in recent history.

At the end of March, the U.S. non-life sector reported its worst first quarter performance on record: an $8.2 billion consolidated net underwriting loss. Unfortunately, this figure is not an aberration, immediately following a 2022 year-end net underwriting loss of $26.9 billion, the highest in over a decade.

Hard markets mar global performance

And the U.S. is not alone. Notwithstanding the increasing frequency and severity of natural disasters, conditions are equally challenging across P&C insurers, globally. Inflation and interest rate rises have significantly increased the value of gross claims paid out by the sector within Europe while simultaneously lowering the value of their bond holdings.

Piling on more pressure and further eroding what were already slim margins is the fact that alongside the increasing frequency of existing risk, new risks are arising and at a faster rate than insurers’ ability to identify and mitigate.

Misunderstanding the increased risks and associated costs of claims related to an electric car has led several major U.K. insurers to stop providing cover for the vehicle type altogether, including cancelling the policies of existing customers. The decision made news headlines in September, damaging brand perception in the process and doing so in a moment in time when improving customer experience could be the key to the sector weathering the storm.

You can’t place a premium on pricing

In the U.S., the regulatory environment limits insurers’ ability to directly pass on increased costs to policyholders to balance top and bottom lines. But even in Europe, where raising premium prices is a common practice, insurers need to search for another solution. Thanks to the current economic situation, consumers are actively reducing their spending – even on insurance products – and insurers are already discovering that passing on costs is pushing their customers towards their competitors.

Time to change

Market conditions will change. But you don’t have time to wait for the change to come to your organization. Nor can you count on being able to supercharge existing capabilities in identifying and offsetting new risk types or new levels of risk frequency within a timeframe that can make a material difference.

Instead, you need to actively offset your organization’s increasing costs against dwindling margins and, crucially, do so in a way that doesn’t damage your ability to remain compliant or to maintain a positive relationship with the existing customer base. Meeting these objectives — especially in the current climate — requires expert help.

Correcting customer perceptions

Historically, insurers have struggled to align customer experience delivery with policyholder expectations. Just 3% of consumers equate insurance companies with CX innovation and only 25% of consumers have confidence in an insurer’s ability to answer questions and resolve issues via a channel other than the telephone. And this is a concern considering the average consumer uses two channels for CX and 30% use three or more based on the context.

Clearly, part of the reason why insurers can appear analogue in a world that is increasingly digital by default, is due to the complexity of products and the way in which they’re distributed. But insurers are also guilty of resisting the need to digitalize beyond back-office processes.

A partnership approach

Making investments that are correctly targeted and that deliver a genuine return can be challenging even in the strongest of market conditions, but with the right customer experience partner, your organization can have confidence in the end result:  a measurable improvement in customer perception alongside significantly lower operating costs.

Correcting the customer journey

Mapping and redeveloping the customer journey will make it simple for potential customers to become policyholders, no matter how and where they choose to engage with your organization. Likewise, optimizing every touchpoint and adding features such as self-service will ensure existing customers can solve simple issues themselves yet can still reach out and speak to someone for more complex issues.

Features such as self-service offer the added benefit of reducing live contact volumes, ensuring your agents are not overloaded or customers trapped in long and frustrating queues. Focused agents and short wait times are critical to delivering a positive customer experience.

Optimum control over resources

Using a blend of onshore, nearshore or offshore locations enables the leading CX delivery partners to add capacity without increasing costs. This capacity can exist to help with your growth ambitions or can be there on-demand when there are surges in risk-driven contact volumes.

Responsibilities can also be spread across several locations based on the complexity and volume of interaction type. Licensed agents can be focused on delivering advice while agents across other territories can focus on other aspects of customer support and care.  Again, this improves service quality and capacity but without increasing your costs.

Compliance, at scale, as standard

The best CX delivery partners actively apply current legislation as it relates to each U.S. DOI and to each major insurance market globally. It guides the curricula used to develop agents for personal and general lines and is integrated into technological solutions that proactively monitor for compliance, quality assurance and protect against potential fraud or other risks. The result is that your organization directly benefits from certified security protocols and technology, dedicated teams specializing in data privacy, rigorous policies for remote access and work from home, physical and environmental controls for facilities, and custom security provisions to meet your specific requirements.

From maximizing efficiency and regulatory compliance, to balancing the cost to serve with an optimum customer experience, discover how Foundever can help insurance providers overcome current market challenges.

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