The Covid-19 pandemic has accelerated a change in customers’ expectations and behaviors. Data have shown that the pandemic significantly accelerated the transition to e-commerce in 2020. Although the initial momentum for this trend has diminished, expectations about convenience may strengthen customers’ digital-first-habits. The lasting effect of this shift will have a dramatic effect on the distribution and service models for private lines and small commercial insurance companies in the coming years.
The acceleration of digital commerce has not been the only consumer trend to note. Our 2021 Accenture Global Insurance Consumer Study reports that millennial and younger consumers (ages 18-34) want digital offerings that help them make safer, healthier and more sustainable choices. For example, 67% of millennials and zoomers reported that they would appreciate advice from their insurance provider on how to shop and travel more sustainably.
In another example of changing needs, a recent Accenture survey from Europe showed that 53% of respondents said they were interested in health insurance that would reward them with reduced premiums for participating in healthy lifestyle activities such as running and cycling. In the Asia-Pacific region, Manulife has seen the widespread adoption of its app-based behavioral insurance program, which helps customers focus on ongoing healthy behaviors to reduce the risk of serious illness.
To meet these new expectations and see long-term success, insurance companies must reinvent their offerings and paths to the market. Of course, this means facing a number of common challenges. Many have fundamental concerns about disrupting their main distribution channel (independent and captive agents). Many insurance companies are still tied to older technology systems and have been slow to adopt digital service models. In addition, although most have begun to deliver customer experience-focused improvements, they have so far seen only limited results because they have not rethought their business models either.
But I see an even greater opportunity for insurance companies that are willing to go further than just reinventing their offerings. Those who undertake to simultaneously reshape their customer experience from end to end will have better conditions to retain their existing customers, receive referrals, acquire new customers and improve their ability to cross-sell products that meet customers’ unique needs.
From reinvented product offerings to improvements in marketing, digital sales channels and customer service, across the customer journey, our research shows that insurance companies can drive sales growth (up to 15% in increased revenue) and increase their margins (by reducing business costs by 10-40%) .
In the coming weeks, I will dig into four aspects of the customer experience where you can make changes that will help you drive growth:
- Innovative new insurance products that meet changing customers’ needs and expectations.
- An insurance marketing transformation that provides more meaningful experiences.
- Digital channels that support an omnichannel layout.
- Customer service that reconsiders what it means to serve customers.
And I will recommend two important techniques that will help you on the journey.
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Disclaimer: This content is provided for general information purposes only and is not intended to be used in consultation with our professional advisors.