The insurance sector is at a crossroads. It can remain on its current path where it will likely continue to face declining consumer trust. Or, it can choose to venture along a new path, embracing technology and customer–centricity to evolve and maintain relevancy in a rapidly changing world.
Much of the insurance industry, particularly general insurance, has become a commodity of sorts. Acting as such, insurers predominately compete on price, often at the expense of innovation and customer experience. The pandemic showed the weakness of this strategy.
The use of complex terms and inconsistent claim payouts during the pandemic, led consumers to lose trust in insurers. Trust forms the basis of the Integrity pillar, which saw a 2 percent global decline in this year's CEE report. According to KPMG research, trust is a key factor in consumers recommending a company to others.
MAIF has succeeded in retaining customer loyalty in 2023, ranking 4th overall for loyalty in France. The insurer – a standout in the industry – has been on a five–year journey to improve its customer experience, prioritizing their policyholders' well-being and satisfaction.
Few others have done the same. In the pursuit to meet customers' needs for lower prices, many insurers cut costs to customer service. Customer satisfaction has taken a hit, especially during the claim process. The claim, which is essentially the tangible product insurers sell to its policyholders, is a critical touchpoint for customer trust and loyalty – all of which are made worse when the process does not consider the customer or their experience.
The role of AI for insurers
As insurers look ahead, trust should be a primary focus, alongside optimizing operations. As new regulations emerge, insurers can benefit from aligning their policies. In the UK, for example, more progressive firms are proactively aligning to the Consumer Day requirements, which is helping to rebuild customer trust and drive growth.
Advanced technology can help support trust building. Data analytics has been long-used within the industry. Yet, insurers have done little to use their great amounts of customer data to create personalised products and experiences. The cloud can also help reduce operational costs and improve efficiency – which may soon become a necessity if insurers want to remain competitive and responsive as customers demand more agility and innovation.
Artificial intelligence (AI), too, holds significant promise for insurers. Use cases can help cut costs from an operations standpoint. More significantly, insurers can come to see AI as a new colleague – a powerful one – that can enhance team capabilities around in terms of risk management, underwriting and pricing. With such an assistant on hand, insurers can enrich the customer experience at the signup stage, and more importantly from a customer perspective, at the claim stage.
AI can also help insurers integrate their ESG values into their products – a regulatory requirement as well as a growing demand from increasingly socially conscious consumers.
The future demands adaptability, customer-centricity and advanced technologies. By embracing these, insurers can meet the evolving needs of their customer and pave the way for a more resilient, relevant and innovative industry.
