Paris, New York – Positive customer experience2 ratings worldwide declined at an alarming rate, reveals the eighth-annual World Insurance Report (WIR) released today by Capgemini, one of the world’s foremost providers of consulting, technology, and outsourcing services, and Efma. Despite efforts by insurers to meet the increasing demands of their customers, positive customer experience ratings globally dropped 3.7 percentage points from an already low 32.6% in 2013 to 28.9% in 2014. North America saw the largest decline (8.3 percentage points), followed by Latin America (5.3 percentage points) and Europe (3.4 percentage points).
“Falling positive customer experience ratings coupled with a growing number of market disruptors– such as Big Data analytics, regulatory change and economic uncertainty – threaten to shake the stability of the industry and require insurers to become fully customer centric or risk losing their customer base to competitors and new entrants,” said Jean Lassignardie, Chief Sales and Marketing Officer, Capgemini Global Financial Services.
Generation Y is raising demands and lowering customer experience ratings for insurers
With Generation Y, the customer segment between 18 and 34 years old, comprising one-quarter to one-third of the population in many markets, this segment is of high importance to insurance firms. Yet this tech-savvy generation presents a huge challenge for insurers, often demanding a high level of service across digital channels. The WIR’s Voice of the Customer survey3 revealed a particularly sharp drop in positive customer experience levels among Generation Y insurance customers in 2014, which helped bring down overall customer experience ratings around the globe. This decline was most pronounced in developed countries where, for example, in North America positive customer experience ratings for Generation Y declined by 10.9% and by 5.4% in developed Asia-Pacific.
As a result, insurers are in danger of losing this important customer segment to more agile competitors unless they can improve their digital services and provide more personalised and fully integrated customer experiences regardless of preferred channels. Insurers will need to focus on social media, online, and mobile channels to engage with their customers as the WIR found that more than 50% of Generation Y customers rated these channels as important in most regions.
Insurers fell short on core capabilities that can improve customer experience
The WIR found that insurers’ maturity levels are lagging in seven core capabilities that can help improve customer experiences and capitalise on opportunities presented by market disruptors. Insurers scored lowest in connecting and engaging regularly with customers as well as having a complete view of customer data and relationships.
The report found that most insurers are connecting with customers at only a very basic level. While insurers offer services across a full range of channels, the customer experience across these channels is often disjointed. Similarly, most insurers aren’t engaging with their customers regularly enough or personalising content for different customer segments. Insurers are also struggling to gain a complete view of their customer relationships. While most insurers are capturing and storing customer data, many are failing to capitalise on analytics to identify varying behaviours, preferences or a comprehensive and real-time view of their customers.
A customer-centric approach is the key to a successful future
Reversing declining customer experiences means insurers must go beyond initial attempts to create a customer centric approach and migrate towards more effective engagement that combines channel experiences – both traditional and digital. While insurers need to develop and improve digital channels to keep pace with the growing demands of their customers, it should not be at the expense of the agent relationship – as the WIR found that the agent channel is providing the highest levels of positive customer experiences. In fact, positive experience levels on when using insurance agents were almost 10 percentage points higher than those of digital channels. This disconnect suggests that the current services provided on digital channels by insurers are dragging down global customer experience levels. Insurers must not only improve their channels to better serve customer needs, but they must also make sure that the channels work in harmony at any needed touchpoint along the customer journey.
“Ongoing investments need to support all types of channels, at least for the foreseeable future,” said Jean Lassignardie, Chief Sales and Marketing Officer, Capgemini Global Financial Services. “Insurers must strive to bring some of the qualities that define traditional channels to the newer channels and vice versa. Insurers that are able to blend traditional and digital channels in a seamless way will be the leading edge providers of the future.”
Improving customer experience is imperative as insurance industry disruptors take hold
It’s important that insurers take action now to improve customer experiences as the industry faces a flood of market disruptors that have the potential to challenge and undermine businesses unless they are prepared for them. Big Data Analytics is expected to have the biggest impact on the insurance industry with 78% of executives4 citing it as the key disruptive force, followed by regulatory change (46 %) and economic uncertainty (42%). Other market disruptors include shifting demographics (35%), extreme environmental conditions (15%), new competition from non-insurers like Google and Amazon (22%), and advanced technologies such as the Internet of Things and telematics5 (21%).
“If you simply look at profit margins, you will think everything is positive for insurers,” said Patrick Desmarès, Secretary General of Efma. “But it’s clear from the lower positive customer experience ratings that insurers are failing to meet the needs of customers. This is especially concerning given the strong link between positive customer experience and customer loyalty and profitability and the game-changing impacts posed by marketplace disruptors.”
For more information visit www.worldinsurancereport.com
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