I just bought a $3.50 “insurance policy.” It’s not a lot of money, but it says everything about the insurance industry, the insurance experience many of us are subjected to, and why experience management would help. Let me explain.
As I was about to complete my online purchase for a sailboat excursion on Lake Michigan to escape this summer’s brutal heat, the boat company offered “trip insurance” for an extra $3.50. The fee covers cancellation by me or by the excursion company should Chicago’s notoriously volatile weather force a cancellation.
Usually, I would view this extra cost with suspicion and skip it. But in the disrupted world of 2020, my tolerance for risk is radically different. Now, $3.50 for a little peace of mind seems like a bargain. Still, I have a lot of questions about this trip insurance.
What exactly does that $3.50 cover? I mean, it says I can cancel “up to 24 hours before the boat departs.” So I can’t cancel closer to the departure? Don’t things typically go off the rails at the last minute? All too often, insurance often feels like an extended warranty, which feels like a bit of a scam.
Why the insurance industry needs experience management
No one looks forward to the insurance experience. It’s complicated and nuanced, yet incredibly important to get right. When people talk about insurance, they often share horror stories of unexpected and exorbitant costs or simply a lack of expected coverage in a crisis.
In fact, one of the most recent Harris Trust polls shows the insurance industry to be scraping the bottom of the list in terms of trust. Only the oil and gas industry rates lower.
The thing is, the vast majority of insurance interactions are perfectly fine. In some cases, they are downright heroic. Unfortunately, we don’t hear very much about those stories. We also don’t hear about the insurance agents who tirelessly explain why we might need an umbrella policy or special coverage for an eight-inch Newtonian telescope. (I’m not making that up).
Stories are everything. We learn from and are heavily influenced by stories we hear from people we trust and, sometimes, total strangers.
Since I don’t have a friend with a PhD in insurance, I wish I had other sources that could guide me through the insurance journey, someone to show me what a good experience looks like. My only strategy, at the moment, is to avoid the damning and viral stories we’ve all heard.
Experience management for insurance: The key to customer loyalty
The insurance industry can fundamentally change the way people experience insurance.
The easiest way is for insurance companies to simply invest in:
Experience management could be the key. Customers need to feel they are not only being listened to, but also see actions driven from their insights. This is how trust is built. This connectedness will help insurance companies increase customer loyalty and increase referrals. That translates into protecting the existing business while also ensuring growth.
Experience management is more than surveys. Although it starts with Customer Satisfaction (CSAT) and Net Promoter Score (NPS), it’s about multi-dimensional listening, and the continuous cycle of experience improvement. A strong experience management program leveraging a powerful experience management platform, will allow the collection of those good stories. It also provides sophisticated ways to share them with both agents and customers.
In doing so, we can make insurance feel less like an extended warranty and more like an actual security blanket. Experience management, in short, makes it easier for customers to communicate with their insurance companies. It also means it’s easier for insurance companies to act on the information they receive.
By effectively using AI to synthesize and extrapolate data, by layering in contextual data to tease out patterns and insights, and by using indirect data such as social listening, text analytics, and acoustic sentiment, insurance companies can gain the trust and loyalty of their customers.
Shake off negative perceptions
In insurance, trust can make all the difference. Given the complexity of insurance products and services as well as the sensitivity around the actual reasons necessitating insurance, the need for trusted guidance is critical. Few of us feel qualified to confidently to buy and manage our own insurance.
Active listening and empathic responses foster trust.
If insurance companies were to design programmatic listening posts as frictionless communication vehicles (versus simple feedback and measurement tactics), customers would be more willing to take the time to share their experiences. Use of real-time feedback, through both direct and indirect methods, allows a full three-dimensional view of the customer, their experiences and needs.
In doing this, insurance companies would achieve true client engagement culture, which would dramatically improve their poor perception. Often, people feel they are being subjected to insurance interactions that provoke anxiety, stress and fear. Who would look forward to that experience or intentionally seek out anything of that nature? Arming customers with real security and peace of mind is very different from the vague extended warranty.
It’s too easy to blame our short-sighted culture. Take a look at Gert Hofstede’s country comparison between the United States and Japan. In Long-Term Orientation, the US only scores 26. Japan scores 88. Guess which country has the most insurance per household?
My research has shown that these percentages, attitudes and behaviors have not really changed over the years. Insurance companies could help break through these behavioral, cultural and psychological barriers through more programmatic research and listening.