In insurance, AI and intelligent automation can improve customer loyalty

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As it reached the end of the 2010s, the UK’s insurance sector faced a problem: its customer satisfaction levels were in decline. In January 2020, it had seen its lowest UKCSI customer satisfaction score since July 2015, falling by 1.4 per cent on the previous year. 

Then came COVID-19. Events were cancelled. Travel plans were ditched. And businesses were interrupted. Practically overnight, insurers faced a stupefying volume of claims. 

But tackling the claims spike led to even more displeased customers. In the few weeks that followed, insurers’ customer satisfaction levels saw a significant depression, dropping a further 1 per cent.

Customer satisfaction is not just critical for insurers; in any business, getting customer satisfaction right is ultimately the pathway to customer loyalty and, by extension, increased revenue. “Loyalty leaders grow revenues roughly 2.5 times as fast as their industry peers,” writes Rob Markey in Harvard Business Review.

The insurance sector’s customers would seem decidedly harder than most to gain loyalty from. According to Accenture, as many as 41 per cent of customers are likely to switch insurer after making a claim. 

But the sector needs to look inwards before it draws any conclusions. Try as they might to digitise their product offerings, insurance firms are lagging behind other sectors like finance and retail banking. Though COVID has brought truly unprecedented activity, a new, sudden spike in claims should not have necessarily meant a new, sudden dent in customer satisfaction. 

So, why did it? 

From the customer’s perspective, insurance products available to market are often cast as a few clumsily and rigidly sized policies that ought to fit all; when it comes to actually making a claim, the process is correspondingly clumsy and rigid. 

Traditional insurance firms’ products lack personalisation and transparencyand the claims process lacks speed. And, all the while, insurtech startups continue to show the wider sector what’s possible, snapping up customers who expect more digitally-ready insurance services. 

To create the kinds of customer loyalty they need, agents and brokers need to bring about proper digital transformations at their firms. This means using AI to fine-tune their products to deliver more value to their customers. 

Of course, AI is already being used for things like tackling fraud and other back-office processes. But further adoption of AI into customer experience as part of digital transformation would give insurance firms a number of ways to make tangible improvements to their products. This would also up their chances of winning increased customer loyalty. 

Transform digitally; see results

Those insurers that are making use of AI as part of digital transformations are already seeing the benefits in their customer satisfaction ratings. In the UK, few insurers are getting this right quite like LV=, which kickstarted its digital transformation in 2017 by tailoring its services to a complex map of possible customer journeys. 

On top of this, LV= has also used machine learning to boost its ability to settle grey-area claims, meaning it can focus resources on improving the customer experience. The result: LV= has remained the top insurer in the UKCSI’s customer satisfaction rankings for two years running.

But integrating AI into services could take businesses in the sector even further than this. With AI-powered tech, handling unexpected claims spikes can be made relatively easy. The real difference is made when the way in which claims are handled feels personalised—as part of a more human-centric customer experience. 

“There was a time when insurance customers were satisfied with a timely response, a fair price and quality service,” Phil Britt writes (paraphrasing Clark Wooten). Undeniably, there’s a gap at the top of the insurance market for a more personalised customer experience. And, to illustrate the scope for closer personalisation in the insurance market, I remind you that two paragraphs up I said that LV= has remained the top insurer in the UKCSI’s customer satisfaction rankings for two years running. Imagine what further improvements to customer satisfaction LV= could make if it had a mobile app as user-friendly as those of some insurtech startups, like Cuvva, Zego and INSHUR.

Build deep personalisation in insurance using intelligent automation

The truth is, AI shouldn’t just be some ‘nice to have’, bolted on and deployed when necessary; customers are magnetised to immediacy and personalisation. Think of US insurtech startup Lemonade, who in 2016 set a new world record for the fastest time to pay a claim (three seconds—and perhaps unsurprisingly, then, Lemonade tops the Cleasurance rankings for customer satisfaction). 

AI can help solve the insurance sector’s customer satisfaction problem by tailoring the process to what end users actually want out of insurance. Like more transparent pricing, communication through preferred channels, and dynamic product offers that resonate with their plans. Intelligent automation can be particularly effective in helping agents know things like what to upsell (and when) based on data collected through ongoing interactions with customers. Its explainability can also ensure that insurers can keep information accessible to auditors. 

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Embracing AI and automation could mean claims volume fluctuations (like the one we saw in March 2020) don’t also mean customer satisfaction fluctuations. Brokers and agents can instead focus their time on the customers most at risk of jumping ship and on building long-term customer loyalty.

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