Are Insurance Companies Listening to Their Customers?

Are Insurance Companies Listening to Their Customers?

September 26, 2022 |
  • Insurers aren't always on the same page as their customers
  • Price isn't always the deciding factor for customers
  • Communication is a two-way street
  • Younger demographics see service as more important than price

There appears to be a growing rift between what insurers are doing in an attempt to satisfy consumers and what consumers actually want from their insurers. What is the source of this misalignment? Is it a misunderstanding of what customers want? Hurdles caused by technology that would require too much work to correct? Whatever the reason, if you want to stay relevant to today’s buyers, you need to be sure you are delivering what they want.

A survey commissioned by Majesco, made up of respondents from a broad cross section of occupations, ages and incomes pointed out some insurance industry issues, with implications for all geographic markets. This study uncovered some details that may be worth further exploration1. There are several findings that are worth delving into a bit deeper, particularly when it comes to key relationship indicators that are all pointing toward growing communication issues.

Let’s focus on the findings and what should be done about them.

...what insurers seem to think is important to consumers isn't always what consumers say is a priority when it comes to choosing an insurer.

What Insurers Think v. What Consumers Think

The first finding that jumped out was striking: what insurers seem to think is important to consumers isn't always what consumers say is a priority when it comes to choosing an insurer. Insurers and consumers agree on the importance of pricing. For instance, insurers say they want to provide a competitive price, and consumers say they want a reasonable and understandable price – but then the two sides differ. Insurers want to build loyalty and referrals through branding. Customers want relevant products and clarity about what coverages the product contains, a high level of service from a wide array of options, and a simple process. This is where the gaps begin to show up.

1. Majesco's study found that many consumers are focused on price – but not all. Companies that focus solely on price and not ease of access, service levels, or relevant products may find themselves alienating 30-40% of their insureds. The policyholders with price as their lowest concern are typically in the affluent demographic – those able to afford both higher premiums for greater asset coverage and more products – so insurance companies are putting their best customers at risk.

2. Policyholders are more likely to find pricing information on aggregator sites than on their own insurance company website. Aggregators were able to establish a foothold and stole some insurers’ territory while they were digitally asleep. While aggregators may be the catalyst for new business, they are also positioned to be a significant contributor to customer erosion. Improvements in technology and marketing efforts targeting price messaging in the customer base can help stem the flow of lost policyholders.

Listening to Your Customers is Profitable

Besides gaps in price messaging, there are two gaps in service provision that were on display in Majesco's survey. A third of respondents to the survey conveyed a sentiment that insurers were defaulting on minimum service levels. Between 47-60% of respondents were only contacted once per year by their insurance company! What an ironic situation the traditionally risk-averse insurers find themselves in when they would do anything to prevent expose themselves to an additional 1-2% of risk. Yet disruptive technologies have shed a bright light on a new breed of competitor that could grab 33% of business due to negligence. That is a massive risk to take! Through increased mobile and digital communication, more so via properly timed and relevant mailings and phone calls, service can be improved and thus lower insurer risk.

Listening to the customers is not only good for improved relationships – it’s great for improving the bottom line.

Insurers don't seem to realize that what customers are asking for, such as improved self-service through thoughtfully designed technology, will actually save on administrative costs. While some insurers are apparently waiting for optimum scenarios, now is the time to improve customer communications by building a labor-saving business case. Listening to the customers is not only good for improved relationships – it’s great for improving the bottom line.

There’s even more additional surprising data related to what products are desire vs. what products are offered. Surprisingly, price was less an of an influence for the younger insurance customers (under 35) than it was for older customers; price, while always important, may become even less important than service, brand trust and product types in the coming years.

It is clear that insurer perceptions are often unequal to the realities of consumers. To move past these assumptions, insurers must listen not only to trends but their customers, too. The idea of providing the customer with what he/she wants must be embraced as it is an important key to success.