Think You Understand the Customer Experience? Think Again. Michael Sauber, VP, Marketing | Sep 29, 2020

Insurance Worldwide

The term “Customer Experience” has been batted around so often, we all assume we know what it means. But do we really?

We know that customer experience is important. More than 80% of carriers see it as the next key battleground for market dominance.1 We also know it can help drive retention. 49% of customers who didn’t switch insurers last year said it was because of a good experience, while 16% switched because of a bad experience.2

It can be a revenue and profit engine, too. McKinsey reports that US auto insurers that provided a consistently superior experience created two to four times more new business and 30 percent higher profitability.

The Six Pillars

The customer experience doesn’t rest on a single attribute of your business. KPMG summarizes the elements of a positive experience with “Six Pillars”3:

  • Demonstrate empathy. How do demonstrate you understand and care about your customers?
  • Make it personal. How well do you tailor the experience to the individual customer?
  • Make it quick. How simple and quick is it for your customer to do business with you?
  • Meet expectations. How well do you set, manage, and deliver against expectations?
  • Resolve problems. How well do you make things right when they go wrong?
  • Act with integrity. How well do you show your customers you care about their interests as well as yours?

The keyword here is “how”. It’s the “how” that makes the difference and can set you apart. And while most conversations on that topic gravitate toward call centers or online portals, these have become table stakes in the world of customer experience. If you want to stand out from the crowd, you need to think about the customer experience more holistically … starting with your products.

The Product Experience

In the consumer world, personalization has become a key factor in driving customer brand preference. A recent survey showed that 91% of consumers are more likely to buy from a company that provides relevant offers and recommendations.5 Just think about your experience with companies like Amazon or Netflix. They understand your needs and preferences based on your history and present you with product suggestions relevant to you.

In the insurance world, personalized products can help carriers and MGAs create a differentiated customer experience. Given a choice, most businesses would rather buy an insurance product designed specifically for them than a one-size-fits-all. They want the comfort of knowing their coverages and limits address the nuances of their industry.

If you follow our blog, you know we are big fans of the insurance program business. Program insurance influences the customer experience because it pays serious attention to three fundamental business questions: Who are we selling to? What do they want? How can we reach them?4 That may explain why program insurance has grown at nearly twice the rate of the total market over the past decade. And these programs create loyal customers. Twenty-eight percent of program administrators report renewal rates of 90 percent or higher.6

Beyond the Generic

Program business goes beyond the generic to deliver highly tailored products to precisely targeted market niches. Program writers understand the unique challenges of the markets they serve, and the products and services they need.

Program business often goes beyond the class code to subclasses. The smartest program insurers apply analytics to public data sources and their own proprietary data to find pockets of opportunity that others missed. Instead of going after the entire long-haul trucking market, for example, perhaps there is an opportunity in the underserved small-fleet niche. (That’s what Instec client Aon Affinity discovered when they launched their motor-carrier program last year.)   

In contrast to this market-first approach, a product-first approach starts with generic bureau content and adds custom rates, rules, and forms that can be applied to the appropriate class codes. (This is the approach Instec client Arrowhead took in creating a product to address its diverse small- and mid-sized commercial business book.)

Neither of these approaches would be effective if it weren’t for the deep market knowledge that program writers possess. Stroll through their offices, and you’ll see the artifacts of past claims on display – the broken bolt that caused a production line shutdown, the stray nail from a construction site that prompted a rush to the hospital. These insurers often know their customers’ markets better than the customers themselves.

All of this market knowledge also influences the services program writers provide. Policies may need to be issued on short notice. Billing may need to accommodate a unique business cycle. Claims may need to address a critical business recovery need – refrigeration at a florist, for example.  

The Takeaway

Put all of these elements together, and you have a product that creates a more attractive experience for the customers they serve. (Of course, pursuing programs also takes the right kind of system. And that’s the topic of several prior posts. See “Never Ending Niches“, for example.)

If you are already a program insurer, consider whether the services you provide are equal to the product value you deliver. If you’re not a program writer, now may be the time to consider boosting the customer experience through your products.

1    New Horizons. State of the Insurance Industry in the US 2019.
2    Ipsos and Medallia. The Customer Experience Tipping Point 2019.
3    Pritchett, Will, and Louise Portelli. Simplifying the customer experience. The Digital Insurer. April 2018
4    Josefowicz, Matthew. Hey Insurers: It’s All Program Business Now.
5    Accenture Interactive. Making It Personal. Pulse Check 2018.

6    The TMPAA State of the Program Business Study 2019. Target Markets Program Administrators Association. October 2019; “Archived Graphs.” Insurance Information Institute.

Mike Sauber joined Instec in 2016, with over 30 years of experience in technology marketing and sales. Mike has led global marketing teams and programs at IBM, Unisys, and Data General, among others, and prior to Instec was a member of the teams that launched two new enterprise software ventures. His deep technology industry experience includes software, servers, printers, and services, with an exclusive focus on the insurance industry since 2011. Mike holds an MBA from the University of Pennsylvania (The Wharton School), and a BES (Architecture) from the University of Waterloo.