the demand for more and improved automated experiences in our daily lives are growing, and the insurance industry is no exception. In recent years, a new breed of insurtech startups has embraced this approach to improve efficiency and customer experience while better calculating risk to the business.
But it has not been an easy process and the digital transformation in this sector is far from complete. Consumers are constantly looking for better options with more efficient and user-friendly services.
In fact, a recent survey by Publicis Sapient found that 100% of consumers who switched providers in the past year cited a reason related to the customer experience. That’s more than the 70% that cited pricing as a driver for switching.
This points to a changing market where consumers have higher and different expectations of insurance experiences, based in part on the ease with which they now perform other tasks digitally, such as shopping and banking. But at the same time, they are hesitant to rely too much on automated processes, given both the emotional nature of the events that drive consumers to file insurance claims and the growing concerns about ethics and privacy when it comes to data.
There is no doubt that consumers are moving towards digital insurance experiences at many levels, and this will only increase. According to our research, people prefer a mobile app over phone or face-to-face conversations to receive claims updates.
Amid these changes, it is also clear that humans continue to play a key role, especially when it comes to customer service, where they can provide the empathy and care that data and AI cannot.
Consumers are also looking for what they see as better digital services. 15% even said they switched providers in search of better digital experiences. Some of the tasks that technology could improve upon included filling out forms and providing information, and understanding policies and the coverage provided.
Insurers are finally responding. Investments in insurtech rose to $15.4 billion in 2021, almost double the amount raised in 2020. And the money was not just from a few major investors, but from various sources, and directed to a variety of insurance providers, indicating on the increased role of technology across the industry. This clearly shows that the sector is changing.
This also comes at a time of other changes affecting and challenging the insurance industry, such as the COVID-19 pandemic, increasing extreme weather events and the rise of self-driving cars.
The growing role of data and the need to understand it
Smooth digital experiences alone aren’t the only changes happening. The way insurance companies and consumers use data is also evolving rapidly. New products such as usage-based insurance (UBI) use data to encourage ‘good behavior’ policyholders.
For example, in the auto insurance industry, drivers with safer driving habits or who drive less than the national average can get discounts on their insurance plans. Such approaches may become commonplace in more insurance products.