Insurers missing vital chances to earn customer loyalty
Weak customer relationships endangered by lower prices
While the majority of consumers (59%) say the are "very satisfied" with their current insurers, this does not always equate to customer loyalty, with 71% also saying that simply receiving a quotation with a lower price would rank as their top reason for changing insurers, according to an insurance customer perceptions survey from Pegasystems.
The survey of more than 1,000 US-based consumers revealed just how price-driven they are: 63% of respondents ranked price as the most important factor when first selecting an insurer.
Curiously, only 13% ranked customer service as their top factor, but with so many consumers willing to switch providers as soon as they see a better price, the onus is on insurers to provide the kind of proactive customer service that will give them an edge to secure long term customer loyalty.
For insurers to create meaningful customer relationships that encourage long-term loyalty, they need to better understand three key areas surrounding customers' current needs and preferences:
- Insurers aren't providing experiences to promote loyalty
When it comes to insurer satisfaction, there's still room for improvement. Thirty-five percent of consumers report being only somewhat satisfied, with six percent either responding they are not very satisfied or not satisfied at all. Additionally, when asked when the last time an agent proactively reached out to them within the past year, nearly 40% of respondents said they had not or they didn't remember. And when insurers do reach out, they're not providing personalized experiences: more than half (53%) of respondents said their insurers only somewhat know their history and preferences. With a lack of personalized service and customer knowledge, there are no factors besides price motivating customers to remain loyal to their insurers. - Consumers are ready for advancements in customer experience
As buying habits and customer expectations shift, insurers need to evolve to accommodate these changing needs. And consumers believe their insurers can do it: 91% of respondents feel insurance companies can be innovative and cutting edge when it comes to their use of technology for better customer experiences. Many are also willing to share more data about themselves if it means better pricing and service, including auto mileage trackers (33%), smart home devices like doorbells and cameras (26%), and wellness incentives (22%). Additionally, buying habits are seeing a generational shift when it comes to the use of technology: when asked how they buy their insurance products, 40% of 18-24 year olds buy online only, as opposed to only 19% of those 65 and up. It's critical that insurers have the right technology in place to accommodate and provide better experiences for all consumers, particularly new generations of buyers. - But don't forget about the basics
Despite this, the human element still remains a top priority - when ranking preferred methods of communication with insurers, phone calls were ranked first (60%), followed by email (43%), and in person (39%). The basic fundamentals of service still remain the same: the most important element of good customer service is quick resolution (42%), followed by personalized experience (28%). Ranking among the top reasons for bad experiences are long wait times (37%) and the issue not being resolved after first contact (23%).
Insurers are doing well enough, but if they want to keep their customers in a competitive and fickle market, they need to do more, the company warned. "In such a price-driven industry, insurers need to look at ways to not only keep costs down, but also to give customers a reason to be loyal so they don't just chase the lowest quote," said Jim Ryan, vice president and industry market leader, insurance, Pegasystems. "Insurers require AI-powered technology to quickly identify and respond to key engagement opportunities, while also providing the right channels of communication for multi-generational customers. By offering better, more proactive, and innovative service, insurers can create lifelong customers, while becoming a more attractive option for new customers."
Sources: Pegasystems / The Marketing Factbook.
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