Insurance Customers Loyalty at Risk as Retention Challenges Escalate


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An average of only 30 percent of customers globally report having positive customer experiences with their insurers, according to findings from the World Insurance Report 2013 by Capgemini and Efma.

The report also found that mobile and social media channels are gaining traction with insurers in terms of early adoption rates. These distribution channels can help insurers provide better customer experiences as well as capture operational efficiencies.

On average, the World Insurance Report (WIR) showed that approximately only one in three customers across 30 countries studied in the report's new Customer Experience Index (CEI) had a positive experience with their insurance company, and nearly two out of three customers are at risk of retention with only a neutral and/or negative customer experience.

"When customers have neutral or negative experiences with an insurer, opportunities are created for insurers to court other carrier's customers, and customers may switch even for minimal extra benefits," said Jean Lassignardie, chief sales and marketing officer, Capgemini Global Financial Services, in a statement. "Even in the U.S., the country with the highest customer experience ratings, insurers still face a risk of retention rate of 50 percent meaning no one is immune."

The report also showed that a majority of insurers are viewing mobile as an important access point for supporting the overall customer experience (especially in areas like quotes, claims, and relationship management) rather than just as an additional sales channel. While insurance customers prefer going online for activities like finding best price and comparing policy coverage, they still prefer physical distribution networks (agents and brokers) when it comes to gaining brand trust. The top five reasons for insurers to invest in the mobile channel are: anytime/anywhere/any device demands; keeping up with the competition; customer service costs; increased smartphone adoption; and cross-selling/up-selling opportunities.

Similarly, social media offers insurers new ways to increase their market penetration and increase the effectiveness of their customer retention/acquisition strategies. According to the WIR, a majority of global insurers (59 percent) are already leveraging social media but very few have integrated it into their overall enterprise-wide CRM strategies leading to sub-optimal results. The report suggests integrating social media strategies with traditional CRM will create "social CRM" enabling enhanced positive experience for customers' and insurer branding propositions.

"Another possible way for insurers to improve their customer experience ratings would be to look at the banking industry model," said Patrick Desmarès, secretary general, Efma, in a statement. "Even though banks have many more interactions with customers, their high customer experience ratings indicate best practices in data analytics, market segmentation, and cross-channel integration are being implemented."