Should I stay or should I go? Insurance companies grapple with innovation
Insurance companies and innovation don't often seem to go hand-in-hand, but as customer expectations rise, the industry must make changes.
It’s hardly controversial to say that most people view their insurance providers with ambivalence. The overriding perception of insurance companies is that they’re needed, but not liked, relied on, but not trusted.
With the pandemic, this negative perception of the insurance industry only intensified.
Financially stressed customers looking for more flexible billing and payment options were frustrated and quick to switch carriers, according a PwC survey. And given the importance of digital in the age of COVID, many policyholders (41%) said a lack of digital capabilities would send them looking for a new provider.
So how do we change the perception of insurance companies as hard to work with? What should the industry do to fix its bad reputation? We’ve got some ideas.
The perception of insurance as a necessary evil
As Sven Roehl – the founder of Toronto-based Cookhouse Labs – points out, insurance in its modern manifestation is far different from its centuries-old origin in community-based initiatives to protect individual assets.
Insurance is now a regulated industry focused on maximizing profits – similar in many ways to other financial services providers. As a result, customers tend to have a poor perception of insurance providers, an outlook even more pronounced among the younger customers who are so crucial to the industry’s future.
This negative perception stems partly from the very nature of the industry. Peter Maas, professor of management at University of St. Gallen, explains that even though insurance plays a necessary role in society, its customers tend to associate insurance providers with the negative events such as illnesses or accidents that compel them to submit a claim.
This perception is unfortunately reinforced when insurance companies fail to meet customer expectations in a time of crisis such as the pandemic – whether it’s dragging their feet on claims or not stepping up to cover testing.
Reputation remedy: Focus on humans, not products
Repairing this bad reputation isn’t easy, but experts have a few ideas:
- Focus on meeting customer needs
- Learn from other industries
- Adopt digital technologies
Industry Experts on the Perception of Insurance
A panel of insurance industry thought leaders convened to discuss the industry’s reputation and how to improve it. You can watch a replay HERE.
In Roehl’s view, insurance companies would do well to focus less on managing customer’s claims and more on teaming with them around the shared objective of reducing risk – for example, via healthier living or safer driving.
In other words, the perception of the industry can only improve when insurers focus less on pushing products and more on developing services their customers actually need.
IoT in insurance: Radical change, powerful potential
IoT in insurance can add customer value, improve executive strategies, and move companies from passive risk-taking to active risk management.
In this respect, insurance companies have much to learn from a seemingly disparate industry such as car manufacturing. What automakers have effectively done is transform anxieties about potential negative outcomes — car accidents — into selling points focused on new safety technologies.
Speaking of technology, it doesn’t help perceptions that insurers have been relatively slow to adopt the newest digital technologies. In virtually all industries, customers have become accustomed to real-time digital access to a broad range of services.
To the extent that insurance companies embrace digital technologies to expand access, customer perceptions are likely to improve.
It’s all part of the evolution toward a human-based approach to insurance – and that all starts with an open and sustained dialogue about the problems customers need to solve.
