The transformation of customer relationships in the insurance industry


The relationship between insurance companies and their clients has always been tricky due to several factors. But just like any other sector today, insurance organizations are transforming with digital technologies – and these solutions are customer-centric. What’s in store for customer relationships in the insurance industry? Keep on reading to learn more.

Insurers have historically struggled to form close relationships

Due to the specificity of an industry that consists of relatively rare contact with the client, insurers often didn’t have the opportunity to develop a relationship with their customers. Most of the time, clients interact with the company on two occasions: purchasing a policy and possibly reporting a claim. This aspect translates into a relatively small amount of data available about customers or their behavior, at least when compared to other industries. Secondly, customers generally don’t feel emotionally attached to insurance brands. Purchasing insurance is nothing but an obligation for them, and they tend to focus on finding the lowest possible policy price.

Insurance companies contribute to this because they don’t position their products or their brands against competitors. They don’t actually emphasize the differences between their products. Meanwhile, customers would like to be treated in a personalized way and have a real choice between products and plans. Most insurers find it difficult to implement a model customer care approach where the customer receives a personalized offer, with the right price tag, at the right time, and through the preferred contact channel. All of these factors can also change over time, which is another dimension that insurers should take into account.

What should insurers focus on today to win in the market?

The customer should always be in the spotlight. We return here to the concept of customer-centricity but in the full sense of the word. Organizations should shape customer experiences by various communication channels equally – be it mobile applications, web portals, all kinds of advertising, or direct contact with intermediaries and agents.

It’s worth emphasizing once again that the agent is still an element of the system, and, of course, we cannot switch to digital channels everywhere. Customers require face-to-face contact, and agents are a major component of every insurer’s sales system. So marketing and sales in the insurance industry of the 21st century will become a mix of different channels. The sales process can start in one channel, pass through another one and end in a third one. The flow will be natural and tailored to the client's activities, happening in real time.

Building an omnichannel experience

Insurers should not only turn to digital channels but develop a truly omnichannel and hybrid communication strategy. We anticipate that after the pandemic ends, this challenge will be even greater than before and during it. In the insurance sector, customer expectations are based on the historical situation and current events. Contact with a human agent is certainly still more expensive than using digital solutions. But it may turn out to be even more important than we thought. Moreover, acquiring a new client is much more expensive and difficult than maintaining an existing one. This inspired companies to develop a solid relationship management strategy that involves investment in all kinds of innovation. Today, the answer is hybrid marketing that combines the option of contacting the customer through various channels in truly omnichannel ways.

Data privacy continues to be important

This is another challenge insurance companies have to solve. From the customer's point of view, the situation is not positive. SAS research shows that nearly 70% of customers are concerned about how their data is collected, which data is processed and for what purposes. Additionally, over 40% of EMEA customers across the region don’t trust insurers as to the purpose of processing their data.

After social media and advertising, insurance is the third-least trusted industry. This is what amplifies this challenge. And it’s becoming even more complex because of the use of data from mobile devices and sensors in vehicles. Similar sensors might soon also appear in our homes, and insurers will collect data for security purposes – but also for calculating the premium and assessing the risks.

That’s why insurance companies need to focus on building trust and educating their customers, showing them the benefits and risks resulting from data collection.


About Author

Marta Prus-Wojciuk

Principal Business Solutions Manager

Marta Prus-Wojciuk has been working at SAS since 2008, where she gained experience during the implementation of business solutions on the financial market by participating in the first implementations of CRMa systems and for detecting fraud in the insurance sector in Poland. Currently, Marta is the leader of the insurance area practice in Central Europe on behalf of Customer Advisory.

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