Roundtable: A customer-centric approach to the digital future

Just under 22% of insurance respondents to Post’s Personal Lines Survey 2019 said they were well prepared to meet the needs of customers born in 2000 when they turn 25.

The insurance industry has already made strides to deliver more propositions digitally but with expectations abounding of the amount of business in the sector being transacted in this manner doubling over the next six years challenges remain.

However, as the specialists at the roundtable made clear, digital is about more than transactional technology. To succeed today and tomorrow requires a mindset embedding digital into business as usual in the way insurance operates while never losing sight of serving customers in the way that is convenient for them.

As such then the stats are not ones to be feared but more a reflection of the opportunity to evolve with shifting customer needs, demands and expectations.

Charlotte Halkett, chief commercial officer of Bought By Many, stressed that a key question was how do customers want to talk to their insurance providers.

“Sometimes that’s technology, and sometimes actually it’s not,” she suggested.

From the design of products through sales to claims the job of insurance is to make customers lives better and bring knowledge to bear, she explained.

Mark Coffey, director of commercial for Atlanta Group, agreed that the right way of solving the conundrum of the digital future was to see technology within the framework of its purpose for the customer.

“Yes, we plough a lot of time and money into digital,” he said. “But, ultimately, that’s to provide a better customer outcome and a better customer journey”.

The attendees shared how they take this attitude into the operational side of their firms.

Allan Potter, head of digital at Hastings Direct, noted that while he works in the digital now team, the aim of being the “biggest and the best” digital insurer was prevalent throughout the organisation, almost to the point of making the term digital redundant.

“It’s all about how the customers want to transact with us,” he detailed.

Similarly Darren Saunders, CCO at Staysure, said that digital was at the “heart of the business” for the travel insurance specialist broker. Saunders defined digital as not new anymore arguing it was all about the “cultural shift from established businesses”.

However, fellow broker David Greenhalgh noted that the high-net-worth market was closer to the beginning of the journey, one he believes it has to go on.

Greenhalgh, associate director for private clients at RK Harrison, flagged that buying habits were changing but numerous tech companies had tried to enter the market and failed.

“They are going on Facebook and advertising, but it’s not targeted, whereas we have targeted affinity business, perfect clients.”

Heart of the business

With the participants unanimous that putting the customer at the heart of business planning was the top priority the discussion moved on to using technology to deliver appropriate services and experiences for varying age group segments. The research had suggested that the 50-year olds of today had different demands than the 25-year olds of the future.

Chris Thompson, global head of mobile at Aviva, disagreed. While the younger end of the market is more digitally savvy it is also price conscious and happy to call to check a quote with the older end of the market showing more activity on mobile and tablet.

Halkett backed up the point that the real factor should be the complexity of the customer’s problem, irrespective of age, while Thompson urged the industry to avoid the trap of assuming a “build it and they will come” strategy will work.

Instead he also returned to the idea of creating products based on solving customer problems. “We still get it wrong,” he accepted but added that with the right mindset from the beginning digital allowed for an “agile way” of evolving and solving mistakes.

Axa Insurance personal lines (intermediated and corporate partners) technical pricing head Vipul Goel pointed out that the pricing of customer risks was already channel agnostic. Using the example of a motor product Goel said that whether they are coming via the digital channel or telephone what matters is the way they are going to drive. “It’s more about providing the convenience and taking other factors on,” he summed up.

Rather than the route of interaction it is the application of new technologies and use of machine learning that is impacting pricing.

The underlying point has to be being clear with the customer about how you are providing value, said Luke Shackerchi, trading manager at Direct Line Group.

Not using technology just because you have the tool but remembering the purpose of serving the customer.

While the customer journey is critical, the UK motor market is highly price driven Kevin Findlay, chief technology officer at Ingenie, maintained. “You’ll sell more on the aggregators by being half a pence cheaper,” he said.

Potter agreed that price is key but countered that digitised processes for mid-term adjustments, claims and renewals as desired by the customers gave good experiences to help build long-term relationships.

“Creating that enduring perception that we are good at digital will hopefully stand us in good stead in year two and year three as well,” he said.

With customer expectations at ever higher levels no matter the communication channel, the debate addressed the underlying question of existing products. What do customers want now and what will they seek in the future?

On demand were the words that came up most frequently in the research.

The panellists have participated in the evolution of telematics  and praised the manner in which it has substantially reduced risks in high-risk groups. This came in part through increased engagement during the explanation of policy terms and via supplying the information the customer needs on an ongoing basis to keep themselves safe.

Asked about the shift in proposition Findlay said the UK market was moving “a little bit away from fitted devices” to self-servicing and use of apps.

The opportunities of 5G to provide information on a real-time basis and pricing per journey was also to the fore in the conversation although opinion was split as to how far people would want to move away from the simplicity of traditional policies.

The internet of things was another area for debate.

Thompson predicted that in the future all items, such as golf bags, will be smart tagged, allowing insurance to adjust the pricing based on where it is stored and when it is transported. Others questioned just how much smart tagging will solve “pain points” for customers but he maintained that Aviva’s research showed people want to have the control.

Personalised propositions

The research also suggested there is strengthening movement towards personalised propositions.

Steve Beard, a divisional head of Markerstudy, questioned if the industry was asking customers enough questions about this.

In his view success is now, and will be in the future, about ease of service and giving customers options across online, apps, by phone and more.

“We can better engage and we can improve risk through the year and we can reward, but it’s got to be personalised,” he said.

It was a consistent viewpoint, as seen in that expressed by David Martin, head of retail management at Zurich.

“No longer does one-size-fit-all,” Martin observed. “You need to bespoke and personalise everything you do in a different way.”

Aggregators have been a critical part of the market for many years and are still growing. There was no expectation of a change any time soon, although a couple of participants touched upon if new technologies might bypass them in terms of acquiring customers particularly with increasing personalisation in the market.

The main thrust of the conversation was though that as personalisation grows over time it has to be balanced for those who want more and less of it.

“We are seeing a move towards insuring the customer as opposed to the product,” said Martin.

He sees pricing becoming more intelligent in a relatively invisible way where insurance needs to explain to customers that they understand their needs.

“As you get to know those customers and you start to see it in your data, that’s where we start to add value.”

Pulling together this data intelligently was a theme latched on to by the group with Thompson warning that customers want to be contacted by Amazon but less so by insurers.

“If we are an insurer and we tell you what you need to buy, they are like: ‘Why do you know this about me? I don’t want this’.”

The specialists felt that communicating properly with customers would help negate this.

Explaining the value of getting the information would address the issue, however, as Beard noted there has to be a “happy medium”. Just as the industry needs to avoid appearing suspicious to customers it needs to keep away from overloading them with information.

If insurance becomes overcomplicated “then we are back to the fact that they will just purchase based on price and hope for the best”, Beard summed up.

Balancing making the proposition more individual for customers with over-engineering it is sure to be a challenge for years to come.

For Austyn Tusler, chief underwriting officer of UK General, education will be part of the package. At the moment insurance is seen as a “grudge purchase”. But personalisation could lead to more people understanding what risk transfer means and with greater comprehension there will be better market penetration. The value will be in being seen as a key person.

“From that digitalisation then ultimately it just becomes an enabler,” he concluded.

The industry suffers from a lack of trust but with consumers feeling more in control of an insurance purchase it will be better able to demonstrate value. The roundtable tackled the issue head on.

Halkett used the example of Bought By Many improving the clarity on the wording of its documents.

She advised getting people from outside the industry to help to do it.

“It’s fair if the customer can understand what they have bought,” she stated. “Then whether something is covered or not is incredibly clear to everybody.”

Findlay agreed the insurance industry needed to do better to get away from “silly” language and called for the same process to be undertaken with data.

“Make it very, very clear what data you are using, instead of having it hidden in the contracts,” he said.

As Saunders described, increasing clarity is “half the challenge” with policy wordings evolving to ever increasing sizes.

“Some parts of this industry haven’t caught up with where we should be now, let alone looking at where we need to be in five or ten years’ time,” he said.

“It’s about legacy and a bit of nervousness around the insurance industry holding onto what it knows and what has served it well historically, not seeing what’s coming at us.”

Thompson concluded that simplifying documents helped simplify the products.

“It makes you just go back to the basics and go, ‘This is stupid. If I don’t understand it…’”

The personal lines challenges then are immediate as much as they are forward looking.

According to the experts, being internally focused is important, but not as important as doing enough to truly understand the customer and their needs and expectations, both from an insurance point of view and how they live their lives and interact more generally.

Being brave enough to be a little more transparent, ask questions and simplify terms and conditions will leave the industry best placed to make sure people can engage with it how and when they want. In this way insurance will grow together with its customers to meet the needs, demands and expectations of all age groups in 2025 and beyond. 

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