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Imminent Disruption: Why Insurance Customers Will Design Tomorrow’s Insurance Experience

No industry is immune from disruption.

Global hotel chains now face competition from sharing economy startups like Airbnb. Streaming services like Hulu and Netflix are pushing broadcast television to the brink of extinction.

So what disruptive force is arousing the entire insurance industry? Customers.

According to a 2014 report by KPMG, a majority (52%) of senior US insurance industry execs agree that, over the next 3-5 years, the number one transformation driver within the insurance industry will be customer demand, including “changes in customer focus, buying patterns, and preferences.”

Despite this awareness, most insurers are unprepared for this customer-driven disruption. For too long, insurers have viewed “customers” through a third-party lens of brokers and HR or finance departments, forcing individual policyholders – those who actually use insurance – to take a back seat in designing the experience they want from their insurance provider. The result of this marginalization is that navigating the insurance landscape – everything from choosing a policy to filing a claim to contacting customer service – has become overly complex, leaving customers overwhelmed and frustrated.

In an industry where the product remains essentially the same, it’s the experience that will dictate customer choice in buying, keeping, or finding new insurance. Unfortunately, today’s insurance experience – especially the digital and mobile experiences – lag dreadfully behind what other industries are doing to delight customers.

Insurers who wish to survive this imminent disruption must embrace it. They must use it as an opportunity to differentiate against competitors who continue to operate in an antiquated, business-as-usual world.

Designing the modern insurance experience demands hand-in-hand innovation with customers themselves.

Practicing the art of customer relationship building

Most insurance companies rely on transactional, and inherently passive, methods – like analytics, panels, focus groups, and social media listening – as primary means for collecting and understanding customer sentiment. But these methods don’t build trusting relationships with policyholders.

Customer relationships nurture the intuition of company decision makers and execs, and inspire customer experience innovation by revealing what’s broken, how to fix it, and the needs that have yet to be fulfilled.

For several years, MetLife has partnered with an online community of 300 customers, each of whom participates in activities and discussions that reveal the motivations, feelings, and perceptions driving their own insurance experiences. The community helps to simplify language and instructions on forms and policy documents, improves the call center experience, and selects relevant themes and messaging for marketing campaigns.

Meeting customers where they are: online and on mobile

Digital experiences are essential to connecting to today’s always-on consumer. Yet many insurers still rely heavily on legacy systems and inflexible engagement methods. These only frustrate digital-savvy customers who expect their insurance interactions, however infrequent, to be nearly as convenient and simple as shopping on Amazon.

According to a recent joint report by The Boston Consulting Group (BCG) and Morgan Stanley, customer satisfaction with the current digital insurance experience lags painfully behind other industries such as personal banking, retail, and travel. “Today, mobile is key, even more than the Web,” says the report, “and this requires an engagement model specifically conceived for a digital world – we believe that insurers are not yet there.”

The good news is that some companies are catching on. The Esurance mobile app, for example, enables policyholders to upload photos of automobile damage, file and track claims, and have live video chats with appraisers. And Aetna’s CarePass app encourages healthy living by connecting to health and fitness devices and apps like FitBit and MapMyRun so healthcare insurance customers can set and monitor fitness goals and access personal health data.

Customer-centricity as a disruptive force

Alongside digital and mobile advances, building customer relationships to inspire and disrupt the industry is now the distinct competitive advantage for growing business.

The industry is still far behind where it needs to be, but change is coming. As new startups like PolicyGenius are pushing the industry further in a direction that gives people more flexibility and control over how they buy and interact with insurance, customers will be the disruptive force. Insurance companies who carry the torch of customer-centricity into the future will be rewarded. Those that don’t will face certain extinction.

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