Insurers are struggling worldwide with declining positive customer experience ratings, research by Capgemini and Efma shows. They are especially experiencing trouble to keep up with the increasing digital demands of Generation Y. To reverse the declining 'customer experience', the researchers recommend improving digital capabilities, whilst not forgetting the value of traditional channels.
Global consulting firm Capgemini and non-profit organisation Efma recently released their eighth-annual World Insurance Report (WIR) which analyses the satisfaction of the insured with their insurer. The 2015 edition of the WIR, which is based on responses from 15,500 customers across 30 countries and five regions and 165 interviews with senior insurance executives from more than 100 leading insurance firms, shows that positive customer experience ratings worldwide declined significantly.
According to the research, despite insures’ efforts to meet the increasing demands of their customers, global positive customer experience ratings dropped by 3.7% from 32.6% in 2013 to 28.9% in 2014. The biggest decrease is found in North America, which saw a decline of 8.3%, followed by Latin America (5.3%) and Europe (3.4%).
Commenting on the declining rates, Patrick Desmarès, Secretary General of Efma, says: “If you simply look at profit margins, you will think everything is positive for insurers, but it’s clear from the lower positive customer experience ratings that insurers are failing to meet the needs of customers.”
The research shows that insurers are especially struggling to meet the increasing (digital) demands of Generation Y*, and as this segment comprises one-quarter to one-third of the population in many markets this poses a big challenge for insurers, the researchers point out. Especially in the developed countries, overall customer experience ratings dropped sharply, with the biggest decrease in North America of 10.9% (life) and 14.6% (non-life) followed by developed Asia-Pacific: 5.4% (life) and 7.3% (non-life).
According to the researchers, insurers are in danger of losing this important customer segment to more agile competitors unless they are able to meet the increasing demand of high level of service across digital channels of this tech-savvy generation. Insurers should focus on social media, online, and mobile channels to engage with their customers, channels that more than 50% of Generation Y customers rated important in most regions.
Key to success future
For insurers to reverse the declining positive customer experiences does however not mean solely focussing on digital, the researchers warn. While insurers should improve their digital channels to meet the growing demands of their customers, these efforts should not be at the expense of the agent relationship, which still provides the highest levels of positive customer experiences. Going forward, the researchers recommend migrating towards a more effective engagement that combines both channel experiences: traditional and digital. In addition, they point out that the improved channels should work in harmony at any needed touch point along the customer journey.
Jean Lassignardie, Chief Sales and Marketing Officer at Capgemini Global Financial Services, explains: “On-going investments need to support all types of channels, at least for the foreseeable future. Insurers must strive to bring some of the qualities that define traditional channels to the newer channels and vice versa. Insurers that are able to blend traditional and digital channels in a seamless way will be the leading edge providers of the future.”
* In this report, Generation Y is defined as: “the customer segment aged between 18 and 34 who have always had technology such as the internet and smart devices in their adult lives.”