Insurance Companies Need to Break Out of Sea of Sameness to Earn Customer Loyalty

Many insurance providers are clinging to archaic business practices, making it difficult to differentiate themselves and cultivate customer loyalty.

But, according to a new study from Watermark Consulting, insurance companies that deliver a great customer experience are rewarded over the long-term, by consumers and investors.

Some insurance companies are using innovation in customer experience to change their business models and attract more brand loyalty:

Pay-as-you-drive, usage-based auto insurance policies reduce insured costs, and insurer risk. Most car insurance policies charge you based on age and history. Now, the distance you drive – and how you drive – can result in lower premiums. Zubie is working with Progressive Insurance to put recording devices in your car, while Censio uses an app to collect much of the same data

Digital insurance managers help you manage all your policies (and will sell you insurance as well, if you want…). How many insurance policies do you have? While I can’t make an accurate guess, I’ll venture 10 or more. Between life, auto, health, umbrellas, property and more… it’s a lot. And I’m not alone. Now, startups like Knip and FunctionFox make it easy to manage all your policies, from your smartphone. And if you need more? Hey, they’re brokers too…

Video-enabled doorbells discourage burglars and lower homeowner premiums. A motion detector records who comes to your porch – and immediately saves it to the cloud.

The study focused on model portfolios of the Top 5 (“Leaders”) and Bottom 5 (“Laggards”) publicly traded insurers in J.D. Power and Associates’ annual Insurance Satisfaction Studies.

“We found that the fortunes of Insurance Customer Experience Leaders and Laggards diverged in a dramatic and revealing way,” explained Jon Picoult, Founder and Principal of Watermark Consulting. Leaders far outperformed the industry index, while Laggards trailed it. And the performance gap wasn’t small – over the seven-year period examined, Leaders delivered average annual returns that were at least double that of the Laggards. Insurance providers may publicly tout the importance of customer-centricity, but behind the scenes, many are skeptical that such a strategy pays off. As a result, they continue to cling to archaic business practices that create complexity and confusion, further stoking customer frustration.”

Insurers that impress policyholders reap the rewards in the form of increased loyalty, greater wallet share, stronger word-of-mouth, and a more competitive cost structure, Picoult noted.

“Insurance companies are struggling to set themselves apart in a marketplace that increasingly views their products as commodities,” Picoult said. “As the Leaders in this analysis demonstrate, the best way to break out of that ‘sea of sameness’ is to deliver an end-to-end customer experience that turns everyday policyholders into true raving fans.”

Recent Content

Membership and Pricing

Videos and podcasts

Membership and Pricing