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Guest posting for Bob Cummings, Head of SAP Insurance Business Unit

Digital customer centricity is at the heart of success. Insurers, agents and brokers must work hard to attract customers by improving their offerings or miss out on valuable growth

Not long ago, buying and consuming insurance was a bit like having to pay income tax. You couldn’t avoid it, so you’d make the monthly payments and, if you were lucky, you’d never have to deal with head office. 

But the new breed of hyper-informed individual doesn’t see insurance as a tax on life. Instead they see it as a service, as protection and a way to get peace of mind in an increasingly volatile world – and it is something they’re used to consuming in ever more sophisticated ways. 

Instead of speaking to an agent, their default first action when looking for insurance today is to turn to their social network and ask their friends for initial advice, or to head for aggregator sites to help in their decision.  By the time they  do get to an agent, more than 50% of the buying decision process has already been completed.

For this new generation, a number of factors come into play when choosing a provider, such as how good a company’s mobile presence is, its connectivity, interaction and service level. Consumers don’t necessarily base their decisions on nuanced differences between products (or even only on price), instead they make choices based on impressions and assumptions, and they’re doing it more and more.

With this in mind, the type of interaction a company has with its customer is vital. In the past, there weren’t too many touch points that an insured person had with the insurer. Signing up for the policy, paying and processing a claim were the only meaningful events, and none of those were very enjoyable. Increasingly, customers seek a much more engaging interaction with their insurer and want to feel that they are in good hands, are cared for, and that the insurer is aware of the insured’s life events, driving behavior and much more.  

Fast forward a few years, and it doesn’t take a massive leap to realize that the companies with the most growth will be the ones that engage with their customers in a meaningful way. Consider that by next year, one in three US employees will be a millennial, and in ten years, they will make up 75% of the global workforce. Insurance is going to be hugely affected by this change, and insurers can’t just serve the same product and allow things to stay the same.

Just as we have seen in other industries, insurers also need to start thinking about the ‘segment of one’. In other words, designing their products specifically for a person’s needs and making that interaction an enriching one.  Customers will be willing to pay more for insurance if they feel they are paying for a positive service.

That said, it’s quite hard for carriers to quickly adapt their products, so after customer centricity, product agility – the ability to react to what products the market wants – is crucial. It’s not just about web or mobile presence, it’s about actually being able to get close to the customer; to access, contact and interact with them.

To find out how SAP can help solve your business needs take a look at our Solution Explorer for the Insurance industry.

What do you think about the issues discussed here? Continue the conversation in the comments below and on Twitter @SAPforInsurance

Consider the differing corporate strategies of two insurance companies:

  1. Carrier A: ‘We provide a financial service that allows customers to cope with a financial loss.’

  2. Carrier B: ‘We seek to know our customers, provide for their specific needs and give them peace of mind in this increasingly complex world.’

     Which company would you rather deal with?