Insurance customer experience: PwC

Putting customers first isn’t just about making them happy. It’s also a sound defensive and offensive business strategy. Its immediate benefits include differentiation against competitors and promoting the buyer loyalty that leads to retention and additional revenue streams. Over the longer term, it can help carriers radically reinvent their business by:

Integrating customer engagement, understanding and advice to monitor risks and update coverages in real time.
Preventing claims events.
Providing policyholders other products and services, often in partnership with other companies, that meet their lifetime needs.

Fortunately, as other industries have shown, this is all entirely possible. Even though most insurers are just getting started, some are already experimenting with ways to better connect with customers, recognizing they can gain a significant competitive advantage.

Regardless of where you are in the process of reinvention, here are some considerations to help you along the way.

The price-experience gap: A disconnect between business and consumer on loyalty 

Executives

Consumers

Prices went up or discounts ended

%

Had a bad experience with products or services

%

Q:Which of the following do you think are the main reasons why customers have left your company in the past year?
Source: PwC Customer Loyalty Executive Survey 2022 base:410
Q:Why did you stop using/buying from this company/brand?
Source: PwC Customer Loyalty Survey 2022 base:1,065 consumers who said they stopped using or buying from a company in the past year.

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Customers (individual, commercial and employer)
- “You have my personal data. Why can’t you offer me personalized coverage?”
- “I expect transactions to be as quick and easy as shopping with an online merchant.”
- “Policy language is indecipherable. What am I really paying for?”
- “The claims process can be long and frustrating. Make it better and, more importantly, help me avoid the stress and inconvenience of claims in the first place.”
Agents, brokers and alliance partners: “Create a product that customers want and make it easy for me to sell and service.”
Product/service partners: “There are many ways we can profitably work with insurers to make customers happier, but carriers typically don’t view us as a strategic partner.”
Internal employees: “I don’t have the right insights and tools to serve customers.”

Most successful businesses try to put customers first because knowing buyer preferences and behaviors is a catalyst for profitable growth. The rise of digital technology has greatly enabled these efforts, particularly in the retail and consumer sector. However, despite the vast amounts of consumer data the industry collects and uses, carrier investments in customer experience haven’t translated into better solutions and interactions.

For starters, purchasing insurance is rarely as straightforward as buying a toaster. Considering the complexity of many coverage needs, customers often can’t just click an item on a website and add it to their shopping cart unassisted. Moreover, statutory, capital and policyholder protection requirements complicate an insurer’s ability to enter new markets and quickly design and update products and services.

However, the biggest challenges carriers face are of their own making. Most carriers have structured themselves with product-oriented operating models that align products to internal business units. This can negate efforts to focus on customer metrics like net promoter score (NPS) and customer life-time value (CLV). In addition, although they’ve long been involved in partnerships and white labeling of products, they’ve rarely managed them as actively as their in-house initiatives. These siloed business structures and products lead to disjointed customer experiences with unwieldy quote flows, inadequate bundling of coverages and narrowly defined risk assessment and coverage sets. This does not align with what consumers want and need from insurers or what they’ve come to expect in an era of online commerce.

Focusing on the customer requires revising business and operating models, making corresponding changes to corporate culture, enhancing human and technology resources, and increasing their involvement in partnerships. This may seem daunting but some carriers are already making the transition, and the technology, methodologies and expertise required for success are all at hand. Better yet, the benefits exceed the costs because a customer-centric approach:

Increases profitable growth. Greater loyalty and advocacy increases share of wallet and life-time value of customers. From your own perspective, would you rather give your business to a company that has a take-it-or-leave-it mentality or one that tries to provide you what you want?
Decreases loss ratios. A focus on risk prevention instead of paying out claims post-incident leads to lower loss ratios.
Creates new revenue streams. Moving beyond cursory service and commodified products can diversify earnings through partnership revenue, noninsurance offerings and data monetization.
Blazes a trail for more transformational change. With sensors and algorithms monitoring, detecting and forecasting risk in real time, customers could pay primarily for risk prevention. In turn, traditional coverage risks would decline and the nature of insurance substantially change.

What it takes to become customer-centric

A customer first approach and its benefits are straightforward, but there’s a lot that underpins them. To make the most of the strategy, you’ll need to develop and integrate:

Customer understanding
Seamless engagement
A variety of compelling offerings
Expert advice

Customer understanding

At its core, this means understanding what customers want and how they want it. And frankly, most customers would prefer not to buy insurance. They do so only because they’re required to or recognize they have an acute need for it. In fact, most customers aren’t even interested in buying protection from risk or loss. Rather, what they really want is to be financially secure, confident that they can meet their everyday and long-term goals.

Understanding this core desire opens new possibilities for designing solutions and experiences that customers really want. Customer understanding also means using customer data to effectively protect them, prevent losses and inspire financial confidence. This includes collecting and storing data from sensors, wearables and other tools and using it in a real-time feedback loop that informs product design, pricing and customer interactions. Doing this will help you identify the specific types of customers you want and present them with compelling offerings throughout their lives.

Seamless engagement

Customers expect seamless transition between and interaction across channels. To provide consistently practical and easy interactions, you need capable people to help customers at the appropriate times and state of the art technology (including chatbots and virtual/augmented reality) with a foundation in the cloud to effectively share and link their data across offerings. These investments in people in technology can facilitate positive touchpoints beyond just time of purchase and claims and lead to cross-selling opportunities that address customer prevention and protection needs at appropriate life/business stages.

A variety of compelling offerings

You need many useful products and services to increase the value you offer buyers. An actively managed network of partnerships is an effective way to meet an array of buyer needs at the point of sale — when customers are most likely to purchase protection — and widen market reach. Such networks include embedded insurance arrangements and orchestration of/participation in ecosystems that offer products, access to advisors/contractors, employee benefits and more.

Expert advice

To move beyond being sellers of interchangeable commodities that compete primarily on price, carriers and distributors should utilize the three capabilities immediately above to provide customers and policyholders meaningful advice that addresses their unique needs at the most appropriate times. This guidance should extend beyond just the time of purchase and be available from the moment coverage begins, through changing coverage needs and during any claims incidents.

Practical examples of a customer-first approach

The capabilities we describe above are complementary. They collectively enable true customer-centricity. In contrast, a disjointed approach inhibits success.

As we’ve shown in our marquee Insurance 2030 report, defining customer personae and their respective buyer journeys is a particularly effective way to visualize how the factors for success can come together in a seamless whole. With that in mind, here are a couple of detailed examples that show how carriers can put theory into practice.

Persona: Family
Overview: Jim and Brenda are in their early 30s. They’ve just had a baby and are moving out of the city to the suburbs. They put a contract on a house and are looking for homeowners insurance.
Shopping preferences: Online self-service, with as few interactions as possible (set it and forget it mentality)

Journey	Traditional experience	Customer first experience	Enabling products
Shop	Jim and Brenda receive an agent referral from their mortgage broker. They receive quotes from multiple providers, but only for homeowners insurance.	The mortgage broker alerts Jim and Brenda to their lender’s home security device and insurance offerings. Jim and Brenda engage with an effective chatbot to select preventative measures such as home sensors and specific coverages.	Embedded coverage Homeowners insurance
Buy	The rate changes from quote to bind. Dissatisfied, Jim and Brenda continue shopping. They finally settle on coverage that “seems okay.”	With the quote, Jim and Brenda also receive an offer of free smart watches if they opt into a healthy living program. The wearables allow them to track their health and control their new smart home devices. These perks impress Jim and Brenda and they purchase the insurance bundle in a single transaction.	Wellness program Wearables
Use	Their boiler leaks while they’re on vacation, flooding the basement. After returning home to a very unwelcome surprise, Jim and Brenda call a carrier rep, file a claim, meet with an adjuster and then receive a go-ahead for repair, which winds up taking two weeks to complete. All of this adds considerable inconvenience to the stress they already feel.	Jim and Brenda are on vacation and receive an alert that their boiler is malfunctioning. They use the carrier app to find a trusted handyman. They let him in via a smart lock and he fixes the boiler, preventing damage and a resulting claim.	Home sensors Trusted provider ecosystem
Grow	After they’ve been in their home for several months, Jim and Brenda receive a series of marketing emails pitching a homeowners/life insurance bundle. Although the volume of emails is annoying, Jim and Brenda have been considering getting life policies so connect with an agent. They then learn that they’d have to take full physicals, complete with blood samples, just to be eligible for coverage. They decline the offer—and start receiving even more emails.	After being enrolled in the carrier's healthy living program for a few months, Jim and Brenda are eligible for significantly discounted life insurance. The couple receives an offer through the app that doesn’t require any additional information for enrollment.	Life insurance

Persona: Small business owner (<10 employees)
Overview: Maya opened her first bakery in Portland, Maine, two years ago. Business is booming and she’s planning to open a second location. Just to get up and running and keep her costs low, she opted for the most limited coverage available when she began. However, she now has a real opportunity to increase her staff and assets.
Preferences: Maya wants to work with a broker to make sure she understands and gets the coverage she needs.

Journey	Traditional experience	Customer first experience	Enabling products
Shop	Maya’s Boston-based broker serves mostly larger clients and doesn’t know small business issues or the Portland market very well. He emails Maya several coverage options with guidance limited to “these all look fine but just let me know which one you’re most comfortable with.”	Maya reaches out to her broker, Jim, to discuss expanding her business. Jim isn’t in Portland but arranges a metaverse walkthrough of her business using a digital twin. They virtually tour Maya’s business to determine how to prevent claims and efficiently expand her business. She receives a follow-up report in a dashboard that includes her current risk assessment and how it’s likely to change as business expands.	Metaverse appraisal Business assessment and expansion plan
Buy	Maya would prefer preventative coverage but as far as she can tell (policy wording is very opaque), options are limited. She chooses what seems like the best coverage her broker has identified, which focuses on potential claims events.	Using the dashboard, Maya is able to model potential shocks to her business and growth plans. She can test for scenarios like: • I lose power for an extended period and our food stock goes bad. • Customers suffer food poisoning. Maya adds customized preventative measures (e.g., sensors) and coverages and receives updated premiums in real time. She also has the option of filling out quarterly self-assessments that will qualify her for premium discounts.	Business sensors Business owner’s policy (BOP) coverages Additional commercial lines coverages
Use	A couple of customers claim to have suffered food poisoning from the bakery’s chicken salad croissants. Maya’s policy does cover such an eventuality but the claims process takes months. In the meantime, Maya’s social media ratings and peace of mind have taken a beating.	The dashboard notifies Maya when her bakery receives negative comments on social media about a food poisoning incident. The notification indicates that Maya’s eligible to receive a claims payout and also includes a link to a crisis management guide, which offers an optional session with a crisis advisor. Maya decides to meet with the advisor, who helps her effectively address the situation.	Claims-enabled crisis management support
Grow	Maya has overcome the food poisoning crisis and business is thriving again. But she’s working 72 hours a week and is having a hard time finding and keeping staff. She thinks meaningful employee benefits would help her attract and retain employees but finds options, terms and conditions baffling.	Maya now has four locations and 25 employees. This triggers her dashboard to auto-generate an employee benefits package that includes health insurance and voluntary coverages such as life and AD&D, as well as options for dental and vision. Because it should help her lure and retain employees, Maya opts for a customized employee benefits package that also provides her and her employees access to a broader benefits marketplace. A virtual enrollment fair and avatar help Maya and her employees understand their benefits and options.	Employee benefits packages Enrollment fair

Contributors

PwC’s Juneen Belknap Kirk, Marie Carr, Susmitha Kakumani and Sarah Berman contributed to this report.

Insurance 2030: What’s your future?

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Insurance 2030: From customer worst to customer first

The price-experience gap: A disconnect between business and consumer on loyalty