Insurance 2030: From customer worst to customer first

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.

What stakeholders are saying

  • 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.”

Why the insurance customer hasn’t come first

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. 

Why is insurance lagging behind? 

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.

The advantages of a customer-first approach

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

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)
Family insurance customer persona
  • 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.
Small business insurance customer persona


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

Industry perspective

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What does customer first mean for the insurance industry?

PwC's Juneen Belknap Kirk and The Hartford's Claire Burns discuss what does customer first mean for the insurance industry.

Topic sections:
Click on the video above and drag the bottom bar to the timeline shown below.

00:00-03:53 | What is customer first insurance?
03:53-05:38 | How technology enables a customer first approach?
05:39-07:48 | Customer oriented operating models
07:49-11:41 | Using ecosystems to reach customers
11:42-13:25 | Reinventing insurance to benefit customers

Juneen Belknap Kirk

Principal, PwC Insurance Consulting

Claire Burns

Executive Vice President & Chief Marketing and Communications Officer, The Hartford

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