Five trends shaping customer expectations of insurance

Vol 47: Issue 3 | October 2024

In short

• Customer expectations of insurance are being shaped by digital technologies and bigger retail trends such as loyalty to purpose-driven brands, cover on demand and seamless solutions via smart technologies.
• Insurance innovators around the globe are responding to new customer demands by listening to their needs and harnessing technology to reduce service friction.
• Updated customer-facing AI applications are expected to increase amongst insurance incumbents who, at present, mainly use them for internal processes.

Insurers are operating in a buyer’s market where digital technologies are fostering new levels of customer expectations. Empowered by unprecedented access to information, tech-savvy customers are seeking seamless, swift, personalised services and aligning their loyalty to purpose-driven brands.

This shift in customer expectations of insurance is also being influenced by bigger trends in the retail space. Here are five of the key trends shaping customer expectations of insurance and some of the brands that have stepped up to meet these needs.

Trend #1: Choice of interaction

Customers want more control over their purchasing experiences. This includes having more choice in how they interact with brands. Data from PwC shows 73 per cent of consumers point to experience as an important factor in their purchasing decisions.

“People’s expectations are becoming much higher,” says Jaquie Scammell, CEO and founder of ServiceQ and author of books such as The Future of Service is 5D. “They are much more tech-savvy and they want more choice, more variety, more speed, more ways of consuming information to get access to goods and services, and more ways of interacting with brands — and they are so exhausted by accepting average service. Companies need to step up their game when it comes to giving customers more of what they want.”

Case study: Avaamo speaks your language

Data from CSA Research — a research provider that focuses exclusively on the global content and language services markets — shows 76 per cent of online shoppers prefer to buy products with information in their native language. US-based Avaamo is helping them to achieve this. A multimodal generative AI platform, it empowers global enterprises to automate and deliver outstanding self-service experiences.

Avaamo’s virtual assistants support 114 languages. Customers can type in any of the languages, and the AI will reply in the user’s language of choice.

If a customer is speaking in another language during a call with a human agent, Avaamo AI can provide support by translating to English in real time, explains Ram Menon, Avaamo CEO and co-founder. “The agent can then reply in English and the AI translates back to the customer with no time lag.”

Menon says English-speaking workers can now support multiple dialects and languages. He points out that this is especially important in regions with a vast diversity of languages, like Asia, with the technology allowing the high cost of hiring agents who speak multiple dialects and languages to be reduced.

Trend #2: Aligning loyalty with brand purpose

The 2020 Zeno Strength of Purpose research from global communications company Zeno includes a survey of 8,000 consumers across eight countries such as the US, China, Singapore and Malaysia. It shows that consumers are four to six times more likely to buy from, trust, champion and defend companies with a strong purpose.

Monique Richardson, customer service expert and author of books including They Serve Like We Lead, says the desire to engage with purpose-driven brands is increasing.

“Customers have access to more information than ever before and they want to understand what brands stand for,” she says. “Purpose-driven brands are resonating with customers, who are also demanding greater transparency from the brands they buy from. Purpose-driven brands are also emerging as employers of choice, and when employees are aligned with a brand’s purpose, it filters through to the overall customer experience.”

Case study: Stella Insurance supports women

A purpose-driven insurance brand, Stella Insurance reimagines insurance processes and products to reflect women’s perspectives and needs.

Founded in Australia in 2020 by Sam White, Stella expanded into the United Kingdom market two years later and provides car, travel and pet insurance. While its cover is not exclusive to women, its vision is to balance the gender biases that exist for women.

“Our purpose is to strive for a world that embraces gender equality, both socially and economically,” says White. “That means changing the status quo for women today and for generations to come, and we’re starting with insurance.”

Stella’s car insurance, for example, includes domestic cover and does not apply any excess to a claim for damage to a member’s car that arises from a deliberate act by a current or former spouse or partner.

White says insurance should be “a partner in women’s lives, not just a product”.

Beyond product innovation, Stella partners with organisations such as Her Heart, a not-for-profit focused on the prevention of women’s heart disease, and Women’s and Girls’ Emergency Centre, which provides support for those experiencing domestic violence. “This purpose-driven approach has resonated deeply with our customers, who are seeking more than just coverage,” says White.

Trend #3: Cover on demand

As consumers demand flexible, cost-effective products and services, the pay-per-use business model is increasingly appealing. Powered by the availability of Internet of Things devices and data, the model marks a shift from fixed pricing to a usage-based approach. Businesses can align their revenue generation with the actual value delivered to customers.

“Customers want to be more empowered with choice and they want personalised services,” says Richardson. “That includes having access to services only when they need them.”

Case study: YAS delivers protection on the go

Launched in 2019, YAS in Malaysia and Hong Kong offers microinsurance on demand, allowing customers to pay only for the resources or services that they consume.

YAS insurance can be ‘hired’ to protect consumers anywhere via the YAS app. It offers cover for travel, sports, commuting and more, without monthly contracts. Insurance can be activated on demand using GPS technology, which allows users to be insured for specific events or durations. For example, if someone is hiking and a storm develops, they can activate insurance to protect their hiking gear instantly through the YAS app.

In a 2023 interview published on Medium, YAS co-founder and CEO Andy Ann explains the insurtech aims to tackle “the fundamental issues that have long plagued the insurance industry”.

“Many traditional insurance products no longer align with the needs of younger generations, and the cumbersome purchasing and claim processes deter potential users,” he says. “We’re revolutionising insurance by making it relevant, accessible and user-friendly, especially for today’s tech-savvy and mobile-driven customers.”

Trend #4: Seamless solutions via AI

Customers increasingly expect the frictionless service that AI tools can enable.

Simone Dossetor, CEO of Insurtech Australia, says legacy systems and manual claims processes have limited insurers’ ability to provide the seamless transactions consumers expect from industries like retail, but she believes this is changing.

“We completed a survey this year, and it showed that almost 50 per cent of [insurance] companies are using AI in some way and 67 per cent of our members are building some sort of in-house capability around AI,” she says.

“At the moment it’s very much about using AI to drive internal efficiency — how can they make it easier to get the information they need to provide a better experience to the end customers.”

“Technologies such as AI can help insurers meet customer expectations, but only if they get it right. Clunky chatbots, inadequate cybersecurity measures and insufficient guardrails around generative AI can be a huge turn-off for customers. And, when they contact their insurer during a crisis, it’s human qualities that they value most.”

While customers expect a seamless offering, Dossetor believes insurers are cautious at the moment about rolling out some forms of AI to their end-customer base. “While they are in the phase of using AI internally, they’ll become more confident. Over the next six to 12 months I think we’ll see more and more use cases going to end customers, but end customers won’t necessarily even notice that they’re using AI.”

Case study: bolttech reduces friction

Singapore-based insurtech bolttech operates as a digital insurance exchange, connecting insurance providers with businesses that want to offer easily accessible insurance to their customers without taking on additional risks. This embedded approach integrates insurance into the customer experience when they buy a product or sign up for a service.

For example, when a consumer buys a smartphone, they may be prompted to purchase a protection plan that offers repair, device replacement or trade-in. bolttech’s clients include tech giant Samsung, which uses the platform to offer device-protection insurance at point of sale.

Launched in 2020, bolttech works with approximately 700 distribution partners and 230 insurers across more than 35 markets. AI and advanced machine learning have been central to its operations and sit at the core of its platform to drive smart, efficient decision-making and enhance customer experiences.

For example, bolttech uses natural language processing technology to process vast numbers of unstructured data sources and generate automated analysis in real time. With these predictive models directly integrated into its platform, the insurtech allows its partners to better understand changing customer behaviours and deliver more proactive risk-management solutions.

In a recent KPMG article, bolttech CEO Rob Schimek says the bolttech exchange provides value for all participants, adding: “We are helping our partners provide a fast, easy, customer-centric experience.”

Trend #5: Predicting wants and needs

Consumers value personalised service. Data from Accenture shows 91 per cent of consumers are more likely to shop with brands that recognise, remember and provide them with relevant offers and recommendations.

By harnessing the data-collection and analysis capabilities of AI tools, brands can anticipate customer requests before they arise.

Dossetor says AI presents huge opportunities for enhancing the insurance customer experience.

“There are use cases in terms of risk mitigation, claims assessment, scanning vehicles, scanning properties, and that’s going to evolve pretty quickly,” she says. “Data analysis capabilities also allow insurers to understand their customers better than ever before.”

Case study: BizCover taps into real-time sentiment

Australian small-business insurance service platform BizCover was founded in 2008 to help SMEs compare quotes and buy business insurance online.

“BizCover has been primarily focused on the customer journey and offering value in the insurance space that previously wasn’t really there,” says Bradley Hoyle, manager of Operational Excellence at BizCover. He adds that the company has taken advantage of recent developments in AI to help customers find what they need efficiently.

“This includes things like real-time agent assistance, having AI to provide knowledge articles and relevant information that could help customers with products or processes, and making sure the customer gets the best-possible outcome.”

Hoyle explains BizCover has also developed a real-time customer sentiment analysis tool called the Pulse Check Engine, which helps it to understand customer needs.

“As soon as we get an email or a message via live chat, we can automatically check on the overall customer sentiment. Are they happy? Are there positive or negative themes? What are the recommended actions we could take?

“I think of it as having an ability to listen in on everything that’s going on live within the business and picking up trends and themes and issues that we can resolve.

“We automatically assign any low-scoring-sentiment cases directly to managers to review with the hope of turning a potential negative interaction into a positive one in real time.”  

Read this article and all the other articles from the latest issue of the Journal e-magazine.

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