Lack of customer contact could cost insurers 12% in business loss: Top Broker Summit

The insurance industry is losing customers by infrequent contact and poor customer satisfaction/issue resolution, and more needs to be done to understand and contact customers.

Speaking at the annual Canadian Insurance Top Broker Summit, held on 14 November at the Ritz-Carlton Hotel in downtown Toronto, Graham Kingma, executive vice-president of The Verde Group, said the industry needs to be doing a lot more to understand and contact customers, or face losing as much as 12% of their business. “Compared to other industries, the insurance industry has infrequent contact with their customers,” he said in his presentation, entitled “Winning Consumers: Their Way.”

Contrary to the industry’s belief, Kingma said, customers weren’t nearly as satisfied with their customer experience.

“Insurance relationship owners believe they have a good relationship with their customers, know what issues their customers have and how to resolve them, and believe that their customers would call them when they have any issues but that there aren’t many issues.”

However, according to Verde Group’s database of over 30,000 respondents in the insurance industry, only 36% of customers would definitely recommend their insurance provider, and that 70% of customers reported to have experienced problems, while actually only 45% of customers would call their insurance company if they have a problem, and only 31% are completely satisfied after such a call. “You have to ask yourself how much potential business is lost due to problems, or problems not being resolved,” Kingma said. That number, he said, could be as high as 12%.

Biggest problems in insurance

The top problems in the insurance industry, Kingma’s data revealed, was “not enough communication/contact, a lack of knowledge/helpful customer service, not enough information/educational materials, and a lack in competitive pricing.”

Kingma urged brokers and insurers to bridge the gap by first understanding what drives people to do certain things. “The best way to drive customer behaviour change is through understanding and managing the experiences that drive customer attitudes and market behaviours,” he said. This is done through analysing customer experiences as a primary driver, attitudes as an intermediary driver and behaviours as a primary outcome.

Current data suggests there are more customers experiencing problems, than there are customers who are satisfied, Kingma said, leading to more “detractors” than “promotors” in the industry’s customer base.

And, since people are significantly more likely to act on a bad experience than a good one, insurers “should be concerned with the number of people their customers will tell when they have experienced a problem with them.” Kingma also encouraged the industry to single out the most damaging problems, which don’t happen that often but need more critical attention than the “trivial many that don’t.”

Proactive customer contact
The industry should also proactively contact their customers, Kingma said, but in the manner preferred by the customer, whether that be by telephone, mobile, SMS, e-mail, web or apps like WhatsApp.

“Ask your customers how often they would like to be contacted. Interact with them on their terms. Find reasons to be relevant to your customers with those contact opportunities,” he said. “Proactive contact can remove one of the most damaging negative experiences in the insurance industry.”

Download Kingma’s full presentation here.

View pictures from our Top Broker Summit here.

This story was originally published by Canadian Insurance Top Broker.