While insurance CEOs are well aware that their organization’s survival depends on their ability to reorient their business around the customer, few feel they have made the necessary progress towards becoming truly customer centric, according to KPMG’s 2017 CEO Outlook.
A great deal of money, time and effort has been invested into various transformation initiatives and technologies but, at the end of the day, most insurers have achieved only incremental improvements in their customer propositions and relationships.
Insurers require fundamental business model change
This lack of progress stems from a general reluctance on the part of traditional insurers to make fundamental changes in their business models, likely due to the sheer complexity of the task. Indeed, becoming customer centric requires a new vision, insights, cultures and partnerships that put the customer at the core of the business. For most insurance organizations, this will mean radical change throughout the business and ecosystem.
Although insurance CEOs seem very keen to get closer to their customers, this requires them to have the right insights about their customers and the capability to do something valuable with those insights. For most traditional insurers, that will mean finding a way to succeed despite their legacy technology environments and disaggregated customer data silos. Customer analytics is a very powerful way of harnessing this insight, yet only 8 percent of insurers say they are using analytics to identify customer preferences.
How to become a truly customer centric insurer?
- Leadership: KPMG professionals’ experience suggests that the shift towards customer centricity starts with the board and executive team who need to set the change agenda, articulate the vision and create the customer proposition.
- Economic model: To achieve the right commercial outcomes, firms will need to start by understanding the customer economic model – knowing what levers they can pull to achieve various outcomes.
- Digital focus: Leading insurers are elevating the shift to digital channels as a first priority. Any new transformation initiative should be assessed in terms of how it improves the shift to digital and the development of seamless omni-channel experiences.
- Customer Insight & Knowledge management: Improving the customer experience requires deep insights on customer trends, demands, demographics and individual experiences. It will require insurers to develop and enhance key organizational capabilities, including data and technology knowledge through new customer relationship management systems, new sources of data and new visualization techniques, as well as front-line employees and data professionals to develop new data-driven capabilities, new ways of working and new skills.
- Customer journey: Leading insurers recognize that they must focus on improving each customer journey. To fully assess the customer journey and the impact of improvements, insurers will need to measure not only the traditional customer experience indicators, but also other – possibly more emotional – indicators to help drive continuous improvement.
- Employee engagement: Simply put, employee engagement generates innovation, creative problem solving and great experiences. Really working to understand the employee journey and thinking about employees just like they think about customers is a mindset shift that can have great results.
- Team structures: Rather than structuring their organizations and teams around traditional vertical and horizontal functions, some insurers are now reorienting their organizational structure around the customer, and creating dynamic teams of empowered employees that focus on points in the customer journey rather than specific transactions or processes.
- Partnerships and Intermediary relationships: Leading insurers recognize that they will need to work closely with their B2B relationships and intermediaries to capture, analyze and leverage available customer data and information.
Insurers must start turning the ship now
While KPMG member firms’ experience working with organizations across the globe suggests that a handful of insurers are already making significant progress towards building a unique and valuable customer experience, our interviews with consumers last year reveals that most continue to disappoint. Insurers will need to move quickly to change their business models and build their capabilities, or risk the demise of their business.