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Why do insurance companies find it so hard to engage with their customers?

June 24, 2014

I have just read a brief report from Eptica, a firm that offers what it calls customer engagement software, on how the insurance industry is shaping up to the challenge of engaging with its customers in the multi-channel age. It won’t surprise anyone to hear that the answer is “Not very well”.

Putting to one side the obvious fact that Eptica has a vested interest in arriving at this conclusion, the report does contain some useful comparisons with other service sectors and, crucially, focuses on key shortcomings.

Insurers have always be moaned that the dynamics of their business normally mean the only times they have an opportunity to engage with customers is at the inception or renewal of a policy and when they have a claim. The multi-channel, social media age is changing that but insurers are in danger of being left behind. This report shows just how far behind they are already.

The key is engagement. That is the glorious opportunity opening up to insurers in the digital age. Technology such as telematics is already creating a wealth of new interactions between insurers and their policyholders and that is just the beginning. Before the industry gets too excited about that it should ponder just how poor it is at using established technology such as websites and email to communicate: the findings in the Eptica report are sobering to say the least.

If insurers can’t communicate effectively by email when someone wants to buy a policy what hope have they got as the current generation of teenagers and university students starts to become customers? They view email as old hat, preferring the instant communication tools of social media. How many established insurers are ready to respond to their (potential) customers on Facebook and Twitter? Very, very few.

Move from the sales process to the claims process and the picture isn’t any better. Tracking something through a structured process is one of the easiest things to do on the web but how many insurers have fully embraced the potential of that technology? This report doesn’t deal with that but I think we all know the answer.

The most disappointing aspect of many insurers’ forays into social media is that they clearly do not understand its potential for genuine engagement with their customers. Some have got to the stage where they see it as a communication tool but overwhelmingly that means just broadcasting and pushing messages, not inviting engagement and conversation. Maybe they are frightened by that? Maybe they fear the regulators will take a dim view of genuinely communicating with individual customers on Twitter? The industry needs to get over all of those fears and embrace the opportunity. If it doesn’t then before long we will all be insuring with Google, Amazon, Facebook et al with the traditional insurance market pushed even further to the margins.

The Eptica report can be downloaded from its website http://www.eptica.com/insurance-multichannel-Study-2014.html.

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