By: Omar Abdul-Hafiz
Amidst all these challenges and turbulence, market experts are working to map out the main critical trends that have grasped insurers’ attention. Most notably, statistics show that customer satisfaction was perhaps the most trending concern among insurance providers. This article touches upon this issue, among several others, in some detail.
Four main trends that defined Insurance in 2020
According to a report by Deloitte, four major trends defined the landscape of the Insurance industry in 2020.
New world, new customers, new solutions
Without a doubt, customers are the most essential element for success and survival in a highly turbulent market. As such, every talk about growth through the various means from M&A to digital disruption is unlikely to make sense without customer satisfaction being the pivotal point of discussion.
The past decade has witnessed an exponential expansion of customers’ needs and expectations. Moreover, not only have their needs expanded, but they also transformed and variegated. Since the advent of social media, smartphones, other highly ubiquitous means of communication, the very definition of customer experience has transformed dramatically.
This big change also made it necessary for insurers to provide a variety of products aside from their main course. According to the report, Insurers hold that 62% of customers regard non-insurance products as the most decisive factor when choosing an insurer.
Furthermore, customer loyalty is also gaining a lot of traction. But what are the main factors for driving customer loyalty? Over 57% of the Insurers surveyed by Deloitte believed that the most effective method of maintaining customer loyalty is by “providing access to friendly and knowledgeable staff”. As such, the more friendly, knowledgeable, and well-trained your staff are, the more they would be capable of keeping your customers happy and loyal to your services.
Finally, the Deloitte report also found that regulatory obstacles have been the biggest stumbling block for growth according to insurers. However, nearly 45% of them believe the next major challenge would be satisfying customers’ needs and expectations.
Understanding customer experience
Laura J. Hay, Global Head of Insurance at KPMG International, summarized customer experience in the Insurance industry in six main pillars:
- Integrity: doing the right thing, being seen to act fairly and in the customer's best interests.
- Resolution: responding to needs and finding solutions.
- Expectations: setting, managing and meeting expectations.
- Time and Effort: making it easy for customers to access information and get essentials.
- Personalization: understanding customers’ individual circumstances.
- Empathy: showing that you care, choosing the right emotional response.
Based on these six points, according to Hay, we may be able to establish a business model that successfully caters to customer needs and expectations, thus maximizing customer loyalty and retention.
A different roadmap for growth
The report has found that growth is anticipated to come from preventative and protective approaches with a range of new services and products. Meanwhile, a little over 35% of insurers generate at least 30% of their business from service-based offerings rather than product-based ones. Over the next three years, however, this is expected to increase to 61%.
Moreover, almost two 61% of insurers nominate China to become the fastest growth over the next three years. They also expect 33% of the premium volume to come from brand new propositions in the market.
The negotiation table beckons
Amidst all the competition intensifying in the market, executives acknowledge that organic growth may not be enough. Instead, they point toward the rising impact of M&A (Mergers and Acquisitions) as a decisive factor for growth. As per Deloitte's report, more than 72% of the executives surveyed hold that M&A is likely to drive at least half of the industry’s growth within the next five years.
Additionally, nearly 49% of insurers surveyed believe that the need to expand products and services is the key element behind M&A activity. Also, about 52% of insurers expect to complete two or more M&A deals in the next three years.
Digital disruption – practical, not theoretical
Digital technology as a disruptive force has officially established itself as an undisputed fact in the market nowadays. However, simply knowing this fact is something, but acting on it on the ground? That is something else completely.
In their report, Deloitte surveyed a total of 200 executives including CEOs, CFOs, CROs as well as CTOs in the EMEA region. Of these, 75 represented property and casualty (P&C) insurers, another 75 were from the life insurance and annuity (L&A) sector, while the remaining 50 were in the reinsurance/global sector.
According to Deloitte’s report, 4 out of 5 insurers believe the industry is doing a good job in keeping pace with technological advancement. As the report states, nearly 95% of insurers surveyed expect an increasing application of advanced analytics within the next three years.
On another note, cybersecurity regulations seem to be a concern for many insurers in the industry. No less than 51% of those surveyed in the report feel that cyber and data regulations would be the biggest hurdle against those that are trying to adapt to an environment run by digital disruption.
What to expect for 2021
As the COVID-19 pandemic continues on a global scale with no certain end in the next few months, it is rather too early to predict exactly how the landscape will look like in 2021. But as the world scrambles to find a vaccine for the virus, disruption is expected to remain as the leading feature in the Insurance market. What this entails is that customers’ needs and inquiries may continue to rise, which adds more weight to Insurers’ shoulders to cope with this increasing demand. This may even call for Insurers to create new policies that cover the damage caused by the pandemic, or improve existing ones to cope with this new demand.
Another important aspect is also the tendency to offer non-insurance products that add more value side-by-side with insurance products. According to statistics such as the Deloitte report mentioned above, this is expected to increase as well.
Finally, considering the current status quo, the competition in the Health and Life Insurance sectors is especially likely to continue to intensify. The central goal, as we have seen earlier in the article, will almost certainly be customer satisfaction. And on this intense race for customer happiness, Insurers are expected to tap on every potential they have. This may include several things from facilitating staff development to investment in well-planned digital transformation that improves the overall customer experience.