The operational implications of a shift from product centricity to customer centricity
Working in partnership with Sapiens this Spring, TIN ran a survey of digital leaders to identify the biggest drivers for transforming insurance operations in the current business environment – and some of the key challenges. This report explores and analyses the results of that survey, but also references the discussions at a recent virtual round table on ‘enabling a digital insurance operating model’ which was co-hosted with Sapiens and led by Jeremy Burgess of TIN and Kelly Ward, Sales, Marketing & Distribution Director at AXA Partners and Amanda Rees, Customer Propositions Manager at Sapiens. The session was attended by a broad cross section of the sector, with general insurance, the Lloyd’s and London markets, life, health and protection insurance all represented.
The headline coming out of the survey analysis is that responding to evolving customer expectations is now the biggest driver for transforming operations: 35 percent of respondents chose ‘responding to changing customer expectations’ when asked what their biggest driver for change was, with ‘improving or achieving process efficiencies’ coming in second at 21 percent. That’s an inversion of what you would have expected 24 or even 12 months ago and is indicative of the importance insurers now place on delivering a customer experience that matches expectations set by other sectors: increasingly digital customer experience is being perceived as a key differentiator.
The second big takeaway from the survey was that the two biggest operational challenges when thinking about improving the customer experience were not directly technology related: data quality and accessibility came out on top, with changing mindsets and culture coming out as a high second, pushing the old favourite of ‘overcoming technology legacy’ back to third place. The fact that mindset and culture change are perceived to be such significant obstacles reflects the nature of the challenge the survey suggests the sector is the in the midst of tackling: the operational implications of a shift from product centricity to customer centricity.
Enhancing CX is now the main driver for transformation
There was unanimous agreement around the virtual roundtable that enhancing CX is now the main driver for transformation, and that keeping pace with escalating customer expectations is the key challenge. For many, meeting this challenge involves a rethinking of the operating model in order to align people and processes around the technology that enables a 21st century digital experience. These new digital operating models need to be agile enough to respond to meet existing customer expectations around service through the channel of their choice, at the time of their choice - but also new and emerging expectations. Post Covid, they also have to accommodate new ways of working and a hybrid of office work and WFH.
However, when redefining the operating model it is essential to do so in the overall context of strategic direction of the business. For AXA this starts with really understanding your customer and what they want. It’s critical to understand that customer expectations are changing rapidly, driven by escalating standards of service in other sectors and other areas of life, and that patience in the kind of poor service traditionally associated with insurance is wearing thin – a process temporarily abated by tolerance for the extenuating circumstances of COVID, but now accelerating again as other sectors show that they can deliver the kind of “anytime, anywhere” service that modern digital and mobile technology now delivers on a daily basis in other areas of their life.
Kelly elaborated on the challenge facing insurers: its not just about both HOW customer expectations are changing AND how quickly, it is also about how disparate these expectations are across different customer segments, and that increasingly these different expectations occur in increasingly smaller demographic segments:
“How long does it take to change a generation? So I think historically some of us might have thought that it takes 20 years before there's a generational shift. We all know about generation X, Y and Z. But I can tell you that my daughter, who's 26, has got a very different view from what a 16 year old would have, and also a very different view to what someone in their mid 30s would have. So, I think my first observation is the speed at which the generations are moving. It's a level now which we as insurance and service providers are not quite keeping up with.”
Another participant added an interesting perspective here: during COVID the elder generations have been forced to adopt digital to a much wider degree than previously, and have taken to it very quickly, and have very quickly established some service expectations that insurers are struggling to meet.
Translating this into the implications for operating models and the customer experience they should be aligned around, Kelly insisted that it shouldn’t be about striving for omni or multi-channel service delivery because “everyone else has it”, but rather that insurers should endeavor to “interact with customers their way, however they wish”.
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