The vital role of digital engagement in today’s insurance industry

Business Development Executive: Business Analytics & Optimization, IBM

Potential insurance policyholders are increasingly turning to social media and other online sources to conduct initial research on carriers and products as well as later seeking support for their policies. According to Insurance Journal, roughly 78 percent of companies enable policyholders to report claims online, and 79 percent offer this capability through mobile devices.

As policyholders continue to turn to online resources for insurance information and support, digital engagement can be increasingly vital for the future of insurance company satisfaction and support. Cognitive computing and analytics play a key role in the engagement process. These tools can reveal to insurers approaches that are well suited for optimizing digital resources and providing satisfaction for policyholders.

Driving omnichannel experiences

As McKinsey & Company points out, policyholders expect insurance providers to offer the same capabilities as other industries do, including the ability to use different channels to file claims or to change policy details. When insurance providers offer a combination of channels to their policyholders, they are enabling individuals to start an interaction in the digital channel, which is less costly for the insurer.

In addition to being cost-effective, digital channels offer scaling capabilities that are essential during communication peaks, such as during natural disasters. According to the Insurance Information Institute, $16.1 billion in insured losses occurred in 2015 because of natural disasters. When such an event strikes, even digital channels may be stressed by the influx of claims. Analytics helps insurance companies prepare for these situations by determining where weaknesses are in their communication networks and then using that information to appropriately change routing, add or adjust digital resources or prioritize communications.

By scanning tonality in voice calls or keywords and phrases in digital communications, for example, content analytics enables insurance companies to prioritize claims depending on urgency and other factors. Is the problem significant because of an extreme storm or fire damage, or is the issue simply a broken window? Content analytics can prioritize these communications and help route policyholders to the right representatives within the company. This prioritization helps ensure that callers’ needs are addressed appropriately while making the most of the company’s resources.

Balancing agent and digital communications

Analytics can also show when an agent is needed to further a profitable policyholder relationship, be it during an initial sale, renewal or ongoing service. Surveys augmented with data, such as website conversion rates and social media sentiment, can be weighed against the cost of online and offline sales. This approach shows when the insurer obtains optimal results through digital communications, when human interaction is more effective and when a combination of channels produces well-suited results.

For example, Guardian Life provides policyholders with various ways to offer feedback and then analyzes this information and other collected data in its Voice of the Customer program. According to Loyalty360, these insights are a key component of the insurer’s strategic planning.

Engaging customers through digital channels

The modus operandi in insurance is for customers to call their insurer or agent if they have a question—no matter how simple the question is. Doing so can lead to frustration on both sides when customers have to wait in long queues for an answer to a simple question. And this scenario leads to increased costs for insurers having to apportion their call centers to handle simple inquiries.

Now, a desire to introduce alternative engagement options through digital channels is underway. One such alternative is the introduction of a digital virtual agent. The chatbot is a web- or app-based virtual agent that can aid the policyholder through a set of defined questions that don’t require the customer to contact the call center.

For example, policyholders who may have just purchased a new valuable item, such as an engagement ring, might want to verify if their existing home insurance policy covers this new item. This inquiry could be executed as a conversation in natural language through a virtual agent. The agent can be trained to consume the existing policy terms and conditions, and through integration with the underwriting system it can respond with either a confirmation that the item is covered or a price to cover the item.

Implementing a virtual agent can benefit both the insured and the insurer. Policyholders have an engagement channel alternative to the call center, which helps improve customer servicing for certain customer segments. Insurers have a couple big benefits. They gain a rather obvious reduction in the cost of operating a high-volume call center by moving simple questions to the virtual agent. In addition, doing so provides the insurer with valuable interaction data about which customer segments are using the virtual agent and what common questions they are asking.

Uncovering sales opportunities

Beyond optimizing channel usage and analyzing policyholder sentiment, analytics helps insurers uncover sales opportunities. Personal information from existing policies and communications with the insurer, combined with insights from social media and other external resources, shows which policyholders are prospects well suited for new policies, those policyholders who are no longer good risks and those who are dissatisfied with the company.

For example, third-party data can highlight policyholders who are making home-related purchases, indicating they could be good prospects for increased home insurance coverage. In another example, according to the National Association of Insurance Commissioners, from a risk perspective, auto insurers are beginning to use telematics to monitor and analyze policyholders’ driving habits to better determine their risk. This group also estimates that more than one-third of auto insurers will use this technology by 2020.

Retaining policyholders

Policyholder retention is critical for the future of insurance companies. Analytics that measure and evaluate sentiment through all communication channels can provide early indicators about policyholder emotion: 

  • Satisfaction with an insurer and therefore likely to renew
  • Dissatisfaction with an insurer and therefore unlikely to renew
  • Somewhere in between satisfaction and dissatisfaction with an insurer and therefore in need of proactive communication from the insurer 

With this analytics information, the insurer can respond appropriately. Insurers are expected to increasingly rely on analytics in the future to enhance the efficiency of their digital channels for policyholder sales, engagement and support. 

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