The Insurance Industry, Disruption and the Human Factor

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The Insurance Industry, Disruption and the Human Factor

Insurance companies can trace their modern roots back hundreds of years to Lloyd’s of London insuring cargo on trading ships. They have seen many trends come and go over the years and are experts at what they do. However, based upon their long tenure and vast experience, are insurance companies reacting quickly enough to technology? Are they embracing it? Are they preparing to compete or partner with it in all its myriad forms? The new buzzword these days in any industry is disruption, the use of innovation to change an existing business model. New words like InsurTech describe creating technological efficiencies within the existing insurance model.  Insurance companies are by necessity adjusting accordingly and time will tell what the new face of insurance looks like especially when big tech decides to jump into the insurance industry.

The Internet of Things, or IoT is creating brand new opportunities for insurance companies to use technology to make it easier and less expensive to deliver quality products to customers. Cars and smartphone apps can track safe driving patterns and reward the customer with reduced rates for obeying traffic signs, not speeding, braking safely and even using public transportation or walking. Home appliances,  and other necessities like thermostats and light switches are now “connected” to WiFi and can share data with any app they may be linked to. Like Amazon’s Alexa that can order groceries and do math, others can track events that can help an insurance company mitigate risk. As with all things, there is a tradeoff. Allowing such detailed information to be gathered by the insurance company or any company for that matter, means the customer must be willing to offer privacy in exchange for price.

On the upside, by embracing and investing in these new technologies insurance companies, can reduce internal costs. Increased efficiency can speed up claims, the underwriting process, and take communications and marketing directly to the customer via technology and connected devices. This overall cost savings can then be passed on to the customer. Faster, more direct target marketing will make it easier to design and offer the perfect, “customized” product to each customer based upon data that they have shared. So it seems like a win win scenario; insurance company costs are reduced and personalized, less expensive products are offered to the customer.

What happens to the human factor though? More tech means less people doing work. Claims are handled by algorithms. Direct to consumer sales channels reduce the need for a broker or sales agent. The historical view of the insurance agent will change to be sure. The customer experience will also change. A small fender bender is handled with a quick photo and the claim settled immediately through technology. That works well when the loss is small. But when a tree falls on your house or some other disaster radically impacts  your family will you be satisfied with snapping a quick photo and moving on? Most likely not. So the customer experience still relies on the human factor when the stakes are higher. Just knowing a person who cares is there to help navigate a large loss is a huge benefit in and of itself that people still want.

So the balance needs to be determined. Embrace technology to reduce cost but at the same time don’t lose the personal connection that meets the needs of the customer. This is an opportunity for insurance companies. Teach. Train. Communicate. Leverage the things that technology can’t do. Simple, human things like having a conversation, comforting someone in need, personally explaining the process of working through a large loss. To take advantage of this opportunity insurance companies must make sure that employees know where the company is going in order to meet the new challenges that technology brings. They must make sure that their agents and brokers are trained in the new technologies being introduced and how it helps the customer.

Now more than ever, it is necessary to maintain and create ongoing programs that leverage the human factor. The use of sales incentives to keep a diverse sales force motivated, engaged, and informed. Competition is now more intense as low-cost, high-tech alternatives are around every corner, making it a challenge to find loyalty programs to keep customers from switching.  Good customers must be recognized and rewarded for their loyalty. Customer retention programs must include human communications. Use small gestures like promotional items to show gratitude and reinforce brand awareness. Customer service personnel are on the front lines and must have an incentive to positively answer customer questions, meet their needs and encourage repeat business. They need to help create strong, trusted, lifetime human relationships. Use employee training and recognition programs to make sure that everyone understands the new technologies and can help the customer navigate through them.  Insurance companies must embrace technology but not forget their people; their humanity. Their human customers will notice. 

About Strategic Incentives: Strategic Incentives is a leading nationwide provider of employee motivation programs. The company works with HR managers to implement sales incentive programs and safety incentives to retain employees, and loyalty programs to build customer relationships.  Visit the website at https://www.strategicincentives.com to download a complimentary PDF of “35 Ways to Use Incentive Programs.” “Like” the Facebook page to receive regular updates on sales incentives and promotional ideas. Call 888-686-8116 for more information on creating an in-depth performance improvement plan.

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