With the outcome from the FCA test case now decided, it's clear that there are some big lessons to be learned for the insurance industry.
There appears to be a disconnect between the products sold and the customers buying them.
There seems to be a critical failure for a centuries-old industry to catch up with the way modern business is conducted and use data and technology as fundamental cornerstones of product innovation.
Insurance firms simply must be more customer centric, particularly if they are going to move beyond this potentially large black mark against them.
The industry already has to work hard to overcome the very fact that the products it sells are bought to protect against worst-case scenarios. It’s very premise is that something terrible has happened and it needs to be resolved.
With this very sharply in focus right now, as SME businesses feel disappointed by the service they received from their insurance providers, it must be evident that the industry should be making itself easy to work with.
Here are some of the key lessons insurance insurance firms must learn.
Place the customer in the middle of your decision making
It sounds a bit cliche now, but too often the initial purpose of the organisation is lost in growth aspirations and the need to simply ‘do things better’.
Ask yourself, are we truly being customer-focused and are we prioritising their needs and expectations?
This can be a painful process and require some difficult decisions to be made. But if there’s one thing worse than a change in direction, it's a steady stream of customers leaving for your competition.
Consider how the banking industry has changed to enable more rapid access to financial products and more transparent processing. This is now a model the insurance industry needs to follow.
Customers want easy access, clear and simple to understand policies, and the flexibility that modern business and living now demands.
What the Business Interruption case shows, is an industry that has lost sight of the very customers it serves and highlights how far it has yet to go.
Build an ecosystem of tools designed around your customers’ needs
The first question you should ask yourself is whether your workflows and processes are set up to enhance the customer experience.
Or whether they are a collection of necessary tools and applications deployed to meet a need but not necessarily stitched together in a way to enhance how you work and how your customers interact with you.
Developments in technology and the evolution of InsurTech firms now mean that insurance companies can deliver truly automated products:
- Customers can be presented with forms that automatically populate detailed information
- That information can be fed into underwriting and risk management
- Pre-packaged products can then be automatically triggered and cover provided without anyone even touching the application
Now is the time to be evaluating how your customer-facing processes function and considering whether you are adapting fast enough to the changing market or being left behind by more forward-thinking and customer-focussed organisations.
Make use of the data that’s available to build better products
Digital tools and technologies create a wealth of data that can be used to improve your underwriting, better assess risk, find more profitable markets, and price effectively.
Real-time insights deliver you the information you need to create products that are a better fit for your customers, and flexible yet robust enough to handle modern business practices.
The insurance industry is beginning to realise the value of data and there are some extremely forward thinking businesses out there such as C-Quence and Hokodo (links here go to interviews we conducted with them in 2020 asking for their vision of the future in SME insurance).
These organisations are moving forward rapidly and have deployed data tools to give them a competitive edge by better understanding customers and the sectors they operate within.
It is sad to see the industry fighting battles in the Supreme Court, it does nothing for its reputation and sends the wrong signals to customers and future customers.
The transformation of the industry is long overdue and it needs to get back to being truly customer focused.
The tools exist to make it possible, there just needs to be the will and clear value-driven programmes leading the charge.