Why insurers need to care more about customers and how to do it in the digital age

COVID-19 has changed the way we live and shop. Amid the turmoil coronavirus has created, consumers are looking for information and clarity from the companies they frequent on how to best protect themselves and how to protect others. Insurers have failed to meet this demand. Most consumers have not heard from their insurance companies so far during the pandemic. The majority of those who did hear from their life, property or health insurance provider only received a mass communication.

The digital transformation offers insurers more opportunities to interact with customers. To create these touchpoints, insurers need to understand what drives people's behaviour and decision-making. Insurers also need overcome the interpersonal barriers created by digital interfaces and emotionally connect with their customers. There are three ways to achieve this:

Engagement - Insurers need to rapidly scale up their digital offerings to better engage with their customers. Small changes can go a long way, such as switching to paperless forms, which also gets rid of hidden administrative fees, or using social media channels for loss notifications. But building a good relationship requires more, namely trust and loyalty. Insurers can achieve this through experience led interactions which ensure customers are offered the right products and services at the right time.

Empowerment – Insurers need to give their customers access to the right information to empower them to make the right decisions. This requires simple and transparent presentation of policies and exclusions.

Emotional connection - Insurers need to incorporate behavioural economics into their processes to show more care and respect during the digital customer journey.

When risk exposure is fundamentally changing, insurers need to emotionally care for their customers and engage with them even more empathically.
Evangelos Avramakis, Head Digital Ecosystems R&D, Swiss Re Institute

The case for taking care of customers

Companies with fully operational digital platforms prior to the pandemic were in the best position to keep their customers informed. During the lockdowns, e-commerce platforms with fully digital services – rather than brick and mortar retail stores with an online offering – rapidly scaled their products and services to adapt to the new world. For example, Amazon and ASOS both made returns easier; Amazon offered pickup services, and ASOS removed the return labels from inside the parcel and moved the returns process online. As these new features make digital purchasing even easier, consumers may stick to online shopping, even after the pandemic subsides.

An online presence offers insurers new and more ways to interact with customers to become more engrained and trusted in customers' lives. On average, people have only two touchpoints a year with their insurer. These typically come at the point of sale and the point of claim or renewal. Insurers cannot expect to know anyone well enough to tailor products and services to them based on biannual contact, especially in a fast-paced world. When a company's customer perception hinges on only two yearly interactions, that's simply too much pressure to perform to perfection.

Understanding your customer in a digital world

Online communication is more difficult. Typical nonverbal cues are missing when we converse and interact online.

With the enforced physical distance and rapid intensification of digitisation, the need to understand consumers has never been greater. That includes the issues consumers face as individuals, their nuanced experience of the world and their own beliefs and values. This is particularly relevant for insurers as consumers trust their insurance providers with the protection of their most valuable assets, be that their health, physical possessions or their lives. Insurers need to understand customers' priorities and behaviour to protect them as best as possible.

e3 - Changing the nature of the customer experience

Digital interfaces and touchpoints have heralded in a new age of customer understanding. Consumer touchpoints are defined by three factors: engagement, empowerment and emotional connection –or e3. This model shows how to attract consumers, inspire loyalty and retain them. It prioritises experience-led interactions and helps insurers understand the necessary components to make an interaction successful.

Insurers can earn customer loyalty and trust by implementing e3 via products, services and experiences based on interactions enabled by data and analytics.
Aakash Kiran Raverkar, Research Analyst, Swiss Re Institute

Figure 1:  Conceptual e3-model for experience driven interactions

  • Engagement: Timely interactions are necessary for maximising consumer engagement. Insurers should contact their customers not only at the right time of day, but also at the right time of their lives. During the coronavirus pandemic, it would make sense as a travel, health or life insurer to reach out and share the available information with customers instead of waiting for them to contact their provider on what are usually overloaded phone lines. In India, some insurance companies are responding to customers on WhatsApp, a popular messaging channel. By moving communication to a platform that customers already use and are familiar with, insurers are engaging with customers in ways that makes life easier for them.
  • Empowerment: When insurers empower customers, they give them the information they need to make decisions and choices for themselves. Insurance products are notoriously complicated, which is evident in the lower rate of digital purchases for especially complex products, like health insurance, compared to simpler products, like travel insurance. This is why trust and knowing your customer are so important in the relationship between the insurer and the consumer. Consumers need to feel that insurers have their best interests at heart and are offering them useful, tailored covers that are reasonably priced and don't have hidden exclusions. Without face-to-face interactions, building trust hinges on giving the customer all the information they need as clearly and succinctly as possible.

  • Emotional connection: Insurers often possess sensitive information. For example, when consumers apply for a mental health cover, they often have to share intimate medical details about their physical and mental wellbeing. Insurers aren't perceived as treating this process in an empathetic and sensitive way. A report in Australia found that consumers felt humiliated and were often embarrassed by insurers' matter-of-fact, verbatim way of asking questions about, for instance, suicide (Beyond Blue, 2011). Insurers have a responsibility to treat their customers in a more emotionally astute way by using data already available to answer certain questions, or making sure staff that work on mental health lines have specific training on empathy or behaviour. Those are good places to start building the emotional connection necessary for insurers to be trusted as a more active stakeholder in customers staying well.

The e3 model shows that understanding consumers on a deeper level is essential. There are many examples that illustrate why this matters: for example, informing those particularly at risk for coronavirus about beneficial policies. In another case, a deeper understanding of a consumer's financial restraints and circumstances could prompt an insurer to offer microinsurance products instead of marketing more costly policies.

COVID-19 insurer-consumer interactions and trust

During the coronavirus pandemic, insurers have regularly been featured in the headlines on health insurance, business interruption, travel insurance, and income protection. According to LIMRA, a not-for-profit trade association, more than 58% of insurers for health, property, life and disability failed to reach out to their policyholders or potential customers (see graphic below).

Figure 2: Customer contact outreach during COVID-19, US

LIMRA's survey shows that the majority of insurance customers merely received a mass communication from their providers. This is a lost opportunity to build more engagement and trust given consumers already have low levels of trust in insurance companies and financial services, according to the Edelman Trust Barometer, which measures trust in 28 markets. The 2020 Edelman Trust Barometer rated financial services – this figure combines banking and insurance, as well as other financial services – as being the least trusted of all industries surveyed (see graphic below). But on the bright side, trust levels for financial services are the most improved across all industries, with trust levels trending up since 2012.

Figure 3: Trust developments in different industries

The poor have an even worse perception of insurers. In their book Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty, economists Abhijit Banerjee and Esther Duflo examine the issue of trust; why the world's poorest people are distrustful of insurers and why they fail to protect themselves with useful policies. They found that a key reason was their lack of understanding about the nature of various insurance policies and the exclusions that might disqualify them from a claim (Poor Economics, 2012).

Forming an authentic emotional connection isn't easy; insurers need to work on establishing better trust- based relationships with consumers.
Corinne Fitzgerald, Researcher, Swiss Re Institute

Technology and data-driven relationships driving experiences

Figure 4: Data-driven customer interaction model

There is a difference between proactive and reactive communication. For example, a customer who suffers from asthma would have likely been particularly concerned when the COVID-19 pandemic began. This offers insurers an opportunity to deepen their trust and loyalty with their customers. They could reach out to explain the risks of asthma and coronavirus and what their policy covers, or inform about mental health help or local grocery delivery services.

Some of the ability to increase touchpoints may rely on a greater sharing of data by the consumer. The digital transformation is making more and more anonymous data available in more areas, including health data. In addition, consumers offer digital providers more and more of their personal data and trust the providers will treat their data and generated insights appropriately (see sigma 04/2019: Advanced analytics).

Insurers and their partners must therefore be ethical and use their data responsibly. In a survey, 76% of insurers agree that competitive advantage will not be determined by their organization alone, but by the strength of the partners and ecosystems they choose (Accenture, 2017). This places an emphasis on not just the reputations of individual insurers, but on the reputations of their partners.

How each player in the ecosystem uses its individual data and applies its ethical business practices will reflect on each company in the chain. Insurers need to make sure they make decisions on partnerships that will improve the current low level of consumer trust in their industry (see digital ecosystems publications).


COVID-19 has accelerated the digital transformation of insurance companies. If insurers apply the e3 lens when assessing their touchpoints, they can create tailored, engaging and empowering connections with their customers. By building this process into their value propositions, insurers can become much more customer-centric.


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