CUSTOMER EXPERIENCE IN INSURANCE Why it matters. How to create it. INTERNATIONAL INSURANCE SOCIETY GLOBAL FORUM JUNE 2019 Bernhard Kotanko , Senior Partner based in Hong Kong (bernhard_kotanko@mckinsey.com)
Customer Experience 1. Why Customer Experience matters 2. How to create great Customer Experience McKinsey & Company McKinsey & Company 2 2
Customer experience leaders clearly outperform across KPIs SAMPLE MARKETS Growth Costs Employee satisfaction Premium growth Gross cost ratio 2013-15, CAGR 2013-15, CAGR Insurance companies NPS 24 7 21 4 Customer Customer Customer Customer experience experience experience experience leaders laggards leaders laggards Employee satisfaction ▪ Increase in customer loyalty ▪ Increase in once-and-done processes/ ▪ Better and more proactive customer ▪ Higher success rate for cross-selling solutions feedback ▪ Reduction in call center volume due to ▪ Increased loyalty to insurance company activity ▪ Benefit from positive referrals better client steering/information ▪ Higher rate of straight-through processing/digitization Note: "Leaders" and "laggards" defined as top/bottom 3 in sample, P&C motor, excluding direct players SOURCE: McKinsey insurance database, DISQ customer satisfaction score, team analysis McKinsey & Company 3
High customer satisfaction driving economic impact for insurers INDICATIVE Likelihood of cross-selling Likelihood of churn Detractors based at 100 Detractors based at 100 191 100 93 -30% 156 +91% 70 100 Detractors Neutrals Promotors Detractors Neutrals Promotors T/d NPS T/d NPS SOURCE: McKinsey Customer Experience Survey in Insurance (Germany, France, Italy, Spain, UK) McKinsey & Company 4
Insurance often not great in creating Customer Experience INDICATIVE E.g. Life insurance Europe NPS Drill down of Life T/d NPS % 74 25 24 13 11 11 10 2 1 1 1 1 0 1 2 3 4 5 6 7 8 9 10 -9 Life Detractors Neutrals Promotors (21%) (30%) (49%) SOURCE: McKinsey Customer Experience Survey in Insurance (Germany, France, Italy, Spain, UK) McKinsey & Company 5
Great Customer Experience requires specific ingredients Example Key ingredients Insurance Non-insurance Proactive transparency towards the customer Flawless delivery of product/service to the customer Convenient means of interaction for/with the customer Emphatic communication and connection towards the customer Unexpected "wow-moments " where it counts for the customer McKinsey & Company 6
Proactive transparency E.g., notification of loss is simplified through Farmers icon-based app Core functionalities Live-support via claims comprising: handler: • Intuitive icon-based • In case of questions online FNOL customer can get assistance via • Log-in via policy „SOS - Button“ number required • Live video-call with • Push notifications claims handler to and tracking of resolve questions claim’s status • Claims handler can take control of customer‘s screen Intuitive claim notification offered across all channels – also for agent Claims app simplifies notification of loss for the customer , collects all required information and establishes connection to the customer for effective digital case steering SOURCE: company website (http://bit.ly/2dZnYLY and http://bit.ly/2dFeimq) McKinsey & Company McKinsey & Company 7 7
Convenient means of interaction E.g., easy onboarding customer journey at Lemonade Sign-up directly through the Usage of chat-bot for a conver- Immediate price calculation and payment – additional features Lemonade App available in the sational user experience and a iOS store feeling of personalization and add-ons are easily added Key advantages ▪ Complete onboarding process and payment in less than 5 minutes ▪ Personalization based on chat-bot, creating a sense of connection with the company ▪ Easy policy individualization at the end of the process, all in simple language ▪ Fast payment process seamlessly leading over to policy administration through the app McKinsey & Company 8
Emphatic communication and connection E.g., life Insurance explained by DBS Put yourself in the audiences' shoes and start Be fun and memorable with their need Address what the customer Decompose the topic to is interested in, not what follow a clear, intuitive every technicallity structure Key advantages ▪ Reduce complex constructs to key elements concentrating on what is really important ▪ Reach a broader target group ▪ Ensure that the message is understood and remembered by the audience McKinsey & Company 9
Unexpected "wow- moments“ E.g., Ping An using gamification and rewards to foster safer driving Today Achievement Behavioral approach geared towards incentivizing safer driving: You’ve accumulated 4,000 Fuel points, Equal to RMB 8 premium consum- • Leveraging smartphone sensors for 500 points=RMB 1 ption Settled each Sunday rating collection of driving behavior data Average speed Cumulat ive time Recorded 3 days’ mileage Claimed • Analysis of driving behavior and last week Driving May earn 1,000 points mileage Record 0 day this time (0 point) Next goal: 3 days (1,000 points) calculation of driving behavior score Score of last week: 100 Claimed • Transparent weekly tracking of May earn 3,000 points Huacheng Road Score of this week (0 point) Next goal: scored 60 (500 points) driving behavior score • Cash-back offering for accumulated “good driving” points Jiefangzhuang North Street Share Behavioral approach towards safer driving lowers total damage value by reducing both frequency and severity of accidents SOURCE: company website McKinsey & Company 10
How to create great Customer Experience in insurance A Build Set aspiration aspiration & and purpose purpose Re-design/innovate B product/service Best-in-class experience customer Transform experience the business Ensure sustainable ops (culture, capabilities, C governance, operating model, performance management) Ensure sustainable operations McKinsey & Company 11
CX Ambition A E.g., role modeling “Customer Obsession“ at Amazon “Leaders start with the customer and work backwards. They work vigorously to earn and keep customer trust. Although leaders pay attention to competitors, they obsess over customers” McKinsey & Company 12
CX Ambition A Key learnings from >100 cross-industry CX transformation projects Leaders need to Create ownership be obsessed with on all levels the customer Experience is a It needs constant transformation reminders effort Performance Skill level specific needs to be training is discussed on essential individual level There must be a Rather 80/20 clear benefit for instead of the full each employee list SOURCE: McKinsey Customer Experience Practice McKinsey & Company 13
Transforming customer journeys B “Design Thinking” approach for end-to-end transformation IMMERSION IDEATION ITERATION Understand weakness Develop an aspira- Continuously refine of status quo journey tional target journey the target journey ▪ Development of in-depth ▪ Design of detailed aspirational target ▪ Continuous collection of customer understanding of status quo customer journey blueprint feedback on customer journey ▪ Synthesis of improvement levers into customer journeys and relevant pain blueprint ▪ Iterative improvement and points (digital) asset landscape ▪ Integration of customer journey ▪ Design of customer journey mock- advancement of customer journey mappings and “CX Insights” to and mock-ups up to final design ups /workarounds understand satisfaction drivers McKinsey & Company 14
Sustainable operations C Multiplication of new customer journey x technology x usage Building of IT Usage of tools Development of A × B × C = Realizing impact new journey architecture and living journey Fast and efficient Creation of Assuring usage of development of technological tools and living new new ways of foundations journey by employees engaging with and customers customers Multiplicative logic end-to-end Impact can only be realized by taking care of proper tool development and at the same time scaling usage by end users McKinsey & Company 15
Sustainable operations C Effective Customer Experience measurement needed far beyond NPS A B Topline metric Integrated Does the topline metric measurement model align your organization Does your organization around a single shared understand and prioritize goal? journeys, key touchpoints, and satisfaction drivers? C D Culture and Customer feedback capabilities system Does your organization Does your system have the key enablers to enable your organization operationalize your to capture, analyze, and measurement system? act on customer feedback? McKinsey & Company 16
Recap: How to create great Customer Experience in insurance A Build Set aspiration aspiration & and purpose purpose Re-design/innovate B product/service Best-in-class experience customer Transform experience the business Ensure sustainable ops (culture, capabilities, C governance, operating model, performance management) Ensure sustainable operations McKinsey & Company 17
CUSTOMER EXPERIENCE IN INSURANCE Why it matters. How to create it. INTERNATIONAL INSURANCE SOCIETY GLOBAL FORUM JUNE 2019 Bernhard Kotanko , Senior Partner based in Hong Kong (bernhard_kotanko@mckinsey.com)
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