New J.D. Power 2021 Shopping Survey shows Insurance needs new service solutions that prioritize customers. The Covid-19 pandemic has been challenging enough for the insurance industry. Business interruption losses and litigation will continue to affect insurers for a long time. However, on the service delivery side, it exposed the industry’s vulnerabilities in distribution.
Just last year J.D. Power found that: “the price factor…has increased by 54% as a key driver of satisfaction”, in their 2020 Insurance Shopping Study. With an estimated 6% to 10% cost advantage, Direct insurers have taken over 7% of the market share from agents in the past 10 years.
Now J.D. Power has released their 2021 Insurance Shopping Study and observed that small commercial customers have become critical of their insurance shopping experience – beyond price. In fact, price satisfaction improved! What changed? The Covid-19 Bomb happened.
With Covid-19 the rubber met the road on insurance service delivery and the industry dropped the ball
Results from the 2021 J.D. Power survey showed:
- Satisfaction with interactions (service contacts) shows a 20-point decline from a year ago.
- Customers had to exert 3X more effort to interact with their agent than in 2020.
- Whoa Direct Writers! Digital interactions suffered equally atrociously.
- During the Covid-19 era over the past 2 years, customers were looking for more information but found it much harder to come by.
- Even though they were able to use multiple channels to pursue the answers they were looking for but still couldn’t find their solution soon enough.
- Billing issues were the #1 top issue with 46% reporting billing issues, compared to 26% in the previous year. That would follow with all the changes to risk in personal auto (largest insured segment in N.A.) and an inconsistent approach to rate abatement by insurers.
Too Much Paperwork and Too Little Time
None of this should be surprising as both insurers and brokers faced internal challenges of WFH and office closures. No one was prepared for the pandemic or would have been expected to be (I don’t recall anyone doing pandemic preparedness drills but funny, I do recall that Y2K panic). But Covid-19 shone the spotlight on existing service delivery solutions that are incomplete, clunky with both brokers and insurers mired too far into manual process and paperwork – failing customers when it mattered.
Covid-19 has spurred interest in shopping online for everything, including insurance. But, when the time comes, customers are showing (in this Shopping Survey, for instance) they still want advice and even “hand-holding” with a complex product like insurance. In insurance, lower prices shouldn’t be a trade off for independent advice and customer advocacy. At least it doesn’t have to be, read on…
The price factor has not gone away. Much like height requirements at a carnival ride, pricing has to be competitive or you are not even getting into the game.
The Opportunity Door Is Open, Insurance Needs New Service Solutions that Prioritize Customers
The answer is that we have to stop making consumers choose between Direct or Broker driven solutions. The enemy is manual processes and solutions that fail to serve the interests of both insurers and brokers and MORE IMPORTANTLY – CUSTOMERS!
Truth is that this crazy drive to gain efficiency for insurers and brokers has led to a relentless movement to self-service and dehumanization of insurance. Customers needs human interaction and accountability more than ever and the pandemic has tested that.
What is missing are solutions that prioritize the customer by working for both brokers and insurers. Solutions that make the buying experience better, with lower prices, and more convenient through multi-insurer automation and Real-Time transactions. Yet, when needed, a broker to provide advocacy, advise and accountability.