The Cost of Digitalization on the Customer Relationship”

by Rod Giess

The Cost of Digitalization on the Customer Relationship

The insurance industry, like many others, has undergone a transformative journey with the rise of digitization. Technological advancements have led to streamlined processes, improved efficiency, and enhanced customer experiences. However, amidst the many advantages, a growing concern arises: Is digitization causing the insurance industry to lose its personal touch? This article delves into the impact of digitization on the traditional personal connections between insurers and customers, exploring both the benefits and potential drawbacks.

The Advantages of Digitization

Convenience and Accessibility: Digitization has revolutionized the way insurance is offered and accessed. Customers can now research, compare, and purchase insurance policies from the comfort of their homes or even on their mobile devices. Online portals and mobile apps provide easy access to policy information and claims processing, ensuring customers have 24×7 support and services.

Improved Efficiency: Automated processes have led to faster application processing, underwriting, and policy issuance. Claims processing has also become more streamlined, enabling policyholders to file claims and receive settlements with greater speed and ease.

Cost Savings: With the reduction of manual tasks and paper-based processes (read, “saving postage expense”), insurers can significantly cut administrative costs, making insurance more affordable for the end consumer.

Innovation: Digitization has opened the door to innovative insurance products and business models. Insurtech startups are introducing novel concepts like pay-as-you-go coverage and usage-based policies, catering to customers with specific needs and preferences.  And because of data analytics, insurance companies better understand customer preferences, enabling them to offer personalized policies and more accurate pricing.

The Erosion of the Personal Touch

Limited Human Interaction: As the insurance industry becomes increasingly digitized, the traditional face-to-face interactions with agents and brokers are diminishing. While some customers appreciate the convenience of online services, others may miss the personal guidance and support that human agents provide.

Empathy and Understanding: Complex insurance matters, such as claim settlement during difficult times, often require a human touch and hand holding. Automated systems, no matter how “intelligent”, could never match the sensitivity of a human adjuster, leaving customers feeling unsatisfied or frustrated.

Loss of Trust: A personalized approach fosters trust between insurers and customers. When personal interactions are minimized or replaced by algorithms, customers may question the transparency and fairness of the insurance process.

Complexity of Digital Channels: While digitization offers convenience, navigating multiple online platforms and applications might be overwhelming for some customers, especially those less familiar with technology.

Striking a Balance: The Human-Digital Symbiosis

Insurance companies must face the challenge of maintaining a balance between the benefits of digitization and the preservation of personal connections with their customers. Here are some strategies to achieve a human-digital symbiosis:

Blended Approach: Implement a hybrid model, e.g., using chatbots for initial queries, and follow up with human agents for more complex discussions.

Empowerment through Information: Provide customers with accessible educational resources and FAQs to address their questions before they seek personalized support.  Such education will empower them when talking with an insurance professional.

Humanize Automation: Where possible, inject personality and empathy into automated interactions to make customers feel heard and understood.

Investing in Customer Service: Train customer service representatives to deliver personalized experiences when human interaction is required, demonstrating empathy and responsiveness.

Conclusion

Digitization has undoubtedly brought significant advancements to the insurance industry, revolutionizing the way policies are sold, managed, and serviced. However, as technology continues to reshape the sector, concerns about the loss of the personal touch have emerged. Insurance companies must find the right balance between embracing automation for efficiency and leveraging human interaction to nurture trust, empathy, and understanding with their customers.