Why insurance apps don't replace agents, but make them look better

Why insurance apps don't replace agents, but make them look better | Insurance Business America

Why insurance apps don't replace agents, but make them look better

The much-heralded digital transformation in the insurance industry is well underway, but is it making the right impact?

JD Power’s latest survey showed that increasingly snazzier web and mobile app offerings don’t offset high insurance rates when it comes to customer happiness. The 2022 US Insurance Digital Experience Study noted that overall satisfaction with digital platforms declined this year. People are going online to shop but aren’t finding respite from rising premiums.  

Read more: Revealed – how satisfied are US customers with their insurers?

There’s a way for insurers to leverage their existing digital tools to soften the blow of rate increases. Robert Lajdziak (pictured), director of insurance intelligence at JD Power, told Insurance Business America that transparency is key.

“When customers understand more of the value aspect of their policy, not only does the dissatisfaction that’s associated with a price increase disappear, but they become more trusting of their insurance company, more so than customers that didn’t get a price increase at all,” he revealed.

“You can clearly see that having that digital offering back up the in-person or over-the-phone conversation helps prolong customer understanding of their policy,” he said, citing a similar study JD Power did with customer satisfaction in the auto industry.

Traditional insurers are making huge investments to raise their digital games, but they’re not anywhere near where insurtechs are with respect to visual appeal, ease of use, or speed of claims process, according to JD Power’s findings. However, traditional insurers were better at giving customers a multi-channel experience.

“A dirty secret is that digital-only customers tend to have the lowest satisfaction scores, regardless of industry,” Lajdziak said, noting insurtechs rely heavily or exclusively on online platforms. “The number one complaint that we get from insurtech customers is that they don’t know how to get somebody on the phone.”

Customers that have high touch needs, whether they have billing questions or concerns about premium increases, and successfully used different platforms to meet those needs throughout the course of a year tended to walk away happier. And when customers use both apps and interactive channels with an agent, it’s the agent’s score that goes up the most, according to Lajdziak.

“When customers use digital, they’re happier with their agent or customer service representative interactions because they’re able to do those quick transactional things very conveniently in their own time, on their phone or their computer,” he explained.

For insurance agents, outsourcing smaller tasks to apps is a win-win scenario, freeing them up to spend more time selling or creating new products, and to home in on the high-value customer needs. For instance, independent agents can focus on giving customers unbiased advice and other personalized guidance – unique offerings that Lajdziak said might account for a revival of customer satisfaction in the shopping and purchase process with independent agents in recent years.

What does this mean for carriers? A streamlined digital approach that complements a multi-channel customer engagement strategy might work best. “Apps need to be super simple, where a customer can go in and intuitively figure out the functionality the first time that they’re using it,” he advised.

Frequency of use should factor in as people on semi-annual or annually recurring policies typically don’t feel the need explore the different functionalities insurance apps have to offer.

“Insurance is a bit unique in that there’s not as many reasons for a customer to engage all that frequently, especially if you compare that to banking apps or credit card apps, even utility apps, where customers are going in to pay their bill every month or look at their energy or gas usage,” Ladjziak explained.

“Customers that have to reset their password every time they try to log into apps – those are the customers that are kind of left behind.”

JD Power also found that 54% of online insurance shoppers didn’t use any of the available tools or educational resources during the quote process. Lajdziak said that result went across demographics, with younger users only slightly more likely to explore mobile app features. However, online chat functions see a lot of success among customers, who might be looking for an extra level of validation.

This seems to point to a clear gameplan for insurers wanting to boost customer satisfaction with their digital offerings. “The clear next step is to help customers understand their policy. That’s just going to help in the overall service, and it sets customers up well for the claims experience,” Lajdziak said.