Product vs service in the insurance industry

01 October 2018

Transaction and product quality are vital elements of a broker’s offering, but can be undermined if they are not accompanied by high levels of client service.

No insurance broker will get far without great products and market-leading transaction skills. However, the commercial world is littered with examples of companies that had a strong product but failed because they couldn’t back it up with a similar level of service.

The most recent edition of the UK Customer Satisfaction Index, published by the Institute of Customer Service in January 2018, shows that satisfaction with insurance companies fell compared with the same period in 2017 – a period during which most other sectors showed an improvement.

The importance of good service is underlined by the fact that a relatively high proportion of customer experiences with the highest ranked organisations related to policy renewals.

Previous research conducted by the Institute of Customer Service relating specifically to the insurance industry noted that it was becoming harder for insurance organisations to earn customer advocacy.

A separate study conducted by DJS Research in 2017 also found that the insurance sector was lagging behind other industries in terms of customer service.

According to the findings, more than a quarter (27.9 per cent) of the UK adults interviewed cited the insurance sector as having the worst customer service, an increase of 2.9 per cent on 2016.

Of course, the insurance industry throws up some unique challenges to delivering top quality service.

For example, a KPMG Nunwood Consulting study published last year found that one-third (32 per cent) of businesses dealt with multiple contacts within their insurance provider, a higher figure than for providers of banking, telecoms, legal or business technology services.

According to the authors of this study, by focusing on delivering promises, increasing transparency and demonstrating expertise, businesses in the insurance sector will enjoy identification-based trust relationships, with stronger levels of forgiveness and, ultimately, increased loyalty.

A prompt response

The efficacy of any insurance product relies heavily on its delivery, so the regular interaction and experience of day-to-day service is vital to client retention and reputation.

Chris Bilney, Head of Client Management at JLT’s Specialty Property and Casualty Division, suggests viewing actions and interactions like a target – every point of written or verbal contact is an opportunity to hit or miss, from a well-constructed email to carefully crafted meeting minutes.

Zywave’s 2017 Broker Services Survey revealed that regular communication and timely service were two of the most sought-after factors for businesses when purchasing insurance.

In fact, the ability to provide prompt and effective service and answer questions in a timely manner was rated the most important criteria for selecting a broker by 83 per cent of respondents.

Unsurprisingly, 70 per cent of the companies surveyed said an inability to provide timely and effective service or answer questions in a timely fashion would prompt them to change broker.

Zywave recommends creating and implementing a communication plan, including sending out – at the very least – monthly emails and newsletters.

Three-quarters of the businesses that contributed to it from their broker every month and almost one-third (31 per cent) wanted weekly communication.

“It is not easy to deliver on these objectives, which is precisely why not everyone can deliver great service and why it should be treated as a valuable skill rather than playing second fiddle to sales closure and smart annual transactions,” says Bilney.

Concerns about change can be a serious impediment to a good business decision.

People will wonder how it will work out, should they stick with what they know and whether the service provider will deliver on its promises.

Persuasion to change not only requires strong credentials, great ideas and an excellent reputation but also strong references and, in most cases, an attention to fine detail to demonstrate commitment, understanding and experience.

“Detailed and thoughtful transition and ongoing service plans will generate confidence,” adds Bilney.

The JD Power 2017 Large Commercial Insurance Study found that demonstrating an understanding of customers’ business needs was one of the most significant performance metrics for large commercial insurers.

It was associated with a sizeable improvement in customer satisfaction among those who say their insurer completely understands their business compared with those who say their insurer does not understand or only partially understands their businesses.

This resounds with the broker sector, which has varying degrees of expertise and penetration into industry segments.

JLT fully appreciates the value of being a sector specialist and it is an area where we are advancing our global delivery,” says Bilney.

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Platform refresher

In addition to consulting with clients around scope of services and service level agreements to ensure they are bespoke, focused and relevant, one of the steps JLT has taken to maximise customer service levels – and ensure these standards are maintained – is to refresh its account planning and challenge platform.

The platform refresher is being delivered through an internal workshop programme and a team challenge process that is part of the annual service cycle.

This includes looking at emerging risks and how JLT can pre-empt client needs, explains Bilney.

“Part of this process is internal (for example, how we can improve our client satisfaction score) but it is also about how we can help our clients,” he says.

“We are moving the concept of service in an insurance context beyond the transactional, annual service cycle towards increasing the profile and relevance of the insurance buyer – and insurance – within their own organisation.”

This final point is one that is not always afforded priority within the insurance industry.

Great service demands a number of factors – timeliness, responsiveness, accuracy – but making the client look good within their organisation is an effective means of making interactions more fruitful and enjoyable.

It is clear that service – as perceived by clients – is a defined win/lose point for suppliers.

In addition, service (rather like reputation) is an area that may take a long time to develop client confidence whereas an insurance product is instant gratification and has limited opportunity to continue to give over time, unless it is paying claims.

“We are also looking to have conversations with company managers about issues beyond insurance,” says Bilney.

“This is not to diminish the value of market knowledge and good products, but rather to recognise that service is the element of our offering that clients see for longer. The product may open the door but service starts from the moment we start talking to a prospect.”

Service and relationships are dynamic, subject to change, new influences, fresh strategies and tactics, he concludes. “We must be prepared to challenge the status quo, question and probe in order to maintain optimal delivery.”

The art of service

Earlier this year, Hamish Roberts, Business Development Director at JLT Specialty, spoke to Julia Graham, Deputy CEO at Airmic, about the importance of and how perceptions of good service can vary depending on the client.

“Service is particularly important to a risk manager where they appoint a broker to look after multiple product lines, examples of which include property; casualty (both general and employee); directors’ and officers’; professional indemnity; and personal accident,” she says.

The key to delivering good service is to understand, predict and pre-empt the client’s needs. This involves synchronising your diary with theirs and understanding key dates, pressure points and stakeholders’ needs behind the risk managers.

“Ultimately, your service offering should be unobtrusive and fit into your client’s business cycle,” she says. “Great service is often difficult to describe, but easy to get wrong.”

Graham observes that many brokers deploy their technical experts in an account coordination role.

“They do this with good intent and usually from a team where the client’s biggest spend resides,” she explains. “Often, these technical sector experts are by their very nature neither generalists nor service experts.”

One point of contact

Many clients want a single point of contact who will marshal and coordinate all the resources within a company.

They don’t want to have to learn how to navigate around a company to get to the right people – they want a one-stop shop, someone who will deliver all the resource they need.

The account executive or coordinator will understand the client’s needs and be able to communicate them through the broker, concludes Graham.

“Service is an art and getting it right is one of the most important differentiators for clients in their broker selection.”

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