The insurtech industry has seen constant growth in the past decade. The global Insurtech market revenue was valued at 5.48 billion in 2019 and is expected to reach 10.14 billion by 2025, growing at a CAGR of 10.80% from 2019-2025.
The industry now appears to be at a key inflection point, with experts worldwide viewing the digitization of insurance as the next massive opportunity after FinTech.
Investments have also grown by leaps and bounds. A study by McKinsey states that $140 million was invested in the insurtech vertical in 2011. It climbed to $270 million in 2013 and $2.7 billion in 2015.
Further, an analysis from the Panorama Insurtech database indicates that although the US has been the most cutting-edge market for insurtech, only 46 percent of the companies are headquartered in the region, with another 40 percent based in EMEA. After the US, the UK and Germany are home to the most insurtech companies.
The rise of the insurtech industry in today's competitive & digital-first marketplace has led to insurance products becoming highly commoditized. Price comparisons are readily available with great ease.
Service quality and brand values are judged based on personal experience and information available through various channels, thus resulting in increased customer churn. In fact, a 2022 study by Techsee reveals that 1 in 10 customers who churned came from insurance.
THE STATE OF CUSTOMER CHURN IN INSURTECH
Customer churn is a crucial metric in customer experience which refers to the percentage of customer attrition over a specific time. In other words, customer churn in insurance refers to when an existing customer stops using the insurance company's services.
The insurance industry is heading for a rise in the churn rate, demanding immediate attention.
The churn rate is usually measured in percentage. The higher the churn rate, the more customers no longer want to purchase services from the business.
Main Drivers of Customer Churn
Fragmented Omnichannel Journeys: A 2022 study reveals that fragmented omnichannel journeys are the most significant driver of customer churn.
Wasting Customer's Time: A study reveals that 1 in 4 insurance customers churn if their issue isn't resolved fast enough. Customers feel like their time isn't being respected & thus cite this as a significant reason for churn.
Poor Agent Service: According to the "2022 State of Customer Churn in Insurance" report, customers, reported a negative experience with agents as the second most reason for churning.
How does churn affect your business?
We are all aware that churn not being suitable for a company's scalability & profitability. But what effects can it have on the organization?
Let's find out!
- Since churn is the primary cause of lost revenue, there is extra pressure on the team to compensate for the reduced income. The only way to accomplish this is to engage and acquire new customers. But, according to Forbes, winning a new customer usually costs five times more than retaining the existing one.
- An insurance churn rate can tell you a lot about the quality of customer experience. The PwC survey confirmed that even the most loyal customers are not willing to tolerate the brand if they have had several bad customer experiences with the company.
Thus, customer churn is an excellent indicator of the insurer's growth trajectory. An effective strategy is to compare the churn rate to your organization's growth rate (the number of new customers) to see whether it's moving in the right direction. If churn becomes higher than the growth rate, it's time to review your retention strategy.
REDUCING CUSTOMER CHURN BY TRANSFORMING CX
As disruptive technologies continue to transform businesses, reducing the churn rate is essential for insurance providers to thrive in the face of increasing competition from new industry players.
Customers expect convenient & effective customer service transactions. In such a fiercely competitive age, customer retention has become increasingly critical because of growing risk exposures, shrinking proﬁtability, and challenges around acquiring new customers.
Let's find out how you can seize every opportunity to deliver an ideal customer experience in the insurance industry to stand out in the market & inspire new customers:
Personalize The Experience
Customers today are used to a seamless & personalized user experience, with their issues getting resolved in minutes. Your insurance company must be no different.
Customers value a simplified process and individualized options tailored to suit their needs. They expect to reach out through service centers or digital channels quickly. Thus, critical innovations in AI (chatbots) with good human touch can empower agents to provide fast & positive customer support.
Learn From The Churn
As much as you plan to offer an extraordinary customer experience; some churns will happen regardless. In that case, the best thing to do is to take away insightful learnings from your customer churn to streamline the process for the future.
Sending out short surveys to those who intend to cancel their policies is a great way to understand & then reduce customer churn.
Moreover, customer churn management solutions can also help analyze customers and build insightful feedback on the churn behavior to get a sense of what went wrong & subsequent strategies to improve the same.
Internet Of Things (IoT)
The global IoT insurance market is expected to reach USD 150.7 billion by 2026 from USD 13.3 billion in 2021.
Insurance companies can monitor and improve their knowledge of the status of risk situations, thus turning raw data into actionable information using digital technologies to gather input from internet-connected devices.
Moreover, with the automation enabled by the Internet of Things, insurance providers can multiply the possibilities of connecting with customers by adding critical touchpoints at susceptible stages such as acquisitions and claims management.
EARN YOUR CUSTOMERS’ LOYALTY WITH POSITIVE CX
Putting customers and technology at the heart of your business to achieve true innovation in the insurance industry means taking charge of customer problems.
At Convin, we help insurance providers leverage critical interaction as an opportunity to create valuable relationships and transform every communication, including the transactional ones, into decisive moments within a truly innovative customer experience.
How does Convin help the InsurTech contact centers?
- Drive customer acquisition and customer retention
- Handle large customer inquiries on multiple support channels.
- Track agent compliance breaches and violations.
- Enable agents to renew more without mis-selling.
What outcomes can the contact centers team expect from Convin’s partnership with Insurtech companies?
- 15-17% improvement in call quality.
- 5% immediate increment in closure rates
- Improve CSAT score by almost 15%
- 15% reduction in revenue loss due to customer churn
- 30x ROI in a year
Solving the issues as efficiently as possible, avoiding information redundancy, minimizing hold times, streamlining front-desk operations, and ensuring attentive remote service is the key to delivering an exceptional Customer Experience Management.
Results first, payment later.