DST Systems has said that insurance firms are at a high risk of losing customers during a claims process.
The technology and operations outsourcing company has said that insurers are particularly vulnerable to losing customers millennials as they expect them to use up-to-date technology. Research carried out by DST Systems has found that 26% of consumers who have made an insurance claim said that their insurer appeared to be using outdated technology. This rose to more than a third among 18-24 and 25-34 year-olds (36% and 35% respectively).
For 18-24-year-olds, lack of communication (28%) would be more likely to prompt a switch to another insurer than a refusal to pay a claim (20%). In comparison, 41% of all consumers from all age groups said refusal to pay a claim would prompt a switch to another insurer, up from 30% in 2015.
DST Systems also discovered that, compared to a year ago, twice as many insurance firms (24%) now recognized the need to update their technology. 60% of insurers have not updated their technology in the past year, while 67% of insurers said they will invest in technology during the next five years. The research also showed that ageing legacy systems hindered policy renewals and that insurers increasingly recognised the need to use technology as a resource for customer engagement, to streamline processes and to help business growth.
Ian Betley, head of international sales at DST Financial Services, said: “It is essential for insurers to stay up-to-date with the needs of younger generations, or they risk losing business. In particular, that means engaging with their customers and understanding their communication preferences. In this highly commoditized market, the risk of customer attrition for insurance businesses is high, given that millennials are likely to abandon their provider and search for an alternative if their communication needs are not met.
“For insurance firms, it is critical to continue to enhance their customer experience and the technology systems that drive it to improve the claims process. In addition, given that the cost of inflexible legacy systems and operating models can hinder insurers from competing on premium price, transformation and change is imperative.
“Ultimately, a satisfactory claims process isn’t enough. In the digital world there are precious few opportunities insurers have to engage with their customers to build loyalty and lifetime value – fewer still where the customer reaches out to them. Insurers need to utilise the claims experience to create compelling reasons to maintain loyalty.”
The White Paper on Claims is available at here.