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Insurers Have a Digital Dilemma: Complex Claims

Americans are turning to digital channels for some home and auto insurance needs, but other areas have proven more complicated.

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Insurers Have a Digital Dilemma: Complex Claims

While it may feel as though every aspect of daily life is becoming digital, consumers are enthusiastic about adapting habits in some areas more than others. Digital adoption typically depends on the complexity of the “episode” (an interaction that fulfills a need). Consumers tend to pick up simple, routine digital episodes quickly and with ease. More complicated or emotional episodes, less so.

Insurance, an industry that has lagged others in digital disruption, is a prime example. Most US property and casualty insurers see high levels of digital adoption and success for routine episodes, such as managing account information and preferences. They have also made recent strides in sales: Over the past year, digital leaders in auto insurance saw up to 61% of customers initiate a sales interaction through digital channels, according to NPS Prism® data. In home insurance, where sales episodes are slightly more complex and emotional, leaders’ adoption rates reach up to 54%.

What’s more, most customers are accomplishing these tasks without human intervention. On average, across home and auto insurance, rates of digital failure—when customers are unable to complete the task and need to switch to a human—are less than 30% for key sales interactions. It’s even lower for industry leaders.

The same cannot be said for claims. NPS Prism data shows that, on average, insurance customers initiate almost one in five home submissions digitally. For auto submissions, it’s roughly one in four. Even among digital experience leaders, customers only use digital channels for about a quarter of home insurance claims and a third of auto claims.

When customers do attempt to submit claims digitally, they often struggle. Failure rates average 39% in home insurance and 33% in auto. Even with top performers, more than 30% of customers must switch to human assistance, far exceeding sales failure rates.

Customers who initiate a claims submission digitally but ultimately need human help report a more difficult experience. On average, their Net Promoter ScoreSM, a measure of their likelihood to recommend the insurer for its claims experience, drops by 11 points. In contrast, switching from digital to human channels during sales interactions—for instance, to get advice or compare options—has little effect on Net Promoter Score, demonstrating the high stakes of the claims experience.

Top players understand the nuances of the digital insurance experience. They are taking three actions to meet customers where they are:

  • doubling down on convenient, enjoyable digital experiences in routine interactions to differentiate and lower costs to serve;
  • improving the digital sales experience to boost adoption; and
  • building a seamless transition from digital channels to human assistance to ensure customers feel supported throughout the claims experience.

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Net Promoter®, NPS®, NPS Prism®, and the NPS-related emoticons are registered trademarks and Net Promoter Score℠ and Net Promoter System℠ are service marks of Bain & Company, Inc., Satmetrix Systems, Inc., and Fred Reichheld.