Insurance Talks #2 – Customer relationships in the insurance industry

Keeping pace with changing customer expectations

Michael Carl: That insurance itself is under significant pressure to change is not in question. Driven from other verticals, driven by technology, by customers, and by individual insurance companies themselves. Our guests have a keen eye for how the transformation of insurance can succeed. And it’s safe to say their companies are both growing faster than the market.

Our topic today is the successful customer relationship and the customer experience. Let’s talk together about how insurance companies can build a successful, future-proofed customer relationship. Let’s start with the keyword “success”. The connection between Dela and Wertgarantie: Both are growing faster than the market. You must be doing something different from the others, Mr. Döring?

Patrick Döring: Well, historically Wertgarantie has had a close connection with the retail trade, and that forces us to offer products and sales service solutions relatively quickly and in an agile manner – and we were already doing that before the word agility was popular. We insure everything that has a plug and a battery, and these are industries in which innovations are fast-moving, new products and new technical solutions come constantly onto the market. Our partners in the retail sector expect a solution from us quickly. That keeps us agile and fit. And, because our products are mainly sold on the floor, in the retail trade, our partners attach importance to the fact that the products are simple.

Simplicity nurtures transparency

Michael Carl: Mr. Capellmann, I’ll pass to you directly. Is the keyword ‘simplicity’ something you would also mention?

Walter Capellmann: Yes, simplicity is a huge factor. I think it’s a huge factor for all insurance products, which have always had to be very complex in order to be able to sell them in an advisory capacity. And simplicity, as we can see with our products, is one of the main keys to transparency.

Patrick Döring: If I’m trying to please everybody, things get slow and complex, and I lose sight of the message of my product. That doesn’t happen to us because we typically operate in a niche market. That goes for AGILA as a pet insurer, as well as for Wertgarantie. And at the same time, we always have to force ourselves not to lose sight of which target groups we’re building products for.

Personalising the customer experience

Michael Carl: Is it right to say providers should avoid thinking like an insurance company used to think, so that they can take a step forward in respects to the customer relationship?

Walter Capellmann: Yes, because it has to do with what the customer wants. The customer wants something special. They don’t want to buy a product, they want help. If we can offer this, and at the same time enter the ecosystems of the customers, and position ourselves there in a relevant way, then that fits better, and that is something that many insurers are only now starting to implement.

Patrick Döring: Yes, and I think that in the course of the digitalisation discussion. Because what we are now learning through Corona, is that the customer interface via self-services, via every form of digitalised communication, is of course better off in the hands of the insurer than in the hands of an intermediary. And, in our business, we want to act quickly on the claims side. This is essential to a positive customer experience. If, for example, a smartphone display repair is carried out and settled within 72 hours, that is an insurance experience that the customer has never had with any of their other policies, and that creates customer loyalty and customer trust.

Walter Capellmann: Yes. I don’t know how you do it at Wertgarantie, but we do NPS research every year, where we let ourselves be evaluated by the customers, or by the brokers.

Patrick Döring: Yes, that’s also our experience, and that’s why we also attach great importance to it. We have made major digital investments, particularly in operational processes. We used to distribute smartphone repairs to our service providers on a broad basis, for example. Today, on Mondays, we receive information about the availability of spare parts and employees, so we know exactly which model can be repaired fastest by which service provider, which enables us to return the repaired smartphone back to the customer within 72 hours.

Smart collaborations reduce administrative bottlenecks

Michael Carl: I would like to emphasise one point. That is, one key to a decent customer relationship, to a positive customer experience, is keeping things under your own control.

Walter Capellmann: Especially now in the digital world. At Dela, we really had the advantage of being born late in Germany. We don’t have any legacy problems. We started from scratch and tried to build up our systems. We will certainly need more time to get them working 100% to our specifications, but we are learning every day. Combining digitality and personality is, for me, one of the most important topics for 2021 and beyond.

Patrick Döring: I think we’ve all learned that digitised sales is not just about building smart technical solutions, but about digitising the personalisation and using very good communicative solutions.

Walter Capellmann: I am very closely linked to the Digital Insurance Agenda, where we see and evaluate a relatively large number of start-ups, insurtechs, and new access channels that are well positioned digitally, and can function well in a collaboration. It’s not like we have to do everything ourselves anymore. Let’s use the things that are offered to us.

Patrick Döring: Exactly. So that’s what we learned as well. We used the AI expertise of start-ups. We buy that expertise and connect it to the insurance core system. We process 450,000 veterinary invoices here at AGILA alone. There is no one in Germany who sees more vet invoices than we do. If we had to process them by hand, I would need a few more building sections here.

Simon Dufour: What are providers learning in terms of collaborations with third-party companies?

Patrick Döring: If you look at it from the insurer’s point of view, we are having intensive discussions about how to establish the question “What is the core insurance process and what are the peripheral systems? These discussions are very demanding and also quite hard internally, because of course you have to be careful that you don’t fall into the trap of putting all the things that have to do with the contract somewhere into the strict regulations. That would kill us as a medium-sized company. And this question “Where is the firewall between the insurance core process and the conversion system?” is one that we are discussing very intensively with internal and external parties.

Walter Capellmann: We’ll take another tick and say okay, if you have this wonderful English term “customer journey”, “customer experience”, or let’s say in German “Kundenerlebniskette”, then that’s something that’s important for us, and there’s an incredible number of approaches. Also, if you look at the healthcare market, how many start-ups are there where such interesting apps are being built? Or, let’s take the case of Mr. Döring and AGILA: I see that there are now Petplan and Vetfinder. These are all systems that we can use to be relevant for the customer. As an insurance company, we have to think about where to proceed strategically, what are our target groups, and how do we reach them in the most meaningful way? We have the advantage that we only have two products. One is risk life, the other is death grants. Both deal with one topic: provision for surviving dependents. Thinking about animals again, most pet owners are families. There are so many platforms where you say, there’s an access route, that can be interesting. Not just thinking about it, but testing it out. Include it in the marketing strategy, in the positioning. I think that’s one of the relevant points. We don’t want to be the typical insurer that sells products, we want to make the core of what we do clear to the customer: We are here to help you.

Michael Carl: Is the key to a decent customer relationship, to a decent customer experience, a change in mindset within the insurance company?

Patrick Döring: Absolutely, yes. The sales issues are increasingly coming into focus and I will say speed is, I think, something that many colleagues still underestimate. None of us wants to waive through claims lightly. That would be wrong. But I would say that “chewing” on the cost estimate for months is becoming increasingly difficult for the customer to accept.

Walter Capellmann: I also think that, especially in the case of the non-life insurer, the overall view of the customer as an individual, has become incredibly important.

Patrick Döring: Exactly. So the issue of customer value plays a major role, and especially in our world, where we sometimes insure several pieces of the customer’s equipment.

Bigger isn’t always better

Michael Carl: One of the truisms that I was told over and over again about insurance is, if you want to be successful as an insurance company, you have to be big. Neither of you are with the big players in the industry, yet you are successful. Was it a mistake to believe in the power of size?

Walter Capellmann: I think that has become more and more relative. Branding and the brand name used to be a very important position in insurance sales. They still are today. But, I think if you were to do a survey now, it would not score so highly as a priority.

For the rest, it’s actually a matter of saying: Okay, where are we relevant? And of course size plays a certain role. DELA is now a big player in the Netherlands. We are also playing in this direction in the German market, but we are not like AXA or a larger insurer, though we can react relatively quickly as a small unit here in Germany. So, for me, the advantage is that I am given the freedom to act like an entrepreneur. I can only do that as a small unit.

Patrick Döring: That is certainly the case. At Wertgarantie, we also live, to some extent, from the fact that we are still in the hands of the heirs of our founders and a family business. What Mr. Capellmann said about customer value applies to us, too. We have seen plenty of competitors come and go in recent years, including in the smartphone and technical device sectors.

Set the tone

Patrick Döring: In theory, the big players in the world can map all this out for themselves, but access on the sales side is difficult, and the operational processes, in terms of speed, are also difficult.

Michael Carl: That can’t be all that difficult, can it? As an insurer, you have to be able to do that?

Patrick Döring: Yes. The market is theoretically large, but it is also unique and the approach to the customer is very special, and a specialist like us has set the tone. And the customer is used to this tone and would like to see and hear this tone elsewhere. And that’s actually an advantage when you’re small and specialised, because you can set this tone in a completely different way.

Walter Capellmann: If 4.5 million people out of 18 million Dutch people trust DELA, then we have done something right. But it also has to do with brand awareness. DELA in the Netherlands is as well-known as Allianz in Germany. In Germany, nobody knew us when we started here in 2018.

Patrick Döring: We practically do it the other way around. With the 55 years of experience of Wertgarantie in Germany, we can also increasingly score points abroad. This takes time, but it is also a value. If you insure a million devices in Germany, you must be doing something right.

Michael Carl: There’s an echo in my head, because of course that’s exactly what classic insurance brokers of the last 30 years have been telling their customers on any given topic.

Patrick Döring: Yes, I think when I go into the big risks now, I can still score points with size. So I think we have to be honest about that. I wouldn’t entrust my real estate holdings to a start-up; I have to know that solvency and, let’s say, strength are sufficient. But in the case of risk life, in the case of DELA, this is done through the parent company, and in the case of us, it is actually done through our industry reputation and the solidity that we have demonstrated over the decades. I don’t think you can always necessarily compare the two.

The future of digital insurance services

Michael Carl: Okay, I’m learning a certain amount of self-confidence can’t hurt either. But to close the loop, let’s look a little further ahead. We have already looked a bit at what is important this year and next year, and what learning experiences are in the pipeline. What is the insurance industry’s expectation, if we now look further ahead to later in this decade? Will they still be doing what they are doing today? What will be the main differences in the market, and in terms of insurers offerings?

Walter Capellmann: I personally believe that the future of insurance is very much in digitalisation. Not just in the form of talking about cost reduction first, but talking about how we can serve the customer in the most sensible way, and how do we make it effortless for them? You don’t necessarily have to replace your old management systems. Instead, you can achieve this relatively quickly with intelligent solutions, interfaces, etc. Digital is therefore a huge topic for the near future. Ways of accessing customers have already changed. User behaviour – we used to call it reader behaviour – has changed enormously for the new generation. We will be much more involved with social media. When I think about how you would position DELA in the next ten years, for me the topic of collaborations with other insurers/partners comes to mind. Wellness and health will play a bigger role too. Likewise, long-term care will be an issue . For example, people who go into care may also have animals. What happens there? Things like that.

Michael Carl: So it also has a lot to do with listening.

Walter Capellmann: Exactly.

Driving the customer experience

Patrick Döring: It always helps to have a clear picture of the situation. I believe that we, as non-life insurers, are increasingly taking on the role of a pilot for the customer. We also have to offer solutions beyond the immediate insured risks. I already see this in pet insurance when it comes to pet training, pet boarding, pet sitting. Our customers ask us, “Who do you recommend in our area?” even though this has nothing to do with the insurance benefits. But we have increasingly built up a credibility that allows us to be perceived in a completely different way than just as the paying party of veterinary costs. In consumer electronics insurance, the big topic is smart homes. To what degree will insurance providers play a role among the providers of large smart home solutions? That will be an exciting development. The question will also be how the customer will eventually accept these solutions? This is still a fairly theoretical event, but it will of course become more important: connectivity of devices. Let’s say the refrigerator that triggers its own damage notification and reports it to our systems, and we send out the technician. That’s not so far off in the future. In this respect, we are positioning ourselves for it.

Michael Carl: Thank you very much, Walter Capellmann and Patrick Döring. Simon, I think we had an interesting discussion, and the keyword “listening” has stuck with me. We need to learn to connect with what is happening in terms of networks, developments, technology from the customer’s point of view, from the point of view of the self-designing customer, and then perhaps we will find a key to the successful future of insurance.