Next-Level Customer Experience...Customer experience is not a competitive differentiator for the company. Tends to be a reactive versus proactive organization around the customer with

limra.com | neosllc.com©2019 LIMRA | ©2019 NEOS, LLC

Next-Level Customer ExperienceHOW DO INSURERS GET THERE?

limra.com | neosllc.com©2019 LIMRA | ©2019 NEOS, LLC 3

TABLE OF CONTENTS

Executive Summary

Key Themes and Takeaways

What More Mature Peers Are Doing

State of the Industry

Summary

Methodology

About the Study

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EXECUTIVE SUMMARY

LIMRA and NEOS have partnered to:

• Identify customer experience challenges and opportunities that life and annuity insurance carriers face

• Understand how customer experience is managed and measured within companies

• Learn how customer experience efforts are prioritized to shape the organization’s future-state

In addition to understanding these areas, survey respondents were also asked to assess their organization’s current state in terms of a customer experience maturity model. The levels of maturity are described below:

*This maturity model is based on proprietary information developed by NEOS and LIMRA including Enterprise Information Management-Maturity Evaluation: Unlocking Your Competitive Advantage (Whitepaper), NEOS, June 2015.

Figure 1: Maturity Model*

MATURITY LEVEL

Initial

Customer experience is not a competitive differentiator for the company. Tends to be a reactive versus proactive organization around the customer with no roadmap in place. Depends largely on individual knowledge, actions, and ad-hoc measurements. Minimal customer journey focus. Existing customer experience measurements are not utilized.

Emerging

Customer experience is identified as an important metric, but not completely acted upon. Process and structure are in place, but not fully scalable or repeatable. Customer feedback comes from several groups and sources without framework for action planning.

Defined

Organizational objectives and roles are understood. Methods for measuring customer experience are established. Business (customer) segments are defined. Customer journey is defined and documented. Customer experience is viewed as central to the vision and mission of the company.

Managed

Measuring customer experience and customer interactions along the customer journey consistently. Engagement models are in place and work is scheduled, planned, and measured. Teams are working together using the defined process.

Optimized

Customer experience data collected is used to improve the customer experience and journey. Customer experience process and data collection are optimized and communicated across the organization and are in sync with business demands. Dedicated team focused on the overall customer experience from start to finish.


KEY THEMES AND TAKEAWAYS

As results were analyzed, a number of high-level themes emerged as insurers plan to improve their customer experience capabilities.

1. To move to an optimized customer experience, life and annuity insurance carriers must shift from a reactive to a proactive approach.

While carriers recognize that a “listening strategy” can strengthen customer experience, many still rely on escalations and customer complaints to obtain information. Shifting to a proactive approach requires investing in activities and tools—like customer journey maps, self-service capabilities, and voice of the customer mechanisms—to move the needle to a more optimized experience.With most respondents falling under the emerging and defined levels, it’s no surprise that 82 percent use reactive moments—like complaints and escalations—to obtain information about policyholders. And nearly one fifth of respondents are not using any external benchmarking organizations (such as LIMRA, Forrester, or JD Power) to compare their customer experience, tools, or processes to their competitors.

However, with the focus on moving towards an optimized customer experience, comes a shift in approach—from reactive to proactive—with carriers looking to gather feedback throughout various stages of the customer journey. Sixty-six percent of respondents are investing in big data to better understand customer behavior, including web engagement, social media activity, customer support calls, etc. For even better analysis, feedback will be aggregated with information from agents, distribution partners, and other company team members to understand the customer experience journey.

To support the importance of moving to a proactive approach, survey results suggest that most annuity and life insurance carriers are investing in proactive tools to better understand the customer journey and meet customer needs.

“Oftentimes our customer journeys and customer touchpoints are based on an accumulation of operational needs with little thought given to what the end experience for the customer will be as they go through our processes to accomplish a task. I think journey mapping and really understanding and designing customer journeys and experiences, and looking at the overall customer lifecycle to design touchpoints, interactions, and experiences that delight the customer are table stakes.”

– Client/Member Experience VP at major insurer

“Figure 2: How Companies Obtain Information About the Policyholder/Beneficiary Customer Experience

How does your company obtain information about the policy / beneficiary customer experience? Select ALL that apply.

Complaints and escalations 82%

Input / feedback from client-facing employees 80%

Market research and benchmarking 78%

Customer interaction monitoring/quality control 75%

Customer touchpoint surveys 75%

Customer tracking surveys 73%

Website usability testing 50%

Social media monitoring 47%

Focus groups 45%

Through distribution partners 25%

Mystery shopping 13%

Other 3%


In addition to investing in the right tools, conducting internal process reviews will also be critical to optimizing the customer experience. While these activities may not always be customer-facing, they will deliver a positive impact on customers. Recognizing this, 84 percent of respondents noted inefficiencies that, when addressed, could ultimately improve processes. Meanwhile, 74 percent are investing in business process design (such as using automation, assigning touchpoint owners, and redesigning processes based on customer pain point identification) to better serve customers. While the objective for better customer experience can differ, both annuity and life respondents ultimately want to improve efficiencies and reduce expenses.

When surveyed, respondents identified pain points which were categorized as being either internal or external. Internally, pain points among departments are agent availability and responsiveness, clarifying the claims process, and legacy systems that slow down process modernization. Externally, customers desire clarity about product offers and their benefits. They also want seamless transactions, so companies should look to provide additional functionalities that enable customers to perform transactions independently.

Figure 4: Identifying the Objective for Improved Customer Experience

Figure 3: Investing to Better Understand and Serve Customers

72%ANNUITY

85%LIFE 81%

ANNUITY

89%LIFE

CustomerJourney Maps

Voice ofCustomer

81%ANNUITY

Self-serviceCapability

87%LIFE

RESPONDENTS

RESPONDENTSRESPONDENTSRESPONDENTS

RESPONDENTSRESPONDENTS

72%ANNUITY

76%LIFE

RESPONDENTSRESPONDENTS

Believe the objectiveof customer experience

is to improve processefficiency / reduce expenses

84%ANNUITYRESPONDENTS

93%LIFERESPONDENTS

Believe the objectiveof customer experience

is to improve service practicesto meet customer needs


“We change our business according to [our customers]. We don’t do our business and expect our customers to change.” –Fortune 500 insurer, explaining how their company takes a customer-centric approach versus solely targeting increased profitability.

2. Carriers must inform and determine actions based on defined metrics and tools—and use them to their advantage.

Most companies understand the importance of monitoring processes and the use of effective tools. However, many carriers are still in the process of understanding how to truly present, apply, and use the information gained from various sources of data. Measuring the business benefits of customer experience helps with internal sponsorship and proving the business case.

Many companies use predetermined metrics—goals, milestones, key performance indicators—to help quantify the success of an activity or initiative. By measuring the success of an activity that directly contributes to the customer experience, leaders can prove a business case and obtain additional buy-in or investment for using a particular tool or service. For instance, one respondent goes above a typical business case presentation and shows a video of a frustrated customer repeatedly receiving an error message during online registration. By putting the internal stakeholder in the customer’s shoes, it’s typically an easier sell than a traditional business case presentation.

In fact, 79 percent of carriers are investing in tools that capture feedback during key moments. For instance, one of the largest life insurance companies in the world uses a transactional Net Promoter Score (NPS) survey—an external tool that measures a customer’s satisfaction after an important part in a process or after a large transaction (often referred to as a key moment of truth)—to identify any pain points and determine improvement opportunities.

From an internal perspective, a Fortune 500 insurer surveyed uses Probabilistic Risk Assessment (PRA) to determine processes that are high-risk so they can be evaluated and redesigned to mitigate potential errors. For example, risk can be estimated using real data to understand what could go wrong, the likelihood of it happening, and the potential consequences.

Having identified appropriate tools, both annuity and life respondents are measuring business success attributed to customer experience in various areas, particularly retention rate and sales/revenue. By demonstrating a connection between customer experience initiatives and improved retention and/or revenue, internal leaders can use these measures for increased sponsorship of tools and resources to help move customer experience to an optimized maturity level.

79%of respondents’ companies are investing in tools that capture feedback during key moments

�


Effective tools are key to helping amplify customer experience. Some tools identified in the results from this survey include:

• Customer Relationship Management (CRM): Salesforce• Customer Experience: Medallia, PureCloud by GeneSys, Trust Pilot, Interactive

Voice Response (IVR) surveys (vendors vary), iPerceptions, Qualtrics• Marketing: Bazaarvoice, Google Analytics, FullStory

Of tools used, 77 percent of respondents are investing in CRM tools to better understand and serve customers, while 41 percent said the lack of these tools is an obstacle to an optimized customer experience. Layered on top of that, legacy systems were noted by 66 percent of respondents as an obstacle to customer experience initiatives.

3. End-to-end customer experience must move from a decentralized to a centralized approach.

Embedding the customer experience mindset into company culture is a key driver in ensuring a successful customer experience strategy. Most companies have pockets of customer experience practitioners with various methodologies and tools. Only a few have truly centralized strategies with common approaches, measurement strategies, and customer experience frameworks. Many carriers noted that it can be difficult to articulate what this means, but they recognize that having a common understanding business-wide that every action to benefit the policyholder is necessary for success. Companies are devoting entire roles or parts of roles in core departments to shift the enterprise to a more customer-centric focus.

Many respondents remarked that it can be difficult to put a hard definition around customer experience with most agreeing that it’s a piece of everything a carrier does—from producer management to post-issue service and claims. One respondent remarked that customer experience can’t be just the responsibility of the core customer experience team — but that all business units accountable for operational results should also be responsible for the customer experience-driven results that their business units and their touchpoints influence.

66%of respondents as a challenge to customer experience initiatives

�Legacy systems were noted by

Figure 5: Measuring the Business Benefits of a Customer Experience Strategy

How do you measure the benefits of your customer experience program to your business? Select ALL that apply.

Retention of existing customers 74%

Sales & revenue 66%

Cycle time 46%

Number of new customers 43%

Cross-selling to existing customers 40%

Distributor production 40%

Employee productivity 33%

Market share 26%

Number of leads 25%

Number of positive brand mentions 15%

Other 15%


Other themes that emerged when moving to an optimized customer experience program, are that it must be:

1. A mindset and company philosophy ingrained throughout every aspect of the company

2. Managed end-to-end across the entire organization3. Managed throughout the entire customer journey

With these three themes in mind, it’s clear that to achieve an optimized level of customer experience; a carrier must move from a decentralized to a centralized approach. In fact, throughout the survey, a particular Fortune 500 insurer was commonly cited as an industry leader in customer experience and having achieved an optimized level. The quality this carrier has that many others do not is an enterprise-wide understanding that everything they do is for the end customer. Another respondent referred to the customer experience ecosystem—the notion that multiple business units will always touch the customer and, therefore, are all responsible for part of the overall customer experience.

When surveyed, the majority of respondents are on the right track, with 56 percent centralizing their customer experience (Figure 6).

“Customer service is what we intend to provide; customer experience is what the customer actually receives. Strategically, organizations need to get their heads around that difference.”

– Client/Member Experience VP at major insurer

“

Figure 6: How Customer Experience Is Organized

With an emphasis on managing the entire customer journey, of those carriers whose primary model is third-party insurance, 41 percent (n=9) note that the agent is a top priority for customer experience efforts versus 63 percent (n=5) note of third-party investment respondents. One impediment to enhancing the customer experience is the business-to-business (B2B) model, which limits company access to policyholder data and insights. Most of these customers are owned by the business partner and the insurer only sees a few pieces of the puzzle.

More centralized than decentralized 56%

Roughly equally centralized/decentralized 24%

More decentralized than centralized 20%


Blazing the Path Forward: How Insurers Can Move Customer Experience to an Optimized Level

Related to the three themes from the survey, leading companies operating at an optimized customer experience level are:

1. Proactively gathering feedback and insight from policyholders, financial professionals/agents, and/or beneficiaries

2. Using data to measure feedback and effectiveness of customer experience and adapting business processes as needed

3. Operating with a consistent customer experience mindset across lines by tasking executives within all departments responsible for a portion of customer experience

Keeping these themes in mind, as carriers embark on creating or strengthening their customer experience maturity, they should consider the following discovery questions:

• How do I ingrain a company-wide consumer experience mindset and philosophy?

• What difficulties might I face transforming customer experience into a more centralized function?

• What are the objectives of my customer experience strategy and what metrics am I using to measure it?

• How do I currently manage and govern customer experience?

• How can I better anticipate a customer’s changing needs and expectations?

• What tools can help me evaluate customer experience and its impact on the business?

• How can I leverage data to optimize the customer experience, improve efficiencies, and reduce expenses?

When it comes time to take that first step, companies should start with Voice of the Customer (VOC) analysis through digital footprints, surveys, and interviews using both qualitative and quantitative data. When deciding how to parse through the information, segmenting based on the customer—in this case, the policyholder and financial professional—can help show activity, trends, needs, and common pain points from the customer perspective.

When it comes time to take that first step, companies should start with Voice of the Customer (VOC) analysis through digital footprints, surveys, and interviews using both qualitative and quantitative data.


A Look at a Centralized Customer Experience Model

An example of a centralized customer experience framework includes keeping the VOC at the core and layering proactive and reactive VOC feedback with strategic and transactional touchpoints.

After gathering this data across the business, leaders must integrate VOC with their centralized customer experience strategy. Centralized customer experience requires standard measures of success, which typically includes overall satisfaction, user experience, time to resolution, call handling time, and so on. Defining and integrating these components across the organization will help hold the individual stakeholders accountable for their responsibility in ensuring strong customer experience.

Because disparate departments can view customer experience differently and hold different business metrics, their customer experience metrics need to have clear alignment to the centralized customer experience metrics. This enables different company verticals to strengthen the customer experience. For instance, a contact center will focus on different initiatives (like chatbots) than a product development department (like a new product feature or streamlined underwriting process). Leaders need to structure and prioritize how different departments will impact and influence customer experience and how it interweaves into their overall customer experience strategy.

Data and insights must be continually parsed, analyzed, and put into motion, and as stakeholders are assembled and aligned in improving the customer experience, carriers will see movement from a reactive to a proactive approach. As that shift occurs, carriers must begin using predictive analytics to determine what consumers will do next. For instance, one respondent mentioned using AI to speed up the underwriting process due to leveraging the data and applying it toward intelligent machine learning. Ultimately, between the use of emerging technology like AI and a centralized, proactive customer experience strategy, carriers must prioritize and structure activities to improve their customer experience.

Finally, adopting an end-to-end customer-centric mentality throughout every department is critical to achieving an optimized level; this mindset must be ingrained throughout every aspect of the company to fully shift the enterprise to a better customer experience. Company stakeholders responsible for operational results should also be tasked for customer experience-driven results that their business units and touchpoints influence.

Data and insights must be continually parsed, analyzed, and put into motion, and as stakeholders are assembled and aligned in improving the customer experience, carriers will see movement from a reactive to a proactive approach.


WHAT MORE MATURE PEERS ARE DOING

In examining life insurance respondents that rated themselves as defined, managed, or optimized, of the 25 respondents’ companies, the following themes and activities resulted:

Proactively gathering feedback

• 92 percent (n=23) are spending money on the Voice of the Customer: learning customer attitudes, preferences, and behaviors via direct or indirect questioning

• 88 percent (n=22) measure likelihood to recommend to better understand their customers; 92 percent (n=23) measure overall customer satisfaction to better understand their customers

• 84 percent (n=21) use customer touchpoint surveys (given at the point of interaction, such as using the website, call to customer service, etc.) to obtain information about the policyholder/beneficiary

• 80 percent (n=20) use customer tracking surveys (conducted on a recurring basis, such as annually or quarterly) to obtain information about the policyholder/beneficiary

• 80 percent (n=20) use customer interaction monitoring/quality control (telephone, email, chat, etc.) to obtain information about the policyholder/ beneficiary

• 72 percent (n=18) use employee/agent surveys conducted on a recurring basis to obtain information about the financial professional/agent customer experience

Using data to measure feedback and effectiveness of customer experience and adapting business processes, as needed

• 100 percent (n=25) are spending money on business process design: redesigning new business, underwriting, in-force, or claims processes to address customer experience in addition to streamlining or internal efficiency

• 96 percent (n=24) are spending money on self-service capability: implementation of technology (including apps, chats, etc.) that enables policyholders to initiate and complete transactions independent of carrier

• 92 percent (n=23) identified inefficiencies and improved processes as a direct result of their customer experience program

• 92 percent (n=23) are spending money on customer journey maps: identifying and assessing paths a consumer may take when interacting with their company

Operating with a consistent customer experience mindset

• 68 percent (n=17) have staff dedicated to customer experience• 80 percent (n=20) said customer experience was more centralized than

decentralized (the other 20 percent (n=5) noted it as equal)• 96 percent (n=24) said an objective of their customer experience program is

to improve service practices to meet customer need; 88 percent (n=22) said an objective is to align company goals with customer needs

• 96 percent (n=24) educated employees on increasing the quality of interactions with customers as a direct result of their customer experience program

“CX is never going to go away and it shouldn’t. We believe that the customer is always right, and they need to be heard. We change our business according to them; we don’t do our business and expect our customers to change.”

– Director of Life Insurance Operations, Fortune 500 carrier

“


In examining annuity respondents that rated themselves as defined, managed, or optimized, of those 12 respondents’ companies, the following themes and activities resulted:

Proactively gathering feedback

• 100 percent (n=12) are spending money on Voice of the Customer: learning customer attitudes, preferences, and behaviors via direct or indirect questioning

• 100 percent (n=12) measure likelihood to recommend; 92 percent (n=11) measure overall customer satisfaction to better understand their customers

• 92 percent (n=11) use customer touchpoint surveys (given at the point of interaction, such as using the website, call to customer service, etc.) to obtain information about the policyholder/beneficiary

• 92 percent (n=11) use customer interaction monitoring/quality control (telephone, email, chat, etc.) to obtain information about the policyholder/beneficiary

• 84 percent (n=10) use employee/agent surveys (conducted on a recurring basis, such as annually or quarterly) to obtain information about the financial professional/agent

Using data to measure feedback and effectiveness of customer experience and adapting business processes, as needed

• 92 percent (n=11) are spending money on core system replacement/enhancement: implementation of modern technology to enable improved customer experience

• 92 percent (n=11) are spending money on self-service capabilities: implementation of technology (including apps, chats, etc.) that enable policyholders to initiate and complete transactions independent of carrier

• 92 percent (n=11) are spending money on sales support capabilities: implementation of technology (including apps and devices) that enable financial professionals/agents to more effectively sell and support their customer base

• 92 percent (n=11) identified inefficiencies and improved processes as a direct result of their customer experience program

Operating with a consistent customer experience mindset

• 58 percent (n=7) have staff dedicated to customer experience• 84 percent (n=10) said customer experience was more centralized than

decentralized (the other 16 percent noted it as equal)• 100 percent (n=12) said an objective of their customer experience program is

to improve service practices to meet customer need; 100 percent said to align company goals with customer needs

• 92 percent (n=11) said to increase employee awareness of customer need/strategy is an objective of their customer experience program

• 92 percent (n=11) educated employees on increasing quality of interactions with customers as a direct result of their customer experience program

“If you do customer experience right, the customer hardly knows that you are doing it.”

– CMO, global financial investment management and insurance company

“


STATE OF THE INDUSTRY

The information below details the processes, methods, and current states of customer experience efforts led by survey respondents. The response data serves as a baseline for understanding where the industry is currently in terms of a customer experience level.

Organization Structure

Examination of how the respondents’ companies have organized for customer experience management suggests that most are more centralized than decentralized (Figure 7).

Figure 7: Organization of Customer Experience Management

Most of the respondents indicated that there is dedicated staff supporting the person leading customer experience for both life and annuities. The number of full-time equivalents dedicated to customer experience is the same for life and annuities (median = 3.0), although for life insurance there is a much broader range (range = 159) than there is with annuities (range = 10.9) (Figure 8).

Figure 8: Dedicated Staff Supporting Customer Experience Lead

For those with a dedicated person leading customer experience, a variety of titles were noted, including: Customer Experience Director, Head of Customer Experience, Chief Marketing Officer, Client/Member VP, Marketing Director, VP of Insurance Services, VP of Consumer Insights, VP of Operations, VP of Business Development, and VP of Client Engagement.

Count Percent

More centralized than decentralized 34 56%

Roughly equally centralized/decentralized 15 24%

More decentralized than centralized 12 20%

LIFE ANNUITY

61%YES

39%NO 59%

YES

41%NO

DEDICATED STAFF

DEDICATED STAFF

DEDICATED STAFF

DEDICATED STAFF


Figure 9: Reporting Structure for Customer Experience Leads

HEAD OF CUSTOMER EXPERIENCE REPORTS TO:

For both life and annuities, more than 70 percent of the respondents indicated that the customer experience lead reports to either the C-suite or to a non-C-suite executive. For life, the lead was more likely to report to the C-suite, while annuity leads were more like to report to non-C-suite executives (Figure 9).

Recognizing that an insurance company can have multiple customers (i.e., policyholder, financial professional/agents, or beneficiary), the survey sought clarification of which of the various stakeholders the respondents’ customer experience programs garner the most focus. While nearly all the respondents indicated they are focused on individual policyholders, almost 3 in 4 also indicated that financial professional/agents are targets of their efforts. Additional “customers” were identified in the ‘other’ category and included firms/agencies, employers, back-office staff, and consumers that are not yet policyholders (Figure 10).

Figure 10: Target of Customer Experience Activities

Note: When asked to rank the priority of the customer types, the highest priority is attributed to individual policyholders most often (n=28) followed by financial professional/agent (n=19).

44%C-SUITE

32%EXECUTIVE

NON-C-SUITE

9% CEO

9%OTHER

6%MIDDLEMGMT

LIFE

41%EXECUTIVE

NON-C-SUITE

31%C-SUITE

13% CEO

9%OTHER

6%MIDDLEMGMT

ANNUITY

Count Percent

Individual Policyholder 60 98%

Financial Professional/Agent 45 74%

Beneficiary 21 34%

Other 8 13%


History of Customer Experience Programs

The treatment of customer experience as a strategic issue appears to be a relatively recent development, and more so for annuities than life insurance. While most respondents indicated that customer experience has been a strategic issue for five or fewer years, life insurance is more likely to be between two and five years, and annuities fewer than two years (Figure 11).

Figure 11: History of Customer Experience as a Strategic Issue: Life and Annuities

TIME BEING A STRATEGIC ISSUE

When asked how they would rate the maturity of the company’s customer experience journey, most respondents placed their companies in the emerging or defined categories (Figure 12). At a defined maturity level, companies have organizational objectives and roles documented and understood, including measurement methods and customer journey mapping. Whereas in emerging, customer experience is identified as an important metric, but it lacks the fully outlined process mapping to make it fully understood and repeatable.

Figure 12: Maturity of Customer Experience Journey: Life and Annuities

MATURITY LEVEL

50

40

30

20

10

0

Initial Emerging Defined Managed Optimized

4%

50%

30%

7%

19%

9%

44%

22%

9%6%

LIFE ANNUITY

LIFE ANNUITY

34%<2 Years

39%2-5 Years

9%6-10 Years

9%9%

>10 Years

I don’tknow

53%<2 Years

19%2-5 Years

9%6-10 Years

16%> 10 Years

3%I

don’tknow


Customer Experience Measurement

In order to understand and properly manage customer experience, we must examine the sources used to examine target customers’ perceptions of it. Respondents suggest there are multiple means their companies use to obtain information about the policyholder/beneficiary customer experience with no clear frontrunner (Figure 13). Some sources—like customer complaints—are reactive, while others—like customer touchpoint surveys—are proactive.

Additional sources of information about the policyholder/beneficiary customer experience are also utilized, but to a lesser extent than those listed in the table below. These include website usability testing, social media monitoring, focus groups, through distribution partners, and mystery shopping.

Figure 13: Top Sources Used to Examine Customer Experience

Similarly, there are multiple means companies use to obtain information about financial professional/agent experience (Figure 14). Here, however, employee/agent surveys are by far the most used method.

Figure 14: Top Sources Used to Examine Financial Professional/Agent Experience

Count Percent

Complaints and escalations 49 82%

Input from client-facing EEs 48 80%

Market research and benchmarking 47 78%

Customer touch point surveys 45 75%

Customer interaction monitoring 45 75%

Customer tracking surveys 44 73%

Count Percent

EE/agent surveys 41 91%

Complaints and escalations 33 73%

Agent advisory councils 33 73%

Firm/agency office feedback 31 69%

Market research and benchmarking 26 58%


These metrics are critical to any customer experience management efforts. The measures used include hard operational and attitudinal measures with average handle time being the most frequently cited. Of those using “likelihood to recommend” as a measure, the vast majority (77 percent) use it to calculate Net Promoter Score (NPS).

In addition to the measures included in Figure 15 below, there were respondents who indicated other measures (e.g., customer effort, customer service preferences, customer emotion), but the frequency did not warrant inclusion in the table.

Figure 15: Top Metrics Used to Measure Customer Experience

For both life and annuities, improving service practices to meet customer needs tops the list of purposes for customer experience programs, followed by aligning company goals with customer needs, and increasing employee awareness of customer needs (Figure 16).

Figure 16: Top Objectives of Customer Experience Programs: Life and Annuities

Count Percent

Average handling time 56 92%

Overall customer satisfaction 49 80%

Likelihood to recommend 48 79%

First call resolution 37 61%

Customer loyalty 33 54%

Transaction-level data 33 54%

Improveservicepracticesto meetcustomerneeds

Align companygoals withcustomerneeds

Increaseemployeeawarenessof customerneed/strategy

Improveprocessefficiency/reduceexpenses

Create a consistent customerexperience acrossdistributionchannels

Increaserevenue

Increasespeedcompanyadapts to changes in customer needs

Pursuedifferentiationforcompetitiveadvantage

93%

87%

76% 76%

65%

61%59% 59%

84% 84% 84%

72%

66%

63%

50%47%

100

90

80

70

60

50

40

30

20

10

0

LIFE ANNUITY


To achieve the objectives in this study, it is of interest to better understand the initiatives companies are investing in for their customer experience programs. There is some consistency in the most frequently cited investments across product lines. For both life insurance and annuities, money is most frequently spent on VOC initiatives and developing self-service capabilities. Each product line also frequently invests in a unique initiative: customer journey maps for life insurance and customer relationship management (CRM) for annuities (Figure 17).

Figure 17: Top Initiatives Utilized for Customer Experience Programs

Voice of theCustomer(VOC)

Self-servicecapability

Customerjourneymaps

Touchpointsor ‘Momentsof Truth’

Core systemreplacement/enhancement

Businessprocessdesign

Customerrelationship management or CRM

Salessupport capability

Big Dataanalytics

89%87%

85%

80%78%

76%

65%

81%

53%

100

90

80

70

60

50

40

30

20

10

0

LIFE ANNUITY

80%

65%

81%

72%

69% 69%

63%

81%

72%


For both life and annuities, retention of existing customers, sales, and revenue are most prevalently used to measure benefits to the business associated with customer experience efforts. Other less frequently used measures include market share, number of referrals, cross-selling to existing customers, and positive brand mentions, but were not included in Figure 18 below because of their low incidence.

Figure 18: Top Metrics Used to Measure Impact

Most respondents (80 percent) indicated that their companies are using external organizations for benchmarking their customer experience programs. The organization most frequently cited by respondents was LIMRA, followed by Forrester, and JD Power (Figure 19). Several other organizations were mentioned, but the incidence of use of each was low (including Ward, DALBAR, Corporate Executive Board, Tempkin, Satmetrix, and North Star).

Figure 19: Organizations Used for Benchmarking

Count Percent

LIMRA 34 56%

Forrester 25 41%

JD Power 12 20%

None 12 20%

Other 10 16%

Retentionof existingcustomers

Sales andrevenues

Cycle time Number ofnewcustomers

Cross-sellingto existing customers

Distributorproduction/volume

70%

67%

48%

44%41%

69%

25%31%

100

90

80

70

60

50

40

30

20

10

0

43%

63%

34%

LIFE ANNUITY

Employees’ productivity

34%33%

16%


Best practices would suggest that as companies gain insights into the specific pain points hampering the experience they offer, they should respond by taking actions to address the related issues. Respondents suggest that among the possible internal actions that could be taken as a result of their customer experience program, there are two that are most prevalent (across both life insurance and annuities): 1) identified inefficiencies and improved process and 2) educated employees to increase the quality of interactions with customers (Figure 20).

Figure 20: Actions Taken to Mitigate Pain Points

To get a sense of how well the respondents perceived their companies were doing in the area of customer experience, they rated their company in comparison with their competitors. Just a few feel they are way ahead of or behind the pack, while 6 in 10 see themselves as equal to or slightly behind the competition (Figure 21).

Figure 21: Comparison to Competitors

74%of respondents subjectively self-reported themselves as equal to or behind their competition

�

Count Percent

Very advanced 3 5%

Slightly more advanced than the competition 13 21%

Equal to the competition 19 31%

Slightly behind the competition 19 31%

Very behind 7 12%

Identified inefficienciesand improvedprocesses

Educatedemployeesto increasethe quality ofinteractionswith customers

Made changes to meet theneeds oftargetedsegments

Establishedowners oftouchpoints

Ensured thatlong-termstrategy takesprecedence over shortterm goals

Createdcross-trainingopportunitiesfor employees

83%

54%

46%

78%

38%

31%

100

90

80

70

60

50

40

30

20

10

0

59%

44%

LIFE ANNUITY

35%37%

80%

31%


Obstacles

When obstacles were examined, respondents most frequently cited competing priorities. This was followed by the limitations of legacy systems and lack of sufficient budget (Figure 22). All findings regarding obstacles were consistent across the life and annuity product lines.

Figure 22: Obstacles to Customer Experience Programs

The Future of Customer Experience

With all but one respondent agreeing that they believe customer experience will have a lasting effect on the insurance industry and will be the driving differentiator for the next three to five years, it seems there is a consensus that customer experience is not a fad (Figure 23). Comments provided suggest changes in customer expectations and opportunities for differentiation will continue to make it critical for companies to focus on the experiences they are providing.

Figure 23: Customer Experience Will Have a Lasting Effect on the Insurance Industry

Count Percent

Strongly agree 24 60%

Somewhat agree 15 38%

Neither agree nor disagree 0 0%

Somewhat disagree 1 2%

Strongly disagree 0 0%

Competingpriorities

Limitationsof legacy systems

Lack of sufficientbudget

Lack of CRMtools /systems

Lack of a customer experience managementprocess

Lack of a clear customerexperiencestrategy / roadmap

83%

69%

48%

44%

26%

72%

31%

100

90

80

70

60

50

40

30

20

10

0

39%

66%

50%

LIFE ANNUITY

Lack ofunderstandingaboutcustomers

Lack ofdedicatedstaff

32%

44%

34%31%

28%

24%

USAA

AAA

Amica

New York Life

Northwestern Mutual

Nationwide

TIAA

Prudential

Manulife

John Hancock

MetLife

MassMutualThrivent

Great American

Principal

Treloar and Heisel

Vanguard

Charles Schwab

Sun Life

Empire Life

Industrial Alliance Pacific Life

StateFarmTD (Wealth)

RBC (Wealth)

Chase

When asked for an open-ended response of industry leaders that set the bar highest for customer experience, top answers included:


In response to an open-ended question asking for an explanation of the level of agreement with the statement that customer experience will have a lasting effect, those that strongly agreed offered the following:

• Experience is the true differentiator. The product race is over.

• In the current digital age we live, the experience becomes everything to a consumer. Insurance/annuity companies will no longer necessarily be in competition with or compared to one another, but rather with all other service organizations a customer does business with.

• It is the one thing we can truly differentiate on. Customer and distribution partners are setting the expectations, and they are only going up.

• It’s table stakes and future customers will make it a requirement.

• People care more about how you treat them than the nuances of your product. It’s the emotional connectivity that is driving our business and its long-term opportunity.

• With the regulation pressures, interest rate environment, and market shift (what customers expect) this will be what differentiates carriers.

• Customers demand high quality and good experiences. If we can’t deliver, we won’t have customers.

• Customer choice and changing consumer preferences will drive higher expectations. A key factor will be their experience.

• Customer expectations will continue to increase requiring more user research and focus on their experiences.

• Customers are more and more demanding and expect a great experience when buying and after the sale. Companies that cannot perform both well will suffer.

• Customers are paying the bills; their money will go to the companies and channels that meet or exceed their expectations.

• The new customer expects engagement similar to other products and digital experiences.

• Many life insurance products are essentially commodities and pricing is generally very similar across carriers. The companies that succeed will have frictionless customer experience and minimization of barriers/pain points. Life insurance will particularly benefit because it is a category that people have low awareness/knowledge of, so a company that does well with answering questions, putting them at ease, and removing hassles will be successful.


SUMMARY

As customers continue to make decisions about their financial protection and security, customer experience is a critical component of that process. How easy is it for them to find what they need, engage with advisors, and purchase a policy?

Historically, insurers used agents to distribute their products, and while some still do, that model has evolved with agents representing multiple carriers and requiring an enhanced experience. Similarly, customers have evolved and are more involved in the purchasing process than ever before, with many purchasing directly from the carrier.

The bar has been raised as online retail and mobile service expectations increase. Customers are no longer prepared to wait—they want instant action, responses, and solutions. Insurers are at a critical juncture, and many are working hard to listen, analyze, and act on their customers’ expectations. Going forward, insurers must improve, be proactive, and continue to measure, evaluate, and evolve their customer experience to ensure it’s always meeting the optimized level of expectation. With so many insurers still in the emerging phase, the playing field is vast and ripe for those who focus and prioritize the achievement of an optimized customer experience to gain significant competitive advantage and market share.

As insurers continue this journey, they must continuously evolve their customer experience strategy as expectations change. They should also seek to understand metrics that show the customer experience’s impact on sales, retention, and operational efficiencies, as well as the tools that can help customer experience—from marketing to CRM.

METHODOLOGY

In order to assess the status of customer experience programs for life insurance and annuity providers, LIMRA and NEOS fielded a web-based survey during the summer of 2019. Participation was solicited from executive contacts at LIMRA member companies. Responses were received from 61 individuals at 47 companies. In addition, telephone interviews were conducted with individuals at 13 companies to enhance the survey findings.

Respondents and Company Factors

Respondents to the survey serve in a variety of roles at their companies, with most coming from operations and marketing. The most frequently selected option was “other” which contained several specific customer experiences and strategy roles.


While respondents indicated their companies have customer experience programs for myriad product lines, participation was sought only for individuals who are involved with programs for life insurance and annuities. The vast majority responded for life insurance or for both the life and annuity product lines.

Given the variety of companies represented by the study participants, variety in the primary distribution models used by companies was expected. The most prevalent distribution model is third-party insurance followed by agency building. Notable in the “other” category, are companies with multiple distribution models where none were considered primary.

Product lines responding Count Percent

Life Insurance 29 48%

Annuity 7 11%

Both 25 41%

Role at your company Count Percent

Operations 19 31%

Marketing 15 25%

Distribution 4 7%

Other 23 37%

Primary distribution model Count Percent

Third-party insurance 22 36%

Agency building 10 17%

Third-party investment 8 13%

Consumer direct 7 11%

MLEA 6 10%

Other 8 13%


ABOUT THE STUDY

The desire to better understand and serve customers coupled with their intensifying expectations has led companies to focus on improving their customer centricity. To differentiate themselves, many are looking to proactively improve relationships with customers, while maximizing the bottom line and enhancing efficiencies among internal processes.

A recent LIMRA and NEOS study of insurance industry professionals examines the state of customer experience efforts and uncovers the maturity levels of life and annuity carriers. It also provides insight into the challenges and opportunities carriers face, including how to optimize and strengthen the customer experience.

Participating Companies (*multiple responses)

Survey Participants

Interview Participants

AAA Life*AIG Individual RetirementAllianz LifeAllstateAmerican EquityAmerican Family Life Insurance CompanyAmerican Fidelity Assurance CoAssumption LifeAXA EquitableBaltimore Life InsuranceBMO InsuranceCanada LifeCMFGCo-operators Life InsuranceCUNA Mutual Group*EquiTrust Life Insurance CompanyFarm Bureau Financial Services*Farm Bureau Insurance of MichiganFarmers Life InsuranceGAIGGreat-West Financial/ProtectiveGuardianIllinois MutualJohn Hancock

Legal & General AmericaLincoln FinancialMassMutual*Mutual of OmahaNationwidePrincipal Financial Group*Protective LifeRBC InsuranceRiverSourceRoyal Neighbors of AmericaSammons Financial Group*Securian FinancialSSQ InsuranceTD InsuranceThe Cincinnati Life Insurance Co.ThriventTransamericaUSAA*Vantis LifeVOYAWestern & Southern Financial Group*Zurich American Life Insurance Company

AAA LifeAmerican NationalAXA Equitable*CUNA Mutual GroupFarm Bureau Financial ServicesJohn Hancock

Legal & General AmericaMassMutualPrincipal Financial GroupThriventTransamericaUSAA


CONTACTS

Todd A. Silverhart, PhD, LLIFCorporate Vice President and Director, Insurance [email protected]

Karna TrautmanHead of Strategy and [email protected]

Chris DickinsonSenior Principal, Insurance Operations [email protected]

Additional Contributors:

Phil Brown| Director, Commercial Research | LIMRA Stephanie Wright | Editor | LIMRA Amy Plympton | Corporate VP – Client & Comm Strategy | LIMRA

About LIMRA

Established in 1916, LIMRA is a research and professional development not-for-profit trade association for the financial services industry. More than 600 insurance and financial services organizations around the world rely on LIMRA’s research and educational solutions to help them make bottom-line decisions with greater confidence. Companies look to LIMRA for its unique ability to help them understand their customers, markets, distribution channels, and competitors and leverage that knowledge to develop realistic business solutions.

For more information about LIMRA, visit www.limra.com.

About NEOS

NEOS is a recognized leader in helping global Insurance and Financial Services organizations drive transformative change. Specializing in Life, Annuities, Retirement, Employee Benefits, and Wealth Management, NEOS provides management consulting and delivery services that enable clients to solve strategy, distribution, operations, data, and technology challenges.

For more information about NEOS, visit www.neosllc.com.

Danielle Lutkus | Senior Analyst | NEOS Jacob Watson | Senior Analyst | NEOSAfton Lucente | Director of Marketing | NEOS

www.limra.com | ©2019 LIMRA www.neosllc.com | ©2019 NEOS, LLC

Documents

Next-Level Customer Experience...Customer experience is not a competitive differentiator for the company. Tends to be a reactive versus proactive organization around the customer with