What is customer service in insurance?

Customer service in insurance is how you show up when it counts: answering questions, resolving issues, and guiding people through some of life’s most intense moments. It’s not just help, it’s a trust-building engine that keeps customers from walking away.

It involves assisting clients with inquiries, claims, and policy management. It plays a crucial role in building trust and loyalty among policyholders and is key in reducing churn, which is essential, especially when the cost to acquire new customers can be so high. 

Effective customer service keeps customers satisfied and ensures they don’t harbor negative feelings towards their insurance company. This is vital, as it prevents them from seeking alternatives once their renewal period approaches. The importance of customer service in insurance can’t be overstated: it’s the backbone of a sustainable business model in today’s competitive insurance market.

What are the benefits of improving customer service?

Improving customer satisfaction leads to higher retention rates, and even word-of-mouth referrals. When insurance companies prioritize customer service, they differentiate themselves in a crowded market. 

The ability to send out personalized communications to customers during critical moments is a game-changer. For example, if a natural disaster is expected to sweep through an area, imagine which insurance company you would prefer: 

• Insurance Company A does nothing. The first time you hear from them is after you make a claim for your damaged roof and windows, and it’s just a canned “our service teams are overloaded with messages, we will get back to you in 3-5 business days.” 
• Insurance Company B, on the other hand, is ahead of the game. Upon the weather forecast, they send out an email and a text message with tips on how to prevent home and vehicle damage from the upcoming storm. They may even encourage you to evacuate your family and pets, depending on the expected severity. After the storm, they send out a heart-felt message, with a link to make a claim with photos if you incurred any property damage, and let you know pre-emptively that they’re working overtime to get through all the submissions, but will help you as soon as they can. 

Both companies may not get to your claim until three days later, and you may get identical payouts from both. But one insurance company will cultivate loyalty, while the other one will just incur frustration and churn. 

If you have the core system architecture that empowers you to do so‌ — one that is ‌customer-centric and event-driven‌, like EIS OneSuite — ‌you can significantly enhance the customer experience. This focus on insurance customer satisfaction not only fosters loyalty, but also drives business growth.

What is the customer retention rate for insurance companies?

The average customer retention rate in the insurance industry is around 76%. High retention rates indicate effective customer service and satisfaction. 

The cost of customer churn is substantial, and acquiring a new customer can be five to seven times more expensive than retaining an existing one. This stark reality underscores the importance of understanding how to improve customer retention in insurance. By investing in customer service, companies can mitigate the costs associated with churn and build a loyal customer base.

How can customers be retained?

Insurance customers stick around when service feels seamless, communication is clear, and every touchpoint respects their time. In insurance, retention comes from making the complex feel simple, and proving you’re reliable when it matters most.

Offering personalized services and proactive communication based on life events or insurance claims can significantly increase customer retention rates. Implementing automated customer touch sequences that are event-driven, along with regular feedback mechanisms, helps in understanding customer needs to refine customer service workflows further. This way, customers receive timely information without having to search for what often feels like hidden or hard-to-find details. These strategies are prime examples of good customer service in insurance that can lead to lasting relationships.

How does personalization improve customer experience?

Personalization makes insurance feel human — like it was built for one person, not for the nameless, faceless masses. When customers see relevant options, clear updates, and timely support, they’re more likely to trust, engage, and stay.

Further, it allows insurers to tailor services and products to individual customer needs. By communicating with customers based on their unique circumstances and offering personalized solutions, insurers foster a deeper connection and trust. This approach helps policyholders feel valued, transforming their perception of the insurer from a faceless entity into a supportive partner in times of need. The impact of personalization on the customer experience is profound, as it addresses the core of consumer behavior examples that highlight the need for individualized service.

What are examples of changes in consumer wants?

Consumers want faster claims, fewer phone calls, and digital tools that actually work. They expect real-time updates, self-service options, and clear communication — no fine print games. One-size-fits-all coverage doesn’t cut it anymore; they want flexibility. Basically, they want insurance that behaves more like the apps they use every day.

To sum it up, consumers now demand more transparency and faster service in their insurance interactions. There’s a growing preference for digital solutions and self-service options. Customers want to interact with their insurance policies in a manner similar to how they engage with other online services, such as banking, Amazon shopping, or tailored television streaming experiences. Understanding these shifts is crucial for insurers, especially when considering emerging risks in insurance.

How to improve customer retention in insurance?

Regularly training staff on customer service best practices can improve client interactions, but deploying better technology and backend workflows is essential. 

Using technology to streamline processes and improve response times is vital for delivering optimized, tailored, and timely customer service communications at scale. For instance, leveraging solutions like the customer-centric and event-driven architecture of EIS OneSuite can significantly enhance service delivery. This approach ties back to how to improve customer service in insurance companies, ensuring that customers feel valued and understood.

Why is the insurance industry struggling?

The insurance industry is stuck on outdated tech that slows everything down — from product launches to routine customer claims. Customers expect speed and simplicity, but legacy systems can’t deliver either. Add in rising cost, competition, and shifting expectations, and many insurers are playing defense instead of being truly ambitious and disruptive.

Unfortunately, many companies are slow to adapt to technological advancements, which negatively impacts service quality. As a result, customers may switch to any insurer offering slightly lower rates, rather than remaining loyal to a company that fails to treat them as individuals. This highlights the critical need for better technological architecture, which can be a make-or-break factor in insurance. Understanding the challenges of insurance marketing is essential for any company aiming to thrive in this landscape.

Our ongoing commitment to innovation and customer-centric service has positioned us as a leader in the industry for ambitious insurers.